A Connected Government: A Roadmap for State and Local Health and Human Services

State and Local Government (SLG) agencies, especially those operating in Health and Human Services (HHS), sit at the epicenter of public need. They deliver frontline services to millions of residents—from Medicaid eligibility and SNAP enrollment to child welfare oversight and behavioral health support. Yet the demand for efficient, equitable, and high-quality service delivery continues to rise, even as agencies grapple with legacy systems, shrinking budgets, and intense public scrutiny.

Legislative priorities such as those embedded in H.R.1 underscore the pressure on SLG agencies to simultaneously deliver cost savings, improve productivity, and enhance operational transparency. But meeting those goals requires something agencies currently struggle to achieve: a unified, interoperable data environment.

Today, most SLG HHS systems remain trapped in a fragmented data landscape. Program-specific platforms do not communicate; legacy architectures cannot scale to modern demand. Data needed to inform urgent decisions sits locked in disparate systems. The result is redundant work, delayed processing, higher administrative costs, and ultimately, slower and less equitable service delivery for the public.

To better understand these challenges, Market Connections partnered with Google Public Sector to survey 250 federal, state, and local government employees involved in HHS operations, management, or IT in September 2025. Their responses illuminate the technical, strategic, and organizational barriers that SLG agencies must overcome—and the significant opportunities available to those ready to modernize.

This white paper translates those insights into a comprehensive roadmap for SLG HHS leaders ready to build a more connected, intelligent, and constituent-focused government.

Interoperability: A Mission-Critical Foundation 

The survey confirms the urgency: 86% of SLG respondents rate interoperability as mission-critical, a higher urgency than any other group measured. In comparison, 71% of Federal Civilian respondents cite interoperability as mission-critical; 63% of Defense respondents do the same.

This difference underscores a simple truth: for SLG agencies, seamless data flow is not optional. It is foundational to mission success.

Unlike federal agencies, where national programs often operate at scale but with centralized oversight, SLG HHS agencies manage high-volume, high-touch services that directly affect individuals’ daily lives. Eligibility, benefits, case management, and referrals require constant cross-program visibility. Without integrated data, these workflows break down.

The stakes are high. Fragmented systems mean crucial information can fall through the cracks as residents repeatedly submit the same documentation across programs. Workers must toggle between platforms that do not speak to each other. Program administrators make decisions without complete information; audits and compliance reporting become manual, burdensome, and error-prone. 

Interoperability is not an abstract technical ideal—it is the backbone of coordinated care, eligibility workflows, public health responsiveness, and equitable human services. It determines whether agencies can deliver the outcomes their constituents expect.

When asked which emerging technologies could most effectively help them achieve interoperability, 41% of all respondents across sectors identified Artificial Intelligence and Machine Learning (AI/ML) as the most impactful tool. This signals that leaders recognize the need not just for modernization, but for modernization infused with intelligent automation and analytics.

Threading the Technical Needle

Modernizing SLG HHS systems requires navigating a matrix of technical, organizational, and regulatory constraints. Across all survey respondents, legacy system integration emerged as the top technical challenge, cited by 6 in 10 respondents. This aligns with decades of underinvestment that left many agencies with aging, siloed platforms.

However, SLG respondents diverged notably from the broader trend: only 48% of SLG agencies cited legacy integration as their top technical challenge. This lower figure reflects an environment where agencies are already accustomed to working around outdated systems—and instead see strategic and regulatory obstacles as more pressing.

Regulatory complexity is a top concern for SLG respondents, as state and local agencies operate under a dense patchwork of federal and state rules. A lack of a clear AI strategy is a disproportionately large barrier, highlighting uncertainty about how to responsibly implement emerging technologies within strict compliance parameters.

Security and privacy concerns are top-of-mind for both SLG and Federal Civilian respondents, reflecting the critical sensitivity of the constituent data they manage.

This cluster of concerns highlights a broader truth: SLG leaders are not merely wrestling with technical debt. They are attempting to modernize within an environment defined by oversight, public accountability, and the need for streamlined governance frameworks.

Agencies see the opportunities—but they need structures, guidance, and secure platforms that make intelligent technologies safe, compliant, and scalable.

The AI Imperative

Despite the perceived barriers, the potential benefits of adopting intelligent systems are generating clear momentum.

Across all respondents, efficiency gains and faster decision-making rank as AI’s top benefits. Among these, SLG respondents report the biggest perceived benefits in these two areas – unsurprising for agencies facing high case volumes, staffing shortages, and increasing constituent expectations for speed and personalization.

AI offers a path to workflows that make services easier to provide and receive. From automation of case intake or eligibility verification, to analyzing trends across programs that can help improve interventions, to enhancing constituent-facing digital services with natural-language interfaces and real-time guidance, SLG leaders know that AI tools have the power to revolutionize health agencies.

But adoption requires more than enthusiasm. The workforce must be prepared.

When asked what resources they need most to adopt AI:

• 33% of respondents prioritized training and workforce development.
• 29% requested additional funding.
• 23% cited the need for technical assistance.

Technology alone cannot close the gap. Agencies need talent, guidance, and partnerships that build long-term internal capacity.

Strategic Recommendations

To convert mission-critical intent into measurable progress, SLG HHS leaders should pursue an integrated, intelligent, and secure platform strategy that aligns with legislative goals, constituent needs, and long-term sustainability.

1. Establish a unified data strategy on modernized platforms: Address siloed infrastructure and focus on leveraging next-generation architecture for scaling.
2. Target the quickest wins for constituents: Prioritize use cases that deliver H.R.1 goals of cost-savings and productivity.
3. Invest in human capital through partnerships: Address 33% request for training by partnering with technical assistance providers to offer comprehensive, hands-on skill development programs.
4. Prioritize governance from the outset: Overcome cited barrier of a lack of a clear AI strategy by embedding Responsible AI principles directly into platform architecture.

A Connected Future

The future of SLG Health and Human Services depends on the ability to operate as a truly connected government. The vast majority of SLG leaders consider interoperability mission-critical. What remains is execution—building a secure, unified, and intelligent foundation capable of delivering faster decisions, greater efficiency, and more equitable outcomes for the public.

Agencies that embrace modern platforms and AI-driven capabilities will not simply modernize operations. They will transform how services are delivered, how workers are supported, and how communities thrive.

The path to a connected government is clear. Now is the moment for SLG HHS agencies to take it.

ABOUT GOOGLE PUBLIC SECTOR

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ABOUT MARKET CONNECTIONS

Market Connections delivers actionable intelligence and insights that enable improved business performance and positioning for leading businesses, trade associations, and the public sector. The custom market research firm is a sought-after authority on preferences, perceptions, and trends among the public sector and the contractors who serve them, offering deep domain expertise in information technology and telecommunications; healthcare; and education. For more information visit: www.marketconnectionsinc.com.