CMS’ Medicaid Work Requirements Rule: A 50-State Analysis of Additional Projected Coverage Losses, FFY 2027–2034

CMS' rule could increase Medicaid coverage loss by 1.8 million compared to prior projections, Manatt Health’s 50-state model estimates.

Authors: Avi Herring, Adam Striar and Liz Scott

Editors: Patti Boozang and Amanda Eisenberg

tl;dr

• Beginning Jan. 1, 2027, H.R. 1 makes work reporting a condition of Medicaid eligibility for expansion adults — 80 hours per month of work, volunteering, or school, unless an enrollee qualifies for an exemption such as pregnancy, caregiving, medical frailty or substance use disorder treatment.

• The Centers for Medicare & Medicaid Services’ (CMS) June 1 interim final rule (IFR) takes a narrower implementation approach than the statute’s plain language, including by limiting access to medical frailty exemptions and restricting self-attestation after 2027.

• Manatt Health’s model estimates the IFR would increase average annual Medicaid coverage losses by 1.8 million people, from 6.4 million to 8.2 million between federal fiscal year (FFY) 2027 and 2034 — or nearly one in 10 Medicaid enrollees nationwide — as compared to modeling based on the plain language of the statute.

The 80 Million Impact

CMS’ IFR released last month is likely to increase Medicaid coverage losses beyond what would be expected under a plain-language reading of H.R. 1. Manatt Health’s new Vital Signs: 50-State Tracking report updates Medicaid enrollment modeling based on the IFR and estimates that average annual Medicaid enrollment losses will rise from 6.4 million people under the statutory baseline scenario to 8.2 million people under the IFR scenario between FFY 2027 and 2034. That difference — 1.8 million additional people per year — represents a nearly 30% increase in projected Medicaid coverage loss.

The IFR is projected to increase coverage losses because it narrows H.R. 1’s medical frailty exemption and imposes additional documentation and verification requirements that make it harder for eligible people to obtain and maintain coverage.

Key IFR Drivers of Additional Coverage Loss

Medical frailty exemption. H.R. 1 exempts medically frail individuals, including people who are blind or disabled, or have a substance use disorder, disabling mental disorder, disability that significantly impairs activities of daily living, or serious or complex medical condition. Earlier CMS guidance indicated that states could look to diagnoses to identify medical frailty. The IFR adds a further requirement: Individuals must show that their condition significantly impairs their ability to comply with the work requirements. That additional test does not appear in the statute and will require states to assess not only whether someone has a serious condition, but whether that condition limits their ability to work, volunteer or attend school.

Self-attestation. The rule permits states to accept self-attestation of compliance or exemption through 2027, but the flexibility is temporary. For medically frail individuals, the rule allows self-attestation only once during an enrollment period before documentation is required. In practice, that means more forms, provider involvement, and points where eligible people can lose coverage for procedural reasons.

IFR Modeling Approach and National Estimates

Manatt’s modeling is based on prior state experience with work requirements. Arkansas, Georgia, New Hampshire and Michigan each implemented or began implementing Medicaid work requirements and saw, or projected, substantial coverage loss among eligible people before the programs were halted. Administrative barriers, not actual ineligibility, drove most of the losses. States that relied more heavily on automation and broader self-attestation saw lower losses, while states with more documentation-heavy approaches saw higher losses.

Manatt’s model uses two scenarios. Scenario 1, the Plain-Language estimate assumes a 30% disenrollment rate among people subject to work requirements, based on the average experience and projections from New Hampshire, Arkansas, and Michigan. The Scenario 2, the IFR estimate assumes a 40% rate, centered on New Hampshire’s experience, because its more restrictive documentation approach most closely aligns with CMS’ narrower treatment of medical frailty and self-attestation.

Under the IFR Estimate scenario, the national enrollment effect is larger and grows over time. Manatt estimates Medicaid enrollment would decline by 8.2 million people on an average annual basis between FFY 2027 and 2034, compared with expected enrollment before H.R. 1, a nearly 10% reduction in total nationwide Medicaid enrollment. The loss begins at an estimated 2.8 million people in FFY 2027, as work requirements phase in through the renewal cycle, and rises to 9.2 million people by FFY 2034 once the requirements are fully implemented. Compared with the H.R.1 Plain-Language Estimate scenario, the IFR scenario adds 1.8 million more coverage losses per year on average, a nearly 30% increase.

These estimates differ from CMS’ projection. CMS projects approximately 3.3 million coverage losses at full ramp-up, well below both Manatt’s estimate and the Congressional Budget Office (CBO)’s earlier estimate of 5.2 million people losing coverage because of work requirements. The main difference is methodological: CMS did not consider prior state implementation experience, while Manatt and CBO treat it as the best evidence of how reporting and documentation requirements work in practice.

50-State Impacts

The largest percentage reductions are projected in states where the Medicaid expansion group makes up a larger share of total Medicaid enrollment. Under the IFR scenario, Oregon would see the steepest average annual reduction (about 20% below baseline between FFY 2027 and 2034) followed by Nevada and Louisiana at roughly 16%. Several other expansion states would see double-digit reductions, including California at 13%, New Jersey at 13%, Washington at 13%, West Virginia at 13%, Virginia at 14%, Kentucky at 14%, and Montana at 14%. In absolute numbers, the largest losses are concentrated in the biggest expansion states.

Other states, including Massachusetts, Minnesota and Wisconsin, would see smaller percentage reductions — 7% or less on average — because the populations subject to the work requirements are smaller relative to their overall Medicaid programs. Still, even in those states, the coverage losses are material.

The Bottom Line

The modeling points to a clear conclusion: CMS’ implementation approach is likely to cause more eligible people to lose Medicaid coverage. Under the IFR scenario, projected average annual coverage losses increase by 1.8 million people relative to a plain-language reading of H.R. 1. The result reflects what happens when eligibility rules become harder to navigate, and exemptions become narrower and harder to prove. A strong body of evidence supports the conclusion — from prior state work-requirement experience to the introduction of other new eligibility conditions and verification requirements — that administrative barriers drive large coverage losses even when people remain eligible.

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Read the full report: Manatt Health’s Vital Signs: 50-State Tracking analyzes the effects of H.R. 1 and other federal actions on coverage, affordability, and system stability. This analysis was made possible through the support of the Commonwealth Fund and the California Health Care Foundation.