Medicaid Changes Spark Warnings from Health Policy Experts

During a media briefing, KFF leaders outlined how the law’s many provisions share one theme: increased burdens on vulnerable Americans and the systems that serve them.

One of the most controversial provisions is a federal work requirement for adults in Medicaid expansion states.

Robin Rudowitz, vice president and director of KFF’s Medicaid program, explained that many people with mental health or substance use disorders gained coverage through the ACA expansion.

Since they don’t qualify as disabled, they would now be subject to the new work rules.

While the law includes exemptions, Rudowitz said, “It is not likely that the state would know really in real time that an individual has those conditions.”

She added that people would face challenges proving their eligibility, especially during a first episode of psychosis, when they likely wouldn’t have a Medicaid claim history to rely on.

One of the most controversial provisions is a federal work requirement for adults in Medicaid expansion states.

Additionally, hospitals might try to help patients by submitting documentation to preserve their coverage, but Rudowitz said the overall system for doing this remains unclear.

That uncertainty could lead to gaps in coverage and added strain on hospitals.

Rural hospitals are especially vulnerable.

Larry Levitt, executive vice president for health policy at KFF, said that while closures are already underway for various reasons, “hospitals will likely blame the new law.”

He pointed to a cap on provider taxes as one provision that could tip financially struggling hospitals over the edge.

Many states use provider tax revenue to boost Medicaid payments to hospitals and fund behavioral health and other essential services.

With new federal limits on how those taxes can be used, states may have to cut services or find new revenue.

Another major concern is the end of the enhanced Affordable Care Act subsidies at the end of 2025.

Cynthia Cox, director of KFF’s ACA program, said, “22 million people will see a sharp premium increase starting January 1” of 2026. While some may switch to cheaper plans or try to pay more out of pocket, “eventually 4 million more people will be uninsured.”

People just above the poverty line in non-expansion states will be especially hard hit.

Cox explained, “Those folks go from paying nothing each month to having to pay roughly 2% of their income.”

Higher-income enrollees—such as older adults or small business owners—who previously received no subsidy “might go from paying roughly eight and a half percent of their income for a premium to paying whatever the sticker price is.”

Drew Altman, KFF’s president and CEO, added that “it isn’t just about how many uninsured. It’s about how healthcare becomes even more unaffordable for a lot of people.”

The law could also reduce coverage options for lawfully present immigrants.

Drishti Pillai, director of KFF’s immigrant health policy program, noted that as of now, 14 states and DC already are using their own funds to cover some groups of noncitizen immigrants.

Those programs may now face cuts as states absorb more costs.

Levitt added that ACA coverage for lawfully present immigrants is also at risk, which could increase demand on state-funded safety net programs.

Those with disabilities may also be affected by the work rules.

Many individuals in the Medicaid expansion group may have disabling conditions but don’t meet the formal criteria to qualify as disabled.

Without that formal designation, they could still be required to meet work requirements.

Tricia Neuman, KFF’s Medicare policy lead, said that state budget pressure could lead to cuts in “optional benefits, which can be very important to people with disabilities,” including home care and transportation that help them live independently.

Nursing homes and older adults may also be impacted.

Rudowitz noted that six in 10 nursing facility residents are covered by the Medicaid program.

She warned that blocking new federal staffing rules could worsen workforce shortages and lower care quality.

Neuman added that budget cuts to food assistance programs such as SNAP could hurt older adults who rely on them for nutrition.

Experts also discussed some states may move forward quickly with Medicaid work requirements before the 2027 federal deadline.

Rudowitz said that CMS might approve those pending waivers, but once the law takes effect, “the actual parameters of the policy will be difficult to vary across states because of the prohibition on waivers.”