Medicaid Work Rules Could Disrupt Care and Drug Access

Under the 2025 budget law, adults enrolled through the Affordable Care Act’s Medicaid expansion must document work, education, volunteer activities or qualify for an exemption to keep coverage.  Analysts estimate at least 5 million people could lose Medicaid coverage as the requirements take effect. For more details on upcoming changes and previous coverage by The Hertel Report, click here. The potential loss of coverage due to new work requirements has drawn attention from the pharmaceutical industry. A new analysis by Health Management Associates found that approximately $42 billion in Medicaid expansion drug spending could be affected if beneficiaries lose eligibility under the new rules. The estimate reflects gross spending before Medicaid rebates are paid back to states and the federal government. According to the analysis, a relatively small number of medications account for a significant share of the spending at risk, including:

• Gilead Sciences’ HIV treatment Biktarvy
• GLP-1 drugs including semaglutide and Trulicity
• AbbVie’s Humira
• and diabetes medication Jardiance

The analysis suggests the coverage losses could become a meaningful revenue issue for manufacturers, particularly as the industry confronts other financial pressures such as expiring drug patents. Arda Ural, chief operating officer of Health Management Associates explained to The Wall Street Journal,

Medicaid rarely tops a brand team’s list of concerns.

The implications extend beyond pharmaceutical sales. Beneficiaries who lose Medicaid coverage may delay treatment, interrupt medication regimens and rely more heavily on emergency care when chronic conditions worsen. Patients receiving treatment for HIV, diabetes, cardiovascular disease and inflammatory conditions could be among those most affected if coverage interruptions occur.

The rollout is also drawing growing political and legal scrutiny. Four states have filed suit against the Department of Health and Human Services, arguing the federal government exceeded its authority in implementing aspects of the work requirement policy. Other states have raised operational concerns about the short implementation timeline and the extensive technology upgrades required to administer the program as detailed by Healthcare Dive. Meanwhile, Senate Democrats are pressing federal officials to delay implementation. In a letter led by Sens. Raphael Warnock and Ben Ray Luján, lawmakers argued that states need additional time to build eligibility systems, train staff and avoid coverage losses caused by administrative failures rather than actual ineligibility.

In Arizona, AHCCCS is preparing to implement the new federal requirements while simultaneously updating eligibility systems and administrative processes. As Arizona officials work toward the Jan. 1 deadline, healthcare providers, health plans and patient advocates are closely watching whether eligible residents lose coverage because of paperwork barriers or reporting difficulties rather than a failure to meet work requirements. The debate is likely to intensify in Washington as Democrats assume control of Congress next year. According to Nextgov, lawmakers are expected to scrutinize implementation of the policy closely through hearings, oversight efforts and potential legislative proposals aimed at mitigating its impact. Washington Democratic Rep. Suzan DelBene, who introduced the bill said,

Congress needs to continue to conduct rigorous oversight to secure answers, understand the full scope of the model’s failures, and hold the administration accountable. We must also pass my bill to repeal the model and put an end to this dangerous AI experiment.

For healthcare stakeholders, the emerging story goes beyond politics. Medicaid work requirements increasingly represent a test of whether policymakers can balance program oversight with uninterrupted access to care. The outcome could affect millions of beneficiaries, billions of dollars in healthcare spending and the availability of treatment for some of the nation’s most vulnerable patients.