Republicans' sweeping Medicaid overhaul has left a lot of the heavy lifting to governors and state health officials as the program launches the biggest package of changes in its 60-year history.

Why it matters: States working with hospitals, clinics and other providers will have to do more with less as they face about $1 trillion in program cuts and the likelihood of 10 million or more newly uninsured people from new work rules and other changes.

• While the GOP views Medicaid as a waste-riddled program that's due for a shakeup, the cuts will force painful tradeoffs at the local level as health systems also struggle with inflation, higher labor costs and rising medical costs.
• "Congress left the dirty work to be done by the governors and state legislators, and that work will start very soon," says Joan Alker, executive director of Georgetown University's Center for Children and Families.

State of play: Medicaid typically accounts for about 30% of a state's budget each year. Spending goes up during tough economic times, and states are required to cover a set of mandatory benefits.

• The fallout from the cuts will vary by state based on their reliance on certain funding mechanisms, like taxes on health care providers, and whether they've expanded Medicaid coverage under the Affordable Care Act.

The biggest changes from the law will arrive in 2027. But states have already started planning for how they'll implement work requirements, decide who's eligible more frequently and cope with new restrictions on how they draw down federal funds.

• They'll also be competing for $50 billion in rural health funding that Congress added to the law — a sum that's been widely criticized as inadequate.

The other side: The new dynamic will force states to think more critically about how taxpayer dollars are being spent in Medicaid, says Brian Blase, president of Paragon Health Institute and a White House official during the first Trump administration.

• "I want there to be a real budget constraint so [states] have to grapple with the actual cost of these programs," he says.

Zoom in: Many states were already preparing austerity moves before President Trump signed the law. States faced with Medicaid budget crunches often cut or limit benefits they aren't required to offer, like dental care or home- and community-based services.

• Other strategies could include reducing Medicaid payment rates for providers or finding new sources of revenue like additional taxes.

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Andrew Hicks lost his health insurance once over a work requirement and worries he'll lose it again under the new federal law.

Why it matters: Arkansas tried work requirements a few years ago, and the main result was that people lost health coverage — and Hicks, a 37-year-old from Little Rock, worries that's about to happen again.

• Hicks now works for a small business that doesn't offer health insurance and says losing access to his antidepressant medication could be life-threatening.
• When he lost Medicaid under the Arkansas work requirements, he was a graduate student working for Uber and didn't meet the reporting requirements. Without medication, he didn't finish his master's program and was suicidal.
• Hicks sees no benefits to the new work requirement. "What is the real point of this?" he says. "Are we trying to make the public healthy or not?"

Flashback: In summer 2018, Arkansas implemented Arkansas Works, requiring some Medicaid recipients to document 80 hours of work or other qualifying activities each month or lose coverage.

• By the time a judge blocked the law the following spring, about 18,000 people had lost health insurance.
• A 2019 study by the Harvard T.H. Chan School of Public Health found that Arkansas' work requirements did not lead to more employment or to more private health insurance coverage.

New Medicaid changes require states to verify recipients' eligibility monthly and do redeterminations at least twice a year. The new law provides $200 million to states for implementation.

What they're saying: "Medicaid is not a reward for having a job," Camille Richoux, health policy director at nonprofit Arkansas Advocates for Children and Families, tells Axios.

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Yakima Valley Farm Workers Clinic is gearing up for compromises and leaner budgets once changes to Medicaid kick in — and that could include cutting refugee health care programs and case management services in Washington and Oregon.

The big picture: The network of community health centers expects the new Medicaid work requirements and more frequent eligibility checks to affect 15% to 20% of its patient population — and wipe out 2% to 3% of its revenue, CEO Christy Trotter tells Axios.

• The nonprofit gets federal funding for seeing patients regardless of their ability to pay, so it'll inevitably receive less payment to see more patients as people lose health coverage under the new policies, Trotter says.
• The organization serves 200,000 patients across its service areas.

State of play: Yakima Valley Farm Workers Clinic had already been preparing for a financial crunch before Congress passed the reconciliation package, following the end of pandemic-era temporary funding.

• It had closed a couple sites after determining they didn't meet the organization's core mission and that patients in those service areas could get care elsewhere.

Now, it's reviewing non-revenue-providing services it offers, like outreach programs and case management, and trying to figure out how to target them at patients who will benefit most, Trotter says.

• "We're challenging ourselves," she says. "It has to have a return for the patients and for us financially."

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Nearly 300,000 pieces of paper related to applications for Medicaid and other forms of public assistance passed through the government office in rural Stearns County, Minnesota, last year.

Why it matters: That figure will grow exponentially once the changes to Medicaid take effect, Melissa Huberty, administrator of the county's human services department, tells Axios.

• The office is already drowning in paperwork and about 30,000 phone calls a month, Huberty says.

State of play: Roughly one-third of states, including Minnesota, delegate at least some of the work of vetting and processing Medicaid applications to counties.

• Over $160 million a year is what Minnesota's Department of Human Services estimates the additional paperwork related to the work reporting requirements alone will cost its local, state and tribal governments.

Friction point: Without additional state and federal funds, cash-strapped counties may have to raise property taxes to help cover the costs.

• "Eventually it's going to come down to a decision of how much do you want to pay in taxpayer dollars to process all the paperwork," Huberty says.

Between the lines: Antiquated technology makes enrolling people in Medicaid a time-consuming task.

• When a Minnesotan fills out an online application via the state's MNbenefits site, the system spits out a paper form that a county worker then needs to manually input into their system.

Upgrading those systems statewide would cost hundreds of millions of dollars that counties don't have, Association of Minnesota Counties executive director Julie Ring tells Axios.

Friction point: Even if county workers can keep up, Huberty fears the new requirements will result in many people who should be eligible losing coverage due to paperwork errors or missed deadlines.

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Carol Veschi, who relies on Medicaid to help care for her 18-year-old son with autism, is worried about how changes could affect her son.

Why it matters: There are a lot of unknowns about how the changes could affect people with disabilities enrolled in Medicaid.

• "We're all scared," metro Atlanta resident Veschi says.

Zoom in: Part of what makes Medicaid so essential to people with developmental disabilities in Georgia and across the country is the waiver component, which allows recipients to stay in their communities rather than live in a nursing home or other care facility.

• For Veschi's son, the waiver has also provided enrollment in a work "sampling" program that offers job training and ultimately helped him secure a paying job, so he can pay taxes.
• Plus, it's given him a social life that makes him happy, Veschi says.

Without waivers, Veschi says she would have to choose to either "institutionalize" her son or her spouse, who is also disabled.

• The state pays about $30,000 for her son's services, but she estimates it would cost her around $200,000 a year to pay for a care home.

What they're saying: "What we've seen in the past ... is when big cuts are made to Medicaid across the board, some of those cuts trickle down, and they do impact people with developmental disabilities," D'Arcy Robb, executive director of the independent state agency Georgia Council on Developmental Disabilities, tells Axios.

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