Trump's Medicaid work mandates are meant to save money. But first states
will have to spend millions
[March 02, 2026]
By DAVID A. LIEB
JEFFERSON CITY, Mo. (AP) — To receive Medicaid health coverage, some
adults will soon have to show they are working, volunteering or taking
classes. But to gather that proof, many states first will have to spend
millions of dollars improving their computer systems.
Across the nation, states face an immense task and high costs to prepare
for the Jan. 1 kickoff of new Medicaid eligibility mandates affecting
millions of lower-income adults in the government-funded health care
program.
The first half of a $200 million federal allotment has already begun
flowing to states to help implement the new requirements. But the tab
for the needed technology improvements and additional staff is likely to
exceed $1 billion, according to an Associated Press analysis of budget
projections in more than 25 states. That extra cost will be borne by a
mixture of federal and state tax dollars.
The task is not as simple as pushing through a software update on your
smartphone or personal computer. That's because each state has its own
system for managing Medicaid, often requiring experts to make customized
changes.
“Our current eligibility systems are pretty old, and the ability to
change them is very, very difficult,” said Toi Wilde, chief information
officer for the Missouri Department of Social Services.
New Medicaid requirements affect millions, but not all
The big tax-cut law signed last year by Trump is financed, in part, by
sweeping Medicaid changes intended to cut government spending. Two of
the most prominent will apply in four-fifths of the states, affecting
Medicaid enrollees ages 19 through 64, without young children, whose
incomes are above the typical eligibility cutoff.
Those Medicaid participants will have to work or do community service at
least 80 hours a month, or enroll at least half-time as a student. They
also will face eligibility reviews every six months, instead of
annually, meaning they could lose coverage more quickly when their
circumstances change.
The two provisions together are projected to save the federal government
$388 billion over the next decade, resulting in 6 million fewer people
with health insurance, according to the Congressional Budget Office.
But states first must update their online portals used by Medicaid
participants, their aging computer systems used by state workers and
their methods of verifying information through various databases.
Most will have to turn to private contractors to meet the time crunch.
At least 10 companies have agreed to offer discounted services,
according to the federal Centers for Medicare and Medicaid Services.
Making those technology upgrades “is going to be a lift. It’s not
something straightforward. It’s not easy,” said Jason Reilly, a partner
at Guidehouse, a firm that is advising several states on the Medicaid
requirements.
Most states don't currently collect employment or education information
about Medicaid participants. So states are looking to tap into outside
sources to verify job and school data. But there’s no database of
community volunteers.
And states are still waiting on federal rules — not due until June — to
define some of the exceptions to the work requirements, such as how to
determine who qualifies as “medically frail.”
States face extra pressure to get it right because the federal
government will start penalizing states with too many Medicaid payment
errors in October 2029.
States will be angling for extra federal money
Congress guaranteed all states a share of the $200 million allotted for
Medicaid work and eligibility changes. But states must apply for
additional federal money. The federal government covers up to 90% of
states' costs to develop systems for determining Medicaid eligibility,
75% of costs to maintain those systems and half of most other
administrative costs.
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A stand for Georgia Pathways is seen at a job fair in Atlanta, Ga.,
June 5, 2025. (AP Photo/Sudhin Thanawala, File)
 Missouri won early approval for the
90% federal funding rate. State lawmakers now are fast-tracking a
$32 million appropriation needed to solicit bids for vendors to
start upgrading technology platforms and improving a chatbot for
Medicaid participants. Over the next year, the state's social
services agency expects to need about 120 additional workers — at a
cost of $12.5 million — to handle the extra administrative workload.
Other states also project large costs. Maryland expects to spend
over $32 million in federal and state funds to implement the
Medicaid changes, Kentucky more than $46 million and Colorado over
$51 million. Arizona estimates it could cost $65 million — and
require 150 additional staff — to implement the new federal
requirements.
Some states surveyed by the AP reported even higher expected costs,
though they didn't always provide a breakdown for how much is due to
new Medicaid mandates and how much pertains to Supplemental
Nutrition Assistance Program changes also contained in Trump's big
law.
Several states, including Arkansas, said they are still working on
cost estimates for the Medicaid changes. Arkansas instituted a
Medicaid work requirement in 2018-2019, and thousands of people were
dropped from the rolls before a federal court ended it. Many of the
technology changes required by the new federal mandates could be
covered under an existing vendor contract and have “a minimal
financial impact on our Medicaid budget,” the Arkansas Department of
Human Services said in an email.
Nebraska has said it plans to launch Medicaid work requirements in
May, seven months ahead of the federal deadline. But the state has
not detailed any associated costs and did not respond to inquiries
from the AP.
Georgia's work requirement prompts concerns
Georgia is currently the only state requiring some Medicaid
recipients to work, after receiving special federal approval several
years ago to expand coverage to some adults not otherwise eligible.
The Georgia Pathways to Coverage program racked up more than $54
million of administrative costs from 2021 through the first part of
2025 — twice the amount of medical assistance paid out over that
same period, according to the U.S. Government Accountability Office.
Almost all of those costs came from technology changes to its
eligibility and enrollment system.
Some Medicaid analysts point to Georgia's costs and Arkansas'
enrollment losses as reasons for caution as work requirements roll
out in other states.
“A huge amount of funding is going to go to vendors to construct
these complicated red-tape systems that prevent people who need it
from getting health care,” said Joan Alker, executive director of
the Center for Children and Families at Georgetown University. “In
my view, that is a big, big risk.”
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