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The enactment of the Republicans’ monstrous budget bill in one sense sets politics and policy at odds, at least for Democrats. Annie Karni, congressional report for The New York Times, frames a political problem for Dems:
A challenge for Ds who expect the passage of this bill to help them win elections is that it may take a while for people to feel the full negative effects. Rs front loaded some temporary tax cuts for working people and backloaded cuts to Medicaid to hit after the midterms.
As KFF’s Larry Levitt points out in response, funding cuts and some impediments to enrollment in the ACA’s private-plan marketplace kick in immediately or almost immediately, i.e., for OEP 2026, beginning Nov. 1 this year (and Charles Gaba has tallied provisions in both Medicaid and marketplace that will take effect before the midterms). That said, Republicans will of course exploit the time lag, which extends to other benefit cuts as well (SNAP, student loans, energy credits), using it to add plausibility to their claims that, as MAGA go-along Tom Kean Jr. (NJ-7) boasted, “we protected Medicaid for every intended beneficiary in New Jersey and across the country.” That is, the bill does not change Medicaid eligibility for anyone (except various classes of lawfully present noncitizens, who are just human waste in Republican parlance). Instead, Republicans set up a thicket of administrative enrollment impediments and cuts to state funding (mostly delayed) that will increase the uninsured population by some 12 million by CBO’s estimate (with another 4 million losing coverage due to Republicans’ refusal to extend the enhanced ACA marketplace subsidies funded through 2025*). If enrollment reductions on that scale don’t happen — as many Republicans claim — neither will the cuts to federal spending that help fund the bill’s gargantuan tax cuts.
All that said, I’d like to consider Democrats’ alleged political “challenge” from the opposite end of the telescope. To what extent can Democrats in state government — and, more speculatively, in Congress — mitigate the coverage and funding losses? Administrative barriers can be erected with steel or Styrofoam — though Trump’s CMS, led by people whose chief passion in life is to ensure that someone somewhere doesn’t get a benefit to which they’re not technically entitled**— will doubtless work to insist on steel. If Democrats take the House, they may be able to delay or reduce some spending cuts — the annual ratchet-down of the provider tax safe harbor, for example, strikes me as the kind of thing Congress is prone to pause.
This will be the first of two or more posts about mitigations. And while I dawdled over this one, KFF president Drew Altman jump-started the first plank for me:
Medicaid work requirements are responsible for $326 billion of the cuts and an estimated 4.8 million in coverage losses, according to the CBO. But it’s highly likely that blue states will find ways to slow walk the requirements and exempt more people from them. I implemented welfare work requirements as a state human services commissioner and know well that there are many tricks of the trade to tighten or loosen them in practice. The work requirements take effect in 2027, unless states decide to implement them sooner or are granted delays. The work requirements are also a prime candidate to be repealed in the future by Democrats, who reject the idea on principle that health insurance should be tied to a work requirement. It remains to be seen whether Republicans will hold states’ feet to the fire implementing work requirements or take the political win and move on.
A few notes:
1. The flip side of some Democrat-led states doing everything possible to help enrollees document compliance or eligibility for an exemption is the ability of Republican-led states to make compliance confusing and burdensome enough to maximize disenrollments. Regardless of the will to mitigate or lack thereof, harm will be done. The ur-case is Arkansas, where in 2018 about a quarter of eligible enrollees subject to the requirements lost coverage within a few months. Arkansas’ online reporting system was labyrinthine and clunky, and program’s call center was overwhelmed — a debacle likely to be replicated in many if not all states. Whereas blue states will likely opt for the minimum required frequency of reporting (at application and every six months), some red states may opt to maximize it, unless or until mass disenrollment becomes a political problem for them.
2. Limited administrative capacity is not limited to states where leadership is hostile to benefit delivery. Blue states where leadership is committed to maximizing enrollment also have sclerotic IT systems and bureaucracies. I have witnessed this in New Jersey, where I know of two separate enrollees who made significant efforts to disenroll upon leaving the state but were not disenrolled for many months; where twice also, state and county workers gave disinformation for two separate enrollees about a transition from temporary to permanent enrollment; and where a state-induced error in the printing of an enrollee’s name on a membership card could not be corrected. Conversely, some red states may have comparatively capable Medicaid administrators and departments — and many states have mixed government (and doubtless, mixed capacities, varying, say, by county, or by database).
3 During the Medicaid unwinding (the resumption of renewals/disenrolls after a three-year pandemic-induced moratorium), CMS encouraged states to build their capacity to conduct ex parte renewals — that is, renewals executed by the state based on available data, without requiring input from the enrollee. OBBA does encourage this kind of burden reduction for enrollees (Sect. 71119 (a)):
(5) EX PARTE VERIFICATIONS.—For purposes of verifying that an applicable individual has met the requirement to demonstrate community engagement under paragraph (1), or determining such individual to be deemed to have demonstrated community engagement under paragraph (3), or that an individual is a specified excluded individual under paragraph (9)(A)(ii), the State shall, in accordance with standards established by the Secretary, establish processes and use reliable information available to the State (such as payroll data or payments or encounter data under this title for individuals and data on payments to such individuals for the provision of services covered under this title) without requiring, where possible, the applicable individual to submit additional information.
In ordinary Medicaid redeterminations, states are required to seek ex parte renewal before sending a renewal form to the enrollee. According to the latest Medicaid enrollment data, 56% of renewals nationally are now ex parte. That would seem to suggest some running room in at least some states for reducing the number of people who have to jump through work reporting hoops. At the same time, those likeliest to benefit from ex parte renewal or exemption may also be the least likely to lose coverage without that advantage. For example, a person with a steady income from a single employer may be likelier to show up in databases than a self-employed person. And people more integrated into the formal economy may also be more likely to be able to handle an administrative burden.
The “community engagement” requirement also has a rather broad exception for the “medically frail” — a description that genuinely fits many ACA expansion enrollees, especially those who are not working or are working limited hours. Under “definitions” in Section 71119, an excluded individual includes one
(V) who is medically frail or otherwise has special medical needs (as defined by the Secretary), including an individual— ‘‘(aa) who is blind or disabled (as defined in section 1614); ‘‘(bb) with a substance use disorder; ‘‘(cc) with a disabling mental disorder; ‘‘(dd) with a physical, intellectual or developmental disability that significantly impairs their ability to perform 1 or more activities of daily living; or ‘‘(ee) with a serious or complex medical condition.
While four nameable types of medical frailty are specified, the fifth, “with a serious or complex medical condition,” sounds pretty capacious. Exemptions, like documentation of “community engagement” hours, can be done ex parte.
Arkansas, however, also provided such exemptions, and did a good deal of data matching, as KFF recounts:
Arkansas successfully data matched about two thirds of enrollees, exempting them from reporting work hours or exemption status. Among those who had to actively report, about 70% did not obtain an exemption or report compliance, ultimately resulting in over 18,000 people losing coverage. Arkansas recently highlighted (in its new waiver request) that limitations with “data matching” led to some individuals with medical conditions or disabilities that prevented them from working to “fall through the cracks” when the state implemented its work policies in 2018.
Thus it seems that these mitigations are “priced in” — and likely a part of CBO’s calculation that work requirements will increase the uninsured population nationally by 4.8 million. OBBBA’s work requirements are harsher than Arkansas’, requiring pre-enrollment reporting, and extending to age 64 rather than age 55.
Every opportunity states have to reduce disenrollment of eligible people is also an opportunity to abstain from doing so. And states that do have the will to keep people covered, whatever their political composition, may have limited capacity to make use of these and other tools. But some states, to varying degrees, will use the tools available.
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* The CBO also ascribes another 1 million in coverage losses to CMS’s recently finalized Marketplace Integrity and Affordability rule, much of which is now codified in OBBA.
** For example, the so-called Marketplace Integrity and Affordability Rule finalized on June 20, 2025 devotes extraordinary energy to ensuring that people in states that have refused to enact the ACA Medicaid expansion remain in the coverage gap - - directing the exchanges to deny premium tax credits to applicants who can’t verify an income of at least 90% of the 100% FPL threshold for marketplace subsidy eligibility — a very high threshold for a forward looking estimate at low income. The new rule states: “We also emphasize that it is important that consumers receive accurate APTC eligibility to help protect taxpayer spending on APTC, which is why we believe it is important to have this income DMI in place even if some consumers are unintentionally harmed through loss of APTC.” The ACA, of course, did not intend to leave millions in a coverage gap that opened after the Supreme Court rendered the ACA Medicaid expansion optional for states. Providing some leeway for people with income hovering nearing the 100% FPL threshold in states where they get no help if their income is below that threshold is hardly an undue burden on taxpayers.
Photo: KUHT, CC0, via Wikimedia Commons
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