The impact of H.R. 1 was front and center at the Medicaid directors' conference, NAMD, last week in Maryland.
The conference, hosted by the National Association of Medicaid Directors, gathered officials and attendees from both sides of the aisle. The agenda focused largely on policy and technology.
At a press briefing during the event, several state Medicaid officials spoke about the upcoming Medicaid work requirement changes going into effect on Jan. 1, 2027. Already starting this month, around 10,000 New Jersey legal immigrants lost coverage in the state. New Jersey is reaching out to 25,000 more members to request additional information on their eligibility status. For those not eligible, said New Jersey Medicaid Director Greg Woods, “where can we have continuity of care and access to care, and with a particular focus on vulnerable populations?”
“This is not a normal build for us,” Woods said of the IT development underway by the state to accommodate H.R. 1 changes. “The timeline is vastly accelerated. […] I don’t think on January 1, we’ll be in our final landing place.”
New Jersey is also working with counties to ensure they have the capacity and budget to handle the changes. Woods expects their workload to increase tremendously.
The situation is similar in Illinois, where the Medicaid department is doing IT work under “extraordinarily tight timelines,” echoed Laura Phelan, the state’s Medicaid administrator. As in New Jersey, over 9,000 immigrants lost coverage at the start of this month. The state projects that up to 300,000 residents could ultimately lose coverage.
“Coverage loss due to H.R. 1 changes also will put substantial financial pressure on individuals, providers and the broader healthcare system,” Phelan said. The state is facing up to a $51 billion loss in the next decade, largely due to provider tax changes and new eligibility rules, she added.
Member outreach is a priority for states. Louisiana can determine whether members are exempt from the new requirements for the vast majority of members based on existing data. However, for about 10% to 20% of members, the state does not have enough data to make that determination. Part of the state’s plan is to leverage AI to respond to basic member questions, such as application status, “so that we can deploy call center staff more effectively,” said Seth Gold, Louisiana’s executive Medicaid director.
Compliance with H.R. 1’s fiscal provisions—which prohibit new provider taxes, reduce the allowable cap on existing ones and impose limits on state-directed payments—will have a significant impact on New Jersey. “When it is fully ramped up,” Woods said, “there will be a several-billion-dollar annual impact on our healthcare system.”
Meanwhile, Tennessee faces impact from both state-directed payments and budget neutrality. In 2025, it implemented a significant state-directed payment to hospitals, bringing them up to average commercial rates. In 2028, the state will have to ration that down to 110% of Medicare.
“It’s certainly less than what they were anticipating,” acknowledged Stephen Smith, director of TennCare, the state’s Medicaid program. However, he added, even with the reductions, “Tennessee hospitals will be receiving more from Medicaid than they ever have.”
For years, Tennessee has had a unique shared-savings model, TennCare III. The federal government caps the total amount of federal Medicaid funds it receives, and if it spends under the cap, it can share in some of those savings. In the first four years of the 10-year waiver, it generated $1.3 billion in shared savings. The state was able to provide diapers for low-income children through Medicaid. It has also committed over $300 million for rural health initiatives and transferred $100 million in no-interest disaster relief loans to counties hit by Hurricane Helene.
“The whole concept is based on our budget neutrality cap,” Smith said. “This has been incredibly successful [for the state].”
The new H.R. 1 policy requires states’ demonstration project waivers to be “budget neutral,” meaning a state’s proposal would not result in costs to the federal government greater than what Medicaid costs would be without it. Some legal experts have suggested that while federal Medicaid spending may become more predictable, this new rule may also limit the use of waivers to expand Medicaid eligibility and benefits.
At the same time, Smith is excited about a new four-year pilot, approved earlier this year, to incentivize Medicaid members to accept a higher-paying job or promotion without fear of losing Medicaid benefits. The Pathway to Independence pilot, set to start in 2027, will offer time-limited premium assistance on the private market to the parent-caretaker population.
“We don’t know if this is going to work, but we do know that if it does work … then it’ll be tremendous, because it will help the people that we serve, but it will also save taxpayers a tremendous amount of dollars,” Smith said.
Debate over Medicaid's role in rising costs
A session set up as a debate over federal flexibility, fiscal sustainability and access to care featured experts with opposing ideological views. Brian Blase, president of the conservative think tank, Paragon Health Institute, lamented cost-shifting from states to Washington, claiming that 50% to 90% of state spending is reimbursed by the federal government.
Blase previously served as a health policy advisor in the first Trump administration. He said states give in to lobbying to expand Medicaid “because they can pass most of the bill to Washington.” Paragon previously campaigned hard against provider taxes and state-directed payments, hospital-friendly Medicaid mechanisms it described as “gimmicks,” efforts that, per reports, found an ear inside the administration and Congress.
“There is a lot of corporate welfare in Medicaid that is not going to the most vulnerable,” Blase said, noting that in some states, Medicaid rates approach commercial rates for what he called politically powerful hospitals. He also said COVID-era policies and Medicaid expansion have “exacerbated” waste, fraud and abuse in the system. These issues have been a core focus for the Trump administration and a salient message for many voters in the run-up to the midterms.
Meanwhile, Daniel Tsai, director of health for the City & County of San Francisco, argued Medicaid is the lowest-cost insurance in the country. Tsai was previously director of Medicaid & CHIP at CMS under President Biden.
He stated that on a per-member, per-month basis, Medicaid costs have not increased in 20 years. “Many providers do not even take Medicaid,” Tsai said. Unless every health system is required equally to take Medicaid, cuts to the program effectively crater the safety net for vast swaths of the population, he added.
Tsai called for broad policy changes at the national, state and provider levels. He acknowledged that most Medicaid variation is not purposeful, adding that “it makes it freaking difficult for patients … to actually navigate the system.” And while the program has been great for two decades, "I think we need to rethink the role of managed care.” For example, the system spends $45 billion annually on administrative overhead related to managed care.
When it comes to H.R. 1's impact on communities, Joan Alker, executive director and research professor at Georgetown University Center for Children & Families, is concerned about the uninsured. These cuts will not just impact adults, but also kids, people with disabilities and older adults. “I’m extremely worried about systems literally collapsing,” she said on the panel. She is also worried about states’ capacity to handle the new rules amid staffing shortages and a “very chaotic federal partner.”
Alker believes issues like rising healthcare costs and an aging population must be addressed with federal action. “We have a healthcare costs problem, not a Medicaid costs problem,” she said. Alker believes staffing up Medicaid offices right now would be cost-saving. “But let’s be clear: no matter how hard you work,” she addressed the audience, “you cannot overcome the systemic challenges that Medicaid is being asked to address.”
Alker's comments garnered numerous rounds of applause from the full ballroom of conference attendees. Paragon's Blase received none.
Reflections from the CMCS director
In a fireside chat, Dan Brillman, deputy administrator & director of the Centers for Medicaid & CHIP Services (CMCS), spoke about his priorities for the program, focusing a lot on the idea of value.
"I want outcomes," he said. "Getting value for every dollar we spend is super important."
Brillman has a business background, having been co-founder and CEO of the health tech company Unite Us. That he was a top contender for the CMCS role was first reported by Fierce Healthcare.
Among Brillman's top priorities is streamlining program design. "When we learn something that works well in Medicaid, I get frustrated that it doesn't freaking scale," he said. Promoting technology is one potential solution. Another is simplifying NCQA measures.
A May 2026 CMS analysis of Medicaid managed care programs across 42 states found about 450 reporting requirements related to about 260 unique quality measures for federal and state-specific quality reporting programs. These were found to be largely focused on process and utilization.
Brillman said collecting these data is "performative." Instead, he said states should move toward fewer, more relevant measures. Having fewer measures would also reduce the reporting burden.
"Data should not just be a reporting function," Brillman said.
On 1115 waivers, Brillman said that they are intended to be five-year pilots that try out interventions. If they work, then it's up to states to lobby Congress to make them a concrete benefit. Whatever benefit is identified should be clinically linked and cost-saving.
"We have to prove these things work and get to the right population," Brillman said, such as a patient with congestive heart failure, diabetes and food insecurity. Brillman praised accountable care for its ability to outperform fee-for-service on outcomes. But some states are questioning whether they should have managed care at all, he said, which is concerning. He believes the program needs improvement, claiming it's inefficient to compete on rates. He called on payers and consultants to step up and take advantage of the current momentum for change.
In an attempt to coalesce states around quality measures, CMCS recently launched an initiative with 37 state partners. The goal is to focus on how quality is measured and center outcomes in the work. CMS and its partners will prioritize measures that demonstrate meaningful improvements in prevention, chronic disease management and behavioral health. CMS also plans to hold additional workshops this year on quality measurement. The effort, Investing in Health Outcomes, asks states to pledge to put health outcomes above processes, streamline quality measures without reducing accountability, push toward digital quality measurement and align financial results with outcomes.
Brillman closed out the fireside chat with a call to action related to waste, fraud and abuse for attendees, saying he would rather have collaborative conversations early to proactively address a burgeoning issue, before it blows up into a major problem. "I'd rather be a partner than a regulator," Brillman said.