STATE LEGISLATIVE SESSIONS HIGHLIGHT CHOICE BETWEEN PROTECTING COVERAGE AND DEEPENING HARM AFTER FEDERAL MEDICAID CUTS
The following information was released by the Center on Budget & Policy Priorities (CBPP):
The
Some states chose policies that will deepen the harm from the 2025 reconciliation law and increase coverage losses. For instance, some states adopted more restrictive eligibility policies than the federal law requires or even allows, reduced funding for home- and community-based services, created additional barriers to coverage for people who are immigrants, or seized on the new federal Medicaid work requirement as an opportunity to add even more red tape that will make it harder for people (including many working people and people who should be exempt) to get and stay covered.
Other states, in contrast, pursued policies aimed at mitigating the harm of the cuts by protecting access to health care and offsetting some of the federal cuts. These policies include extending Medicaid postpartum coverage, increasing state help to reduce premiums for people with low incomes buying coverage through the Affordable Care Act (ACA) marketplaces, and increasing revenue by taxing wealthier people who benefited the most from the 2025 reconciliation law's tax cuts.[3]
While no state has the resources to fully make up for the cuts in the reconciliation law, states' decisions will significantly affect the amount of hardship the federal law imposes on their residents. Going into future legislative sessions, state policymakers can protect residents' coverage by rejecting red-tape policies that would further restrict access and take coverage away from people, raising revenue from those who can most afford it to backfill for federal cuts, and pressing federal policymakers to reverse the law's harmful cuts.
The 2026 state legislative sessions marked the first regular sessions since the enactment of the harmful Republican reconciliation law in
Initial estimates projected that these two policies could cause between 4.9 and 10.1 million people to lose Medicaid expansion coverage in 2028, depending on state implementation choices.[4]
In addition to the budget challenges stemming from federal cuts to Medicaid and SNAP, many states also face budget shortfalls as a result of a wave of unaffordable state tax cuts enacted in the past five years.[6] Some states used additional federal funds during the COVID-19 pandemic to address shortfalls due to inadequate revenues and many did not prioritize increasing revenue to maintain existing services once those funds ran out.
As the above combination of factors strained state budgets, some states chose to cut Medicaid after the 2025 reconciliation law's enactment or in their 2026 legislative sessions, often starting with provider reimbursement rates and benefits considered optional under federal law, such as home- and community-based services. Other states, however, took steps to limit the damage from the federal cuts and preserve coverage for their residents, such as by pursuing tax changes to help shore up revenue.
Several states considered or enacted legislation to codify new federal Medicaid policies from the 2025 reconciliation law, even though state law often didn't require it. Lawmakers used these bills to direct state Medicaid agencies on their implementation decisions, often by requiring restrictive policies that would put more burden on people and make coverage losses even higher, including for people who are actually eligible but unable to successfully navigate administrative hurdles to gain and keep coverage. States have long used this approach of adding red tape to reduce their Medicaid spending by kicking people off the program, without explicitly cutting eligibility.[7] In addition, several states made other changes in their 2026 sessions that will reduce access to health care.
Policies Codifying and Exacerbating Restrictions in the Harmful 2025 Republican Reconciliation Law
Many of the state bills codifying elements of the 2025 Republican reconciliation law adopted some of the federal law's harshest options. Some state bills went beyond the law, such as by applying restrictive policies to populations (such as non-expansion adults) not directly affected by policy changes in the reconciliation law.
Adopting the most restrictive work requirement policies allowed under the harmful 2025 Republican reconciliation law. Several states considered proposals promoted by organizations such as the
Is required to look back three months when someone applies for Medicaid to see whether they complied with the work requirement or were exempt during each of those months, instead of looking at just the prior month. (
Must verify compliance with the work requirement at least quarterly and require compliance every month, rather than checking for one month of compliance at each six-month renewal. (
Is barred from adopting certain optional flexibilities specifically permitted by the 2025 reconciliation law, such as the short-term exemption from the work requirement when people experience a hardship.
Is prohibited from accepting self-attestation as evidence of compliance with the work requirement, even though a recent federal rule permits self-attestation through at least 2027. [11] Thus, enrollees will have to provide documentation of compliance even for activities that are burdensome to verify, such as their work as a family caregiver. (
The longer lookback period and more frequent compliance checks will likely disqualify many otherwise-eligible people from health coverage, such as people working in low-wage jobs whose hours fluctuate from month to month, including those working in home health and child care, retail workers, and gig workers.
These restrictions will also limit the Indiana Medicaid agency's ability to respond pragmatically to real-world circumstances, forcing it instead to impose additional paperwork and verification burdens on both enrollees and agency staff. For example, without the short-term hardship exemption, a person could lose Medicaid coverage after a hospitalization or natural disaster temporarily disrupts their work hours, prevents them from completing reporting requirements on time, or displaces them from their home.
In several other states, lawmakers rejected similar red-tape proposals, likely due in part to the added costs and administrative burdens that would compound the already significant expense of implementing federal work requirements.[13] But such proposals could resurface in the future.
Pursuing cost-sharing and eligibility policies that go beyond what the harmful 2025 Republican reconciliation law allows. Some state bills considered this year would add restrictions to Medicaid coverage that go beyond important guardrails established by federal law and would only be permitted if the federal government granted the state a waiver.
For example,
Similarly,
Applying restrictive eligibility policies to non-expansion populations. Several provisions in the 2025 reconciliation law apply only to the Medicaid expansion population, including more frequent redeterminations and the work requirement. However, in
While these proposals were not enacted,[18] they suggest that some states might seize on provisions similar to those in the 2025 reconciliation law such as work requirements, more frequent eligibility reviews, and cost sharing to further restrict their already limited Medicaid programs. In non-expansion states, children, pregnant adults, older adults, and people with disabilities would be disproportionately impacted, as they make up the vast majority of these states' Medicaid enrollees.
Targeting Medicaid coverage for immigrants. Many states also pushed anti-immigrant narratives and policies. Some took steps to use data collected from public benefits programs to support the Trump Administration's immigration detention and deportation dragnet.
These efforts to create more fear among immigrants and their families put health coverage at risk for people who are eligible. They include
Other bills, including those enacted in
Some states considered bills that would have further restricted immigrants' access to health coverage.
Medicaid and Other Funding Cuts
Some Medicaid provisions in the harmful 2025 Republican reconciliation law, like those limiting states' use of taxes on health care providers to support Medicaid, mean that many states will have to come up with new funding sources if they want to maintain current provider payments, benefits, and eligibility. But rather than pursuing new revenue sources or reconsidering tax cuts that disproportionately benefit wealthy individuals and corporations, some state lawmakers chose to respond by cutting provider payments, benefits, or eligibility.
Cutting provider payment rates. States often cut provider rates to reduce Medicaid spending without directly restricting people's Medicaid eligibility or benefits. However, these cuts can significantly reduce access to care by causing some providers to scale back services or accept fewer Medicaid patients particularly providers already operating on thin margins, such as rural hospitals and community clinics.[23]
In several states, the harmful consequences of some cuts quickly became apparent.
Cutting benefits. Several states targeted Medicaid services for people with disabilities for cuts this year, especially benefits considered optional under federal law (which means states are not required to provide them, even if they are critical to individuals) like home- and community-based services (HCBS). At least seven states enacted legislation[30] that could undermine key services to help older adults and people with disabilities live in the community rather than being forced into more institutional settings.
These cuts come at a time when the Trump Administration has increasingly targeted HCBS as well, advancing misleading claims about fraud. The
Restricting eligibility. Some states have considered direct cuts to Medicaid eligibility, beyond those already included in the 2025 Republican reconciliation law. For example, in
Curtailing other state spending on health. At least six states
Policies Mitigating Harm and Protecting Coverage
Despite significant budget pressures, a handful of states pursued proactive strategies to protect people at risk of losing their coverage or facing higher health care costs.
Protecting and expanding coverage. Some states committed general funds to protect or extend coverage, even in a tough budget environment, instead of resorting to Medicaid cuts.
Reducing costs for marketplace enrollees. Some states with state-based marketplaces fully or partially replaced the loss of premium tax credit enhancements that expired on
Raising revenue. A few states sought to raise revenue to avoid deeper Medicaid cuts that could harm enrollees and destabilize health care providers. Several states enacted tax measures requiring wealthy households and corporations to pay more, including increased income taxes on high earners in Hawai'i,
These types of revenue proposals can help states protect health care and other services amid federal cuts. This stands in sharp contrast to the reconciliation law, which partially financed large tax cuts tilted to wealthy households and corporations through historically large cuts to food assistance and health care. (A large portion of the cost of the tax cuts was not offset and is resulting in higher deficits and borrowing.)
States lack the resources to fully fill in the gaps that the Trump Administration and Republican-controlled
[1] CBPP, "By the Numbers: Harmful Republican Megabill Will Take Health Coverage Away From Millions of People and Raise Families' Costs,"
[2]
[3]
[4] Wagner and Orris, op. cit.;
[5] Ibid.
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] The state currently has an approved 1115 demonstration, which allowed
[15]
[16]
[17]
[18] The
[19]
[20]
[21] LegiScan, "Missouri House Bill 2481," https://legiscan.com/MO/bill/HB2481/2026 and "Oklahoma House Bill 4422," https://legiscan.com/OK/bill/HB4422/2026;
[22] Little and Kohler, op. cit.
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]
[32]
[33] Governor
[34]
[35]
[36]
[37] Governor of
[38]
[39]
[40] Ibid.; those states are
[41]
[42]


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