Jefferson City, Missouri– To get Medicaid health coverage, some adults will soon have to prove they work, volunteer or take classes. But to gather this evidence, many states will first have to spend millions of dollars to improve their computer systems.
Across the country, states face the enormous task and costs of preparing for the Jan. 1 start of the tournament. New Medicaid Eligibility Mandates Which affects millions of low-income adults on government-funded health care.
The first half of the $200 million federal allocation has already begun flowing to states to help implement the new requirements. But the cost of the required 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. This additional cost will be borne by a combination of federal and state tax dollars.
The task is not as simple as performing a software update on your smartphone or PC. That’s because each state has its own system for administering Medicaid, which often requires experts to make ad hoc changes.
“Our current eligibility systems are very outdated, and the ability to change them is very difficult,” said Toy Wilde, chief information officer for the Missouri Department of Social Services.
the The Big Tax Cut Act The program, which Trump signed last year, is funded, in part, by sweeping changes to Medicaid aimed at cutting government spending. Two of the most notable of these measures would apply in four-fifths of states, affecting Medicaid enrollees ages 19 to 64, not younger children, whose income exceeds the typical eligibility threshold.
Medicaid participants will have to work or do community service for at least 80 hours per month, or be enrolled at least half-time as a student. They will also face eligibility reviews every six months, rather than annually, meaning they could lose coverage more quickly when their circumstances change.
Together, these two provisions are expected 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But states must first modernize their online portals used by Medicaid participants, outdated computer systems used by state employees, and methods for verifying information through various databases.
Most of them will have to turn to private contractors to face the time crunch. At least 10 companies have agreed to offer discounted services, according to the federal Centers for Medicare and Medicaid Services.
Making these technological improvements “is going to be a boost. It’s not easy. It’s not easy,” said Jason Reilly, a partner at Guidehouse, a firm that advises many states on Medicaid requirements.
Most states do not currently collect employment or education information about Medicaid participants. So states are looking to tap outside sources to verify job and school data. But there is no database of community volunteers.
States are still waiting for federal rules — set to expire before June — to define some exceptions to work requirements, such as how to determine who qualifies as “medically vulnerable.”
States face additional pressure to get it right because the federal government will begin penalizing states that make too many Medicaid payment errors in October 2029.
Congress guaranteed all states a share of the $200 million allocated for Medicaid work and eligibility changes. But states must apply for additional federal funds. The federal government covers up to 90% of states’ costs for developing Medicaid eligibility determination systems, 75% of the costs of maintaining those systems, and half of most other administrative costs.
Missouri received early approval for the 90% federal funding rate. State lawmakers are now fast-tracking the $32 million needed to solicit bids from vendors to begin upgrading technology platforms and improving a chatbot for Medicaid participants. Over the next year, the state social services agency expects to need about 120 additional workers — at a cost of $12.5 million — to handle the additional administrative workload.
Other states also anticipate significant costs. Maryland expects to spend more than $32 million in federal and state funds to implement Medicaid changes, Kentucky expects more than $46 million and Colorado more than $51 million. Arizona estimates that implementing the new federal requirements could cost $65 million — and require 150 additional employees.
Some states surveyed reported higher projected costs, although they did not always provide details on how much would be due for new Medicaid mandates and how much would be for Medicaid. Supplemental Nutrition Assistance Program Changes also included in Trump’s Big Bill.
Several states, including Arkansas, said they are still working on cost estimates for the Medicaid changes. Arkansas instituted work requirements for Medicaid in 2018-2019, and thousands of people were dropped from the rolls by A federal court ended that. Many of the technology changes required by the new federal mandates can be covered under an existing vendor contract and have “minimal financial impact on our Medicaid budget,” the Arkansas Department of Human Services said in an email.
Nebraska said it plans to do so Launching Medicaid work requirements In May, seven months before the federal deadline. But the state did not provide details on any associated costs and did not respond to AP inquiries.
Georgia is currently the only country Requiring some Medicaid beneficiaries to work, after receiving special federal approval several years ago to expand coverage to include some adults who are not otherwise eligible.
The Georgia Pathways to Coverage program generated more than $54 million in administrative costs from 2021 through the first part of 2025 — double the amount of Medicaid paid during the same period, according to US Government Accountability Office. Almost all of these costs came from technological changes in the eligibility and registration system.
Some Medicaid analysts point to costs to Georgia and enrollment losses in Arkansas as reasons for caution as work requirements begin to take effect in other states.
“A lot of the funding will go to vendors to build these complex red tape systems that prevent people who need them from getting health care,” said Joan Alker, executive director of the Center for Children and Families at Georgetown University. “In my view, this is too big a risk.”