‘a Crisis In The Making’: Nebraska Races To Impose Work Requirements On Medicaid

Nebraska is racing to implement Medicaid work requirements by May 1 — eight months before the national deadline set by the One Big Beautiful Bill Act passed by Congress last summer.

And not only is the state first out of the gate, its government plans to do it without hiring any additional staff, even as other state health departments prepare to bring aboard dozens if not hundreds of new employees to determine who should remain enrolled and who should be booted from the safety net health insurance program.

Policy experts and advocates for people on the Medicaid rolls fear the rushed timeline and understaffing will lead to disaster.

“The situation here on the ground is that people are afraid,” said Sarah Maresh, the program director for health care access at the nonprofit Nebraska Appleseed. “The fact that we're so close to the implementation date and still have no real answers on a bunch of things, along with the lack of investment and resources, are all really concerning to us.”

The Medicaid work law, which Republicans passed on a party-line vote as a cost-saving measure to pay for their megabill, is predicted to kick millions, including many working adults, off the federal insurance when it takes effect around the country next January. The Trump administration and GOP officials maintain the rules will help root out fraud in the program and encourage people to get jobs, while the Democrats are counting on the cuts being a liability for Republicans in the midterms.

In Nebraska next month, and in all states beginning in 2027, those enrolled in Medicaid under an Obamacare expansion provision that allows those with incomes 138 percent above the poverty level to qualify will have to prove they’re working at least 80 hours per month or that they’re enrolled in school, caring for a relative, volunteering or doing other “community engagement activities.”

Those in traditional Medicaid, including those with lower incomes, pregnant women, children, and those with certain disabilities, will not have to comply.

Nebraska Appleseed estimates that about two-thirds of the state’s Medicaid expansion population — around 54,000 people — will lose their insurance once the rules are in force, including many people who are working or have a legitimate exemption but can’t navigate the process. Other health policy experts predict a smaller but still seismic impact, with between 16,000 and 30,000 Nebraskans losing insurance coverage.

The Cornhusker State’s experience will be a high-stakes test for a policy the White House and Republican Party have championed, and what happens in Nebraska could shed light on what the rest of the country could face when the policy goes national. The only states that have previously enacted similar rules — Arkansas and Georgia — found they cost the state a lot of money to implement, didn’t increase employment, and caused a lot of people to lose coverage.

But with just weeks to go before the law takes effect, Nebraska’s Medicaid director Drew Gonshorowski told POLITICO he is “pretty optimistic.”

“We really do view this as an opportunity to extend opportunities for our members to find work,” he said. “I have been so heartened at how great the team is here and what that means in terms of our ability to deploy things quickly and at pretty low cost.”

On May 1, the state will start requiring roughly 72,000 low-income people enrolled in the state’s Medicaid expansion to prove compliance with the new work requirements every six months.

Despite many GOP governors’ enthusiasm for the policy, few states are joining Nebraska in getting a head start. Both Arkansas and Montana are enacting work requirements in July, although Arkansas officials say theirs is merely a “soft launch” and no one will lose coverage until next January.

Nebraska, however, is the sole state to charge forward before the Trump administration releases final guidance for the program in June — information other states say is necessary for deciding how to enforce the rules.

Additionally, the health policy consulting firm Manatt estimated that states need at least 18 to 24 months to set up the necessary IT systems, followed by at least four months of testing to ensure they work — far more time than Nebraska is allowing itself.

A spokesperson for the Centers for Medicare and Medicaid Services said in a statement to POLITICO that the agency is supporting Nebraska and other states that are “pursuing early adoption” with “ ongoing coordination, policy guidance, technology support, and operational assistance to ensure effective implementation and positive beneficiary outcomes.” After the state’s May 1 launch, federal staff will help them “address operational or technical challenges as needed.”

Gonshorowski argued in an interview that the state is uniquely positioned to succeed and doesn’t need additional staff because it runs its enrollment and eligibility system in-house and doesn’t rely on the outside tech contractors that manage many other states’ Medicaid data. But experts and advocates fear many people will fall through the cracks.

“This is enormously complicated, states are on a very tight timeline, and I think it’s just a crisis in the making,” said Joan Alker, a research professor at the Georgetown McCourt School of Public Policy who specializes in Medicaid.

Alker and other experts are particularly worried about states like Nebraska that have large rural populations, which they say are at higher risk of losing coverage for several reasons.

Rural areas have more poor residents who qualify for Medicaid, higher rates of chronic illnesses, fewer jobs, and worse access to the internet. Rural Nebraskans must also travel farther to the government offices where they can figure out their enrollment status. The state health department’s map of public assistance offices shows a swath of rural counties that lack one, while residents of urban centers like Omaha have multiple.

Nebraska’s Republican governor and most of its lawmakers opposed the expansion of Medicaid under the Affordable Care Act, but voters approved it via a ballot initiative in 2018 — part of a wave of red states expanding coverage by popular vote to low-income residents without children and others with higher incomes than are allowed in traditional Medicaid.

Gonshorowski said that once the rules take effect, new Medicaid enrollees can self-attest as to whether they have a medical condition that makes them exempt from having to prove their work hours, but those trying to renew for another year will be scrutinized, and could lose their insurance starting this August.

Starting in December, Nebraska’s Health Department sent letters to every resident subject to the new requirements, but just half received a text message and fewer than 15 percent received an email. The latter methods are key for reaching low-income people, who tend to move frequently. It sent another round of notices in March, and this week will start airing TV, radio, and digital ads to let people know about the imminent changes.

Yet at public meetings the department held to answer questions and solicit feedback, patient advocates and medical providers warned that the rules’ “vague and undefined language” and “complex and burdensome administrative requirements” will mean even patients who are working or who qualify for an exemption will lose access to Medicaid.

Among the groups urging the state to delay or soften the new rules was the Nebraska Hospital Association, whose leaders fear a cascade of devastating impacts: a spike in the number of uninsured people, the deterioration of those patients’ health as they skip checkups and medication, and a financial burden on hospitals unable to bill Medicaid.

Concerned by what they’ve heard from state officials so far, the group decided to fund its own outreach blitz to minimize the number of working or legitimately exempt Nebraskans who lose insurance. The association and some of its hospital members are launching social media campaigns, phone banking, and creating a website with information in English and Spanish about how to submit the necessary paperwork.

“We're concerned that the public isn't prepared for this,” association president Jeremy Nordquist said in an interview. “The impact on patients will be so significant that our hospitals feel like we have to take a lot of it on ourselves proactively, so that as patients come in, they're already covered, and we don't have to be reactive on the back end.”

Nordquist, along with Maresh and other health stakeholders and providers, are also pressing the state to better define the conditions that would excuse patients from the work rules.

For one exemption, the state’s website says those with a “disabling mental health condition” or a “serious and complex medical condition” can be considered “medically frail,” but doesn’t define what counts as “serious and complex.” For a second, it says those who “were hospitalized” or “traveled to receive serious medical care” can claim a “temporary hardship” exemption. But it does not lay out how long someone would need to be hospitalized or how far they would have had to travel.

Gonshorowski said his department is “going to be releasing more details in the coming weeks,” and said that if doctors want to suggest conditions that should count as medically frail, they can email him and he will consider them for inclusion.

Yet groups fear time is running out.

“We said, in talking with the [health department] a month ago, that the month of April would be a great time to lean into that education,” Nordquist said. “We need to get our provider community up to speed on it before that deadline.”

Some groups could be hit harder than others. Gonshorowski, for instance, said he’s concerned about the estimated 3,000 people subject to the work requirements who are homeless and “difficult to locate.”

State advocates noted that people who work seasonal jobs where the number of hours swings wildly from month to month — including farm laborers, holiday delivery workers and those in the tourism and hospitality fields — could also be vulnerable. In order to not lose coverage, they will have to calculate their average earnings over the previous six months and prove to the state that it comes to the equivalent of 80 hours per month at the minimum wage.

“We're concerned about people trying to do back-of-the-envelope calculations,” said Maresh.

The Nebraska Health Department’s decision not to hire additional staff has triggered alarm bells with state and federal health experts. Adrianna McIntyre, a Harvard professor who researches insurance policies, predicted that the fallout will spread beyond the pool of working-age adults in Obamacare’s Medicaid expansion who have to comply with the new rules — hitting pregnant women, the elderly, people with disabilities, children, and others who depend on traditional Medicaid.

“Because of these new rules,” she said, “caseworkers are going to have less bandwidth to help all Medicaid enrollees navigate enrollment.”