Jul 23, 2026
States sound alarm over new Medicaid work requirement rule
States are challenging the Trump administration’s plan to require some Medicaid enrollees with serious health issues to submit additional paperwork to prove they’re exempt from work requirements
Healthcareby Alexandra Olgin
Medicaid can be a lifeline for people with serious health issues like cancer, HIV, and substance use disorder. Last summer, the Trump administration overhauled the health insurance program that covers about 70 million Americans
One key change is work requirements, which will start next year, and several states fear the steps to prove someone is too sick to work are getting complicated, meaning any hiccup could cause patients to lose necessary coverage
The last time that Bee Velasquez lost Medicaid coverage was in 2017
“My anxiety went up, my PTSD went up,” said Velasquez, who lives in Portland, Oregon. “You don’t want to go to the doctors, you don’t even want to make a phone call at that point, because you’re like, what kind of bill am I going to get?”
The 45-year-old relies on a daily medication for her HIV. Without insurance, Biktarvy costs between $4,000 and $5,000 per month. Velasquez has Medicare because of her disability and Medicaid because of her low-income, so her medications are fully paid for. But when a mistake in the system left her without coverage, she desperately searched for free medication
“People will send medication,” she said, “And so I was able to find re needed in that time.”
It’s a nightmare she worries could happen again with the new rules tying Medicaid coverage to work. Starting in January, 18.5 million people will need to show they’re working 80 hours a month or that they’re too sick to do so
Velasquez works and volunteers her time as an HIV advocate, but the number of hours is inconsistent. She worries about all the documentation she’ll need to prove she should be exempt because of her HIV and other health conditions
Due to her health conditions, Velasquez makes frequent visits to the doctor and takes multiple medications
“I rely on the healthcare system in a way that some people don’t,” she said. ”One of the biggest threats to my health shouldn’t be paperwork.”
Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, defended the requirements to reporters in aJune press conference
“I think it’s a beautifully written effort to try to define for our nation what part of the puzzle is,” Oz said. “Cause if you are going to get something of value from the American people because there should be some obligation.”
States have been racing to build systems to verify who’s working and who qualifies for an exemption. For months, federal health officials informally told states that existing data like diagnoses and medical records would be enough to show someone was medically frail
Then in June, the agency reversed course. Starting in 2027, many patients will also need documentation — like a doctor’s note — showing they’re currently too sick to work. CMS didn’t respond to questions about why it added the new requirement
Dr. Mohammad Dar, the former senior medical director of the Massachusetts Medicaid program and former chair of the National Medicaid Medical Directors Network, said it’s causing chaos
“These Medicaid systems are made to be like 100-mile-per-hour trains going solidly on a track and cannot deded to them is a bureaucratic train wreck of, there are no train tracks, there is no route, just go north.”
Twenty-five states and D.C. are suing federal health officials to stop this extra requirement. The states said it goes farther than the federal law, and many already spent a lot of money making plans to use data they already have. Maryland said in court filings it spent more than $30 million already. The extra requirement means they’ll have to spend at least another $2 million
“Extremely worried is the mood,” Dar said
The Urban Institute estimated the Medicaid work rules could jeopardize coverage for up to 7 million people. They’ll still need care, but they won’t be able to afford it — and that’s going to leave hospitals and clinics like Dar’s to absorb the cost. He is now the chief medical officer of a network of 25 community health centers in Massachusetts
“It’s going to cost care, it’s going to cost outcomes, it’s going to cost jobs,” Dar said
The Commonwealth Fund estimated that hospitals in states with more expansive Medicaid coverage could see operating margins fall by 11-30%
“Never have we hit our own healthcare system with such a battering ram,” Dar said
Patients, doctors, and states are trying to prepare for next year, but they’re waiting to hear from a judge later this month which rules they’ll be prepping for
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