States navigating a ‘critical time’ of Medicaid changes amid midterm elections, expert says

Voters in 36 states will choose a new governor during this midterm election, a change that could have ripple effects and impact states’ rollout of changes to Medicaid, experts say. 

Fifteen incumbent governors are running for reelection on Nov. 3, while for 21 states, their current governors will either be term-limited and prevented from running, or are not seeking reelection this year. 

Elections and changes in government leadership often bring a “kind of paralysis at the state level, even if it’s the same party,” Jennifer Wagner, director of Medicaid eligibility and enrollment at the Center on Budget and Policy Priorities, told Route Fifty. 

Indeed, the results of the midterm elections could bring shifts to appointed state positions, like the chief information officer, which impacts legislative priorities or budget and funding allocations. 

“If somebody is in a more political position, like a CIO, and there's a new administration coming in, they're not necessarily going to hang around to the bitter end until they get escorted out the door. They’re looking for jobs now, so they might peel off now, next month or in December,” Wagner explained. 

“The timing is definitely tough,” she said. 

Two months after the midterm elections is the Jan. 1 deadline for state Medicaid programs to require beneficiaries of the federally funded and state administered insurance program to meet work — also called community engagement — requirements.

Under the work requirements, established by President Donald Trump’s One Big, Beautiful Bill Act last July, Medicaid beneficiaries between 19 and 64 years old have to verify that they are employed or are engaged in an education or volunteer program for at least 80 hours a month. Certain covered individuals may qualify for exceptions to or be excluded from the requirements.

The weeks between Nov. 3 and Jan. 1 are “a critical time” for implementing work requirements, and the potential “instability and paralysis” resulting from the election’s impact “is just a further strain,” Wagner said. 

Indeed, while “states have worked in good faith to prepare for implementation …. We do not have sufficient time to make these changes responsibly before states must begin making consequential coverage determinations affecting millions of Medicaid enrollees,” governors of five states — California, Maine, New Mexico, Oregon and Virginia — wrote in a letter to Health and Human Services Secretary Robert F. Kennedy Jr. earlier this month, requesting that the compliance deadline to be delayed. 

California, Maine, New Mexico and Oregon all have gubernatorial elections taking place next month. 

In Illinois, another state with a gubernatorial election on Nov. 3, the Department of Healthcare and Family Services “is engaged in a massive amount of data and IT system design, production, testing and release to comply with the requirements of HR 1,” said Laura Phelan, the state’s Medicaid director during a press briefing hosted by the National Association of Medicaid Directors this week in National Harbor, Maryland. 

HFS also recently “developed a screener tool to help Medicaid customers determine whether new requirements apply to them and whether they can claim an exemption” to help streamline the process, Phelan said. 

“We estimate that anywhere from 165,000 to 300,000 of Illinoisans could lose coverage,” under the new Medicaid eligibility rules, and “for many, it won’t be because they are no longer eligible, but because of the additional administrative burden the federal changes create,” she said. 

Further complicating the rollout of work requirements is that the preliminary guidance states received last December to begin adjusting Medicaid eligibility and enrollment systems differs from the interim final rule that the Centers for Medicare and Medicaid Services only released in June — just six months before Jan. 1, said Mary-Beth Malcarney, senior advisor on Medicaid policy at the nonprofit Families USA. 

“Among other changes, the rule established an extra-statutory definition of medical frailty; added new compliance activities requiring changes to forms and system functionality that states did not anticipate; and created an entirely new verification hierarchy requiring states to determine an individual’s work status before evaluating compliance or an applicable exception,” the governors’ letter reads. “These changes require new system logic, revised processes, updated notices and forms, and additional staff training — much of which cannot be developed, tested and deployed on the current timeline.” 

Additionally, states face another readjustment to Medicaid work requirements on Jan. 1, 2028, when more stringent rules regarding self-attestation go into effect, Malcarney said. 

Currently, beneficiaries may claim that they meet a work requirement exemption for Medicaid coverage, such as medical frailty, and states can accept such claims without verification. After Jan. 1, 2028, however, states must require Medicaid enrollees to submit documentation that verifies their reason for exemption or use ex parte data verification to make such determinations. 

In New Jersey, “we would like to automatically verify medical frailty as much as possible” using code lists released by CMS, but “this is an evolving process,” said Greg Woods, director of New Jersey’s Medicaid system.

“I don’t know yet where we’ll land operationally on [self-attestation and medical frailty], but that’s certainly a major concern for us,” he said. 

In the next couple months and following year, there are “a lot of changes for [state] government all at the same time [as] work requirements … which adds to the complexity of the overall administrative implementation of the Medicaid program,” said Courtney Burke, senior fellow of health policy at the Rockefeller Institute of Government. 

“At the state level, I think regardless of who's in the state houses, there's an obligation on the part of those in state government to continue with implementation,” she added. 

Indeed, for Illinois and other states subject to establishing Medicaid work requirements, “HR 1 is a federal law, it’s a federal mandate, and we all have to do it,” Phelan said, and in the meantime, “we’re trying to keep as many people covered as possible and trying to make sure that we keep as many covered benefits [for people] as possible."