States in ‘Anti-Obamacare’ Race to Adopt Medicaid Work Rules

Conservative states are rushing to implement work requirements for Medicaid recipients ahead of a federally-mandated deadline, prompting concerns about challenges that would affect access to care.

Nebraska in May became the first state to require adults ages 19-64 to work, train, or volunteer for at least 80 hours a month in order to receive government-subsidized healthcare. Montana is slated to follow in July and Iowa later in the year. Those moves come ahead of Congress’ Jan. 1, 2027 deadline for states with expanded Medicaid programs to impose work requirements that stand to slash spending on taxpayer-funded health coverage.

The roll outs follow a particularly costly year for Medicaid, with the program in 2025 hitting its most expensive year on record at over $970 billion across all states and territories. Republicans’ sweeping tax and spending law could save $911 billion in reduced Medicaid payments over a decade. It could also cost over 14 million people their health coverage by 2034.

A coalition of Democratic governors in 2025 called on Republicans to prevent the cuts before their tax plan passed, while 29 states in a March survey by the research firm KFF said the Jan. 1 deadline provided insufficient time to adopt new data sources essential to implementing the program.

States pushing ahead contend the early adoption allows them time to resolve kinks and provide a model, while freeing up budgets.

“For a lot of conservative states, the desire for the past 10 to 15 years has been, ‘how can we show that we are more anti-Obamacare than anybody else?’” said Matt Salo, former Director of the National Association of Medicaid Directors.

The Nebraska health department did not respond to questions about the state’s early adoption for this story.

Rollout Readiness

States are actively overhauling their Medicaid infrastructure to comply with the new requirements, which include new data sources and definitions essential to deciding who qualifies for Medicaid and who gets dropped.

KFF says that 21 states surveyed lack a current definition for “medically frail"—a key category for those exempt from work requirements. Eighteen states, meanwhile, plan to adopt new data sources to verify qualifying criteria like income and non-medical exemptions.

“There are going to be states that already are dead set to make this as rigorous and strict as possible, and there are states that are going to try and do everything in their power to reduce coverage losses,” said Allie Gardner, senior policy analyst at the Center on Budget and Policy Priorities.

How early launches of work requirement affect enrollees remains to be seen. Observers say it could take months before data begins to trickle in.

Yet on the ground, a lot of people “are really worried,” said Sarah Maresh, Health Care Access Program Director at Nebraska Appleseed, a group that does outreach with residents and has met regularly with state officials on the rollout.

“We’re seeing answers to really important questions way too late, Maresh said. And that doesn’t give advocates enough time to advocate for different policies.”

Although Nebraska had adopted Medicaid expansion assuming it would cost under $4 billion in its first decade, real costs have risen to $3 billion in fewer than five years, said Hayden Dublois, data and analytics director for the Foundation for Government Accountability, a group that supports free-market policy.

Fellow early-rollout state Montana also saw its 10-year projected expenses rise to over $7 billion after initial estimates only forecasted about $3.2 billion in additional costs, he added.

“They’re already hemorrhaging expenditures on this new class of able-bodied adults,” Dublois said. “In our view, they’re moving early because they’re looking at how expansion has busted their budget.”

Analysts say Nebraska and Montana’s early rollouts could also serve as a beta-test for other states.

Both populations are relatively small – around 2 million and one million, respectively. Getting things “up and running” may be easier for smaller states and offer others lessons, said Nina Owcharenko Schaefer, Senior Research Fellow for Health and Welfare Policy at the Heritage Foundation.

It also helps show where their kinks might be, she said, and gives states time to adjust and accommodate for what glitches might happen, she added.

Beneficiary Spike

States pursuing early rollouts have prepared for this moment since at least December, when Nebraska Gov. Jim Pillen (R) heralded work requirements as “a hand up, not a handout.” States’ swift adoptions signal not only the beginning of a healthcare overhaul, but the result of pent-up defiance against their longstanding federal Medicaid obligations, said Salo, now a senior adviser at the Washington-based consulting firm ADVI Health.

Nebraska announced its early adoption almost exactly a year after introducing former Heritage Foundation and Paragon Health Institute researcher Drew Gonshorowski as its Medicaid Director in December 2024. Both right-wing think tanks supported work requirements for Medicaid’s expansion population, arguing that many beneficiaries choose not to work.

The left-leaning Urban Institute estimates nearly 90% of beneficiaries already work, participate in work-related activities, or have a disability.

The earliest adopters have financial stakes in work requirements along with ideological ones, said New York’s former Medicaid director Brett Friedman.

Medicaid programs spent approximately $178.2 billion on its adult expansion population in 2023, according to KFF, representing about 26% of total Medicaid spending across the 40 states that covered those enrollees.

States that rush their rollout could cause many beneficiaries to lose coverage for procedural reasons like filling out forms insufficiently. Friedman says that’s the point: it leaves more money in state budgets to fund other priorities.,

In April, Gov. Pillen signed a budget package that included over $400 million in spending cuts and reallocations aimed at redirecting funds toward tax relief, child welfare, and police incentives. These austerity measures will only help prolong the Medicaid system, said Montana’s Greg Gianforte, one of the three state governors launching early.

“If everyone is allowed to climb upon the net, it will collapse,” he added.