States Face Steep Costs to Implement Medicaid Work Mandates

New federal requirements will force states to spend millions on technology upgrades and additional staff.

Published on Mar. 3, 2026

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To implement new Medicaid work requirements, states across the nation will have to spend over $1 billion on technology improvements and additional staff, according to an Associated Press analysis. The task is complex, as each state has its own Medicaid management system that requires customized changes. States must update online portals, aging computer systems, and methods of verifying employment and education data. While the federal government has provided a $200 million allotment to help, the total tab is expected to far exceed that amount.

Why it matters

The new Medicaid work mandates are part of a larger effort to cut government spending on the health care program. However, the significant upfront costs for states to implement the changes could undermine any potential long-term savings. There are also concerns that the new requirements could lead to thousands of people losing Medicaid coverage, as seen in Arkansas when it briefly instituted a work mandate.

The details

The new Medicaid rules will require adults ages 19-64 without young children to work, volunteer, or attend school at least 80 hours per month to maintain their coverage. States will also have to conduct eligibility reviews every six months instead of annually. To verify this information, states must tap into outside data sources since they don't currently collect employment or education data on Medicaid participants. States are still waiting on federal guidance to define exceptions, such as for the 'medically frail'.

  • The new Medicaid work and eligibility requirements are set to take effect on January 1, 2027.
  • The federal government will start penalizing states with too many Medicaid payment errors in October 2029.

The players

Toi Wilde

Chief information officer for the Missouri Department of Social Services.

Jason Reilly

A partner at Guidehouse, a firm advising several states on the Medicaid requirements.

Joan Alker

Executive director of the Center for Children and Families at Georgetown University, who expresses concerns about the new Medicaid rules.

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What they’re saying

“Our current eligibility systems are pretty old, and the ability to change them is very, very difficult.”

— Toi Wilde, Chief information officer, Missouri Department of Social Services

“Making those technology upgrades 'is going to be a lift. It's not something straightforward. It's not easy'.”

— Jason Reilly, Partner, Guidehouse

“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. In my view, that is a big, big risk.”

— Joan Alker

What’s next

Federal rules defining exceptions to the Medicaid work requirements, such as for the 'medically frail', are expected to be released in June 2026.

The takeaway

The significant upfront costs for states to implement the new Medicaid work mandates raise concerns that any potential long-term savings could be outweighed by the technology upgrades and administrative burdens required. There are also worries that the new rules could lead to thousands of people losing their health coverage, as seen in Arkansas.