Some of HARP’s followers are asking us what the Medicaid changes in the “One Big Beautiful Bill Act” (OBBBA) mean for the work that state Medicaid agencies and correctional leaders are doing to strengthen access to services and continuity of care for people who are leaving prison and jail. Because it’s a big bill, we’re taking some time to assess its full implications. But here are several of our initial takeaways:
- The law does not directly change any federal Medicaid continuity of care policies. It does not change the youth continuity of care policies established in section 5121 of the Consolidated Appropriations Act (CAA) of 2023 nor does it change the requirement that all states suspend rather than terminate eligibility when a Medicaid beneficiary enters corrections, which was enacted as part of the CAA of 2024 and is set to take effect in 2026. Similarly, nothing in the law changes states’ ability to use section 1115 Medicaid demonstration waivers to strengthen reentry, which 27 states have proposed or are in the process of implementing.
- The law makes significant changes to Medicaid eligibility. These changes apply to the Medicaid expansion population. This is the population of low-income adults who have been eligible for Medicaid since the Affordable Care Act took effect. Many Medicaid beneficiaries who are in the justice system are covered through Medicaid expansion, and the new eligibility policies, which all states are required to implement, will apply to them.
- The first eligibility change is that once someone is enrolled in Medicaid, their coverage must be renewed at least every six months. Currently, coverage is renewed annually. When beneficiaries renew coverage, they have to complete renewal paperwork or similar processes in order for their coverage to continue.
- The second eligibility change is that, for the first time, people in the expansion population will have to document that they are working, or engaging in work-related activities, for 80 hours each month in order to qualify for Medicaid coverage — and to maintain their Medicaid coverage once they enroll.
- Fewer people will have health insurance as a result of the law. The Congressional Budget Office, which provides independent analysis to Congress, estimated that the health care changes that the law makes would result in increasing in the number of people without health insurance by 10 million by 2034. Changes to Medicaid provisions in the bill contribute to a large portion of this number, with changes to Marketplace provisions contributing to the remaining portion. Current Medicaid enrollment is about 71 million people. The actual coverage impacts of these new policies will play out differently in different states. State and federal implementation choices will be the most significant determinant of how many people ultimately lose coverage.
- The new law exempts some groups of Medicaid beneficiaries from the work requirements. It exempts Medicaid beneficiaries who are incarcerated, and that exemption continues for 90 days after an individual’s release from a correctional facility. Some Medicaid beneficiaries returning home from incarceration may also qualify for other exemptions. For example, the law provides an exemption for people with chronic conditions, such as substance use disorder.
- The work requirements, including the exemptions, will be extremely complex to implement. Decisions the federal government and states make about policy and operations will matter a great deal to whether people who qualify for an exemption receive one. Implementation planning is already starting in many states.
- People face challenges finding employment following incarceration. It will be important for corrections officials, reentry service providers, and other stakeholders to work closely with state Medicaid offices to operationalize this exemption.
- The work requirements and six month renewals take effect December 30, 2026. The law permits states to implement work requirements sooner, and provides the federal Department of Health and Human Services with the authority to grant states that need more time to implement them an extension to 2028.
- In addition to these eligibility restrictions, the law makes other changes to Medicaid, including how states can finance their share of Medicaid spending. These changes are not directly related to policies that affect continuity of care for people who are incarcerated. But the financing changes and other new requirements of the law may have ripple effects across state Medicaid programs and other state-funded programs, including corrections, in ways that are hard to predict.
HARP is analyzing the new law closely and discussing it with state and local implementation leaders and stakeholders. We will publish a more comprehensive analysis of the law’s Medicaid provisions and their potential impact on continuity of care and public safety later this summer.