On Friday, Nebraska became the first state to roll out new Medicaid work rules under the GOP’s “One Big Beautiful Bill” passed last summer — a full eight months before required, leaving experts concerned that the state could be speeding towards disaster.
Under the new rules, the tens of thousands of Nebraskans who receive Medicaid through the state’s expansion under the Affordable Care Act have to prove they work, volunteer or attend school for at least 80 hours a month, or lose their Medicaid coverage.
Experts predict between 20,000 people and 40,000 people will be kicked off the safety-net insurance program in the Cornhusker State beginning this summer as a result of the new requirements.
Though the large majority of Medicaid beneficiaries are already employed and should still qualify for coverage, work requirements in practice create a cascade of disenrollments because of issues that enrollees face proving their compliance, whether that’s faulty IT systems or paperwork lost in the mail, research shows.
And Nebraska’s race to be the first state to initiate the work requirements isn’t helping, patient advocates say.
State officials maintain they’ve conducted extensive outreach to inform Medicaid beneficiaries about the changes. But beneficiaries say they’re still in the dark, and Nebraska hasn’t stood up the staffing and systems infrastructure needed to ensure that people who should stay on Medicaid actually will, according to healthcare advocates in the state.
Nebraska’s rush job and lack of investment is shaping up to have serious consequences for the 70,000 people in its expansion population — not to mention the state’s Medicaid chassis as a whole, according to Sarah Maresh, the director of healthcare access at public interest nonprofit Nebraska Appleseed.
“We already have in Nebraska significant error issues and processing times, so this is not going to impact just Nebraskans with Medicaid expansion coverage,” she said. “Everyone with Medicaid is going to see those impacts.”
Nebraska races ahead
The work rules were mandated under Republicans’ massive tax and policy reconciliation passed last summer, part of the law’s extensive cuts to Medicaid.
Getting national Medicaid work requirements across the finish line was a major victory for conservatives, who have long dreamed of yoking coveage in the safety-net insurance program to employment.
However, the policies are deeply controversial. Work requirements have been trialed in a small handful of states with little evidence of success: Historically, the policies have resulted in eligible individuals losing coverage because of issues documenting their compliance, with no corresponding uptick in employment.
The work requirements under the OBBB apply to people aged 19 to 64 to who are eligible for Medicaid expansion under the ACA. Currently, 42 states and Washington, D.C., have expanded their Medicaid populations to a greater share of low-income adults under the 2010 law.
The OBBB’s work rules are expected to reduce federal Medicaid spending by almost $330 billion over ten years, while causing millions of people to become uninsured, according to the Congressional Budget Office, a nonpartisan scorekeeper.
The OBBB gave states until Jan. 1, 2027, to stand up the work requirements. That 18-month implementation timeline is incredibly tight for an undertaking of this scale, Medicaid experts say, and states have been hustling to build up new IT systems, communicate the changes to enrollees, hire new staff and make other investments to avoid improper disenrollments.
As such, it raised eyebrows late last year when Nebraska announced it planned to deploy its own work requirements on May 1, well in advance of the 2027 deadline.
Gov. Jim Pillen, a Republican, was joined by CMS Administrator Dr. Mehmet Oz in a December press conference sharing the expedited timeline. Pillen emphasized that the policy would benefit Nebraska by promoting stronger community ties and incentivizing more citizens to work.
However, Pillen didn’t outline why he was electing to move forward so quickly. As of Friday morning, the governor’s office had not issued a press release about the work requirements taking effect.
Still, Nebraska’s health department said this week that it had conducted extensive outreach to make sure Medicaid expansion members are aware of the changes, including sending more than 75,000 letters, 38,000 text messages and 10,000 emails.
In addition, state officials are allowing some wiggle room for compliance. Although the requirements take effect Friday, they won’t apply for members renewing their Medicaid coverage in May or June, according to a Thursday press release from the Nebaska Department of Health and Human Services.
Instead, the first group of Medicaid members impacted will be those renewing or applying for coverage in July.
“We want to make sure members know that they will not necessarily need to meet these new requirements as soon as they go into effect,” Nebraska Medicaid Director Drew Gonshorowski said in a statement.
Nebraska also plans to scrape existing data to try and determine a member’s eligibility before reaching out to them, according to Gonshorowski. Automating these processes has been shown to reduce improper disenrollments.
But Nebraska’s actions are insufficient to make sure everyone who should retain coverage will do so, according to patient advocates.
Nebraska has hired no new staff and secured no additional funding to bolster the IT systems needed to verify work requirements compliance, Nebraska Appleseed’s Maresh said this week during a press call hosted by patient advocacy group Families USA.
Moreover, Nebraska’s outreach to beneficiaries has been vague and complex, at a higher reading level than patients with low health literacy are able to understand, according to advocates.
Beneficiaries in the state say the campaign isn’t actually working.
Schmeeka Simpson, a mother of three and Medicaid recipient, said on the Families USA call that she doesn’t know whether the work requirements apply to her, or how to find out.
“I work multiple jobs and still qualify for Medicaid, but I’m deeply concerned about the decision to implement Medicaid work requirements early, before they are even required, and without fully understanding how this will impact real people in my community,” Simpson said. “We’re already doing everything we can to stay afloat. So this policy is not addressing laziness, it’s actually adding pressure to people who are already stretched thin.”
Moreover, Nebraska is shoving work requirements out of the door before key questions about the changes have been answered, patient advocates say.
The CMS isn’t expected to release a rule clarifying key tenets of the mandates, such as which populations qualify for an exemption because they’re medically frail, until this summer.
Nebraska has released a list of medical codes that would qualify a patient for the medically frail exemption. But the state did so a week before the work requirements took place, and it seems the list has some gaps, such as the exclusion of codes related to some cancers, heart failure and HIV, according to Maresh.
“That's over 300 pages of codes that we and others are still unpacking with just days before the first people are going to be denied from coverage,” Maresh said on the Wednesday call.
In addition, though the state says it will automatically check whether a beneficiary’s health codes qualify them for the medically frail exemption, Maresh said she was deeply skeptical that those processes would be accurate.
The systems appear to be basing that determination on the first code it sees, she said. So, if a patient with cancer gets a check-up for the flu, and the system uses that visit to evaluate that patient for medical frailty, it would base that determination on the flu code — not the underlying diagnostic codes for cancer — and the patient would be denied.
“We have significant concerns about how that’s operating,” Maresh said.
Several pieces of legislation have been introduced in Nebraska to try to minimize coverage disruptions, but none have passed. In addition, though state officials have met with advocates to hear their concerns about the rollout, those meetings haven’t resulted in any changes, according to Megan Word, government relations director at the American Cancer Society Cancer Action Network.
“A lot of these questions remain unanswered, and the state is moving ahead regardless,” Word said.
Nebraska is one of three states implementing work requirements early, according to Jennifer Tolbert, the deputy director of health research firm KFF’s program on Medicaid and the uninsured.
Montana plans to roll out the requirements on July 1 and Iowa on Dec. 1. Arkansas plans to soft launch its requirements in July, but not actually disenroll anyone until Jan. 1, 2027.
Nebraska’s resource constraints are not unique. States say they’re struggling with the tight turnaround to rejig their entire Medicaid data and eligibility systems, expand outreach and education and track compliance — all with minimal funding from the federal government.
As a result, most states are adopting less restrictive compliance verification policies, and exploring ways to use new and existing data sources to automate verification and exemptions, according to a survey the KKF released Thursday.
