Budget-Strapped Montana Will Stress-Test Trump’s Medicaid Work Rules

Montana will soon test whether cash-strapped and strained state health departments can carry out federal Medicaid work requirements without ending coverage for eligible adults. 

On July 1, Montana plans to become the second state after Nebraska to make Medicaid enrollees prove they’re working to keep their coverage. That’s six months ahead of the federal deadline for states to implement Medicaid work rules for millions of enrollees.  

That date is also the start of a new state budget year, as well as the deadline for Montana health officials to climb out of a previous Medicaid-driven spending deficit. Montana lawmakers underfunded the health agency when they set the state budget last year — before congressional Republicans passed President Donald Trump’s One Big Beautiful Bill Act. Health policy analysts say the state’s budget crunch is a hint of the challenges to come nationwide.  

That’s because the federal spending law requires states to check every six months whether millions of Medicaid enrollees work, go to school, or volunteer at least 80 hours a month, or qualify for an exemption. Those checks will take time and money. Simultaneously, the law is expected to reduce federal Medicaid spending — the largest pool of federal funding for states — by nearly $1 trillion over 10 years, shift more food assistance costs to states, and add tax breaks that could hit state budgets. 

“States are the ones that are gonna have to do the dirty work of implementing cuts,” said Joan Alker, a Georgetown University researcher focused on health coverage.  

Part of Montana’s proposed budget fix is to stall rate increases for healthcare providers that were due July 1. Clinicians told me they already struggle to afford hiring staff amid growing waitlists for care, which they blame on low Medicaid payments. 

Email Sign-Up

Subscribe to KFF Health News’ free weekly newsletter, “The Week in Brief.”

Meanwhile, there are some red flags in the state’s Medicaid data from recent years: People often face long waits to access public assistance, and many can lose coverage at renewal time because of paperwork issues. 

All these problems reflect a national challenge to connect people to care through strained public assistance programs. Our reporting has long shown how states have struggled to process Medicaid applications. 

“Our concern is, is the department ready?” Jean Branscum, CEO of the Montana Medical Association, said of the state health agency. “Does the capacity exist for all this to be done right and ensure that patients don’t pay the price?” 

State officials have said they’ll scan existing data to try to automatically confirm whether people meet the work rules. And they’ve been building up their public assistance team for months.  

But they’ve had to wait on unanswered questions from the federal government that are key to exempting especially vulnerable people from the incoming rules. And now, they’ve got a lot more work to do with less money. 

The state is ramping up to implement the federal work requirements six months ahead of the deadline. But Montana is one of several states already struggling to pay for health services.