Montana Hurries To Adopt Trump’s Medicaid Work Rules Amid Budget Woes

Montana plans to be one of the first states to enforce President Donald Trump’s work mandate for Medicaid enrollees, adding another challenge for state health officials trying to plug a massive budget hole.

Clinicians and patient advocates say the incoming changes will deliver a twofold blow: They expect the work requirements to kick more patients off Medicaid, meaning fewer can afford care, while the health department’s budget problems make it harder for doctors to serve those who keep the coverage.

It’s a tumultuous time for state health departments. Additional federal changes are forcing states to perform more checks on who qualifies for food assistance, better monitor doctors’ compliance with Medicaid rules, and set up new programs to access a share of $50 billion in federal funds meant to improve rural health services.

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

Already, some Montanans struggle to access the government health coverage amid state backlogs. Meanwhile, clinicians struggle with staffing, attributing the issue to low Medicaid payments. Those problems reflect a national challenge to connect people to care through strained public assistance programs.

The Montana Department of Public Health and Human Services didn’t respond to a list of questions, instead directing KFF Health News to the latest information on the state’s website detailing Medicaid changes, at medicaidchanges.mt.gov.

Health policy analysts have said Montana’s challenges offer an early glimpse at what states must navigate to comply with congressional Republicans’ One Big Beautiful Bill Act. Signed by Trump last year, the federal tax and spending law requires millions of Medicaid enrollees to prove they’re working or attending school for 80 hours each month, unless they’re eligible for an exemption. States also will be required to evaluate enrollees’ eligibility every six months instead of annually, which will take more time and money. Some states already don’t have enough staff to quickly process Medicaid applications or answer enrollees’ phone calls.

On July 1, Montana is scheduled to become the second state, after Nebraska, to implement Medicaid work requirements. That’s six months ahead of the Jan. 1 federal deadline to do so for the 42 states, along with the District of Columbia, that expanded Medicaid to cover more low-income people. Montana health officials say they’ve had time to plan for that shift. The state mandated work rules in 2019 but hadn’t gained federal approval to move ahead until now.

More states are likely to face a budget crunch soon, said Joan Alker, a Georgetown University researcher focused on health coverage.

The One Big Beautiful Bill Act is expected to reduce federal Medicaid spending — the biggest pool of federal cash states receive — by nearly $1 trillion over 10 years. The law also left states with a bigger share of the cost to run food assistance programs, while creating tax breaks that could lower states’ bottom lines.

“States are the ones that are gonna have to do the dirty work of implementing cuts,” Alker said.

Withholding Medicaid Provider Rate Increases

On top of federal changes, Montana lawmakers underfunded the health department in its two-year budget in 2025, the result of cuts and an underestimate of Medicaid enrollment. The state also overestimated how much the federal government would contribute toward Montana’s Medicaid costs this year.

That resulted in a $183 million shortfall in state and federal funds, requiring the health department to borrow from next year’s budget. To partially offset those costs, the department wants to withhold a 3% Medicaid provider rate increase approved by the legislature and governor last year. State officials have said they’re trying save money without unraveling services.

Health organizations have pushed against the plan, saying that Montana’s Medicaid payments already don’t cover the cost of care and that health businesses can’t afford wages that attract workers.

Matt Bugni, head of the statewide nonprofit Aware, which provides behavioral health and disability services, said the organization was counting on incoming increases to keep existing employees amid a staff shortage. Bugni said Aware has more than 70 group-home beds it’s been unable to fill, because it’s down roughly 15% of its workforce.

“There are waiting lists,” he said. “We just can’t staff it.”

Montana health organizations said they’re still recovering from 2017 budget cuts that buckled services. The state’s caseworker system largely disappeared, more than half of Montana’s public assistance offices shut down, and mental health crisis centers closed.

“We still are struggling,” said Sierra Riesberg, head of the Montana Behavioral Health Alliance, a nonprofit advocacy group.

In 2023, Montana Gov. Greg Gianforte, a Republican, signed into law a $300 million investment to repair the state’s behavioral health and disability services. He also created an initiative to use Medicaid funding to fill in gaps in addiction treatment programs.

But Riesberg said that, despite improvements, some beds created through those initiatives remain empty because low Medicaid reimbursement rates make it hard to recruit staff.

The stalled increases would especially hit community-based services such as mental health treatment and developmental disability services. They wouldn’t affect physician services or federally funded health centers that offer care based on what patients can afford. But Lander Cooney, an executive vice president at One Health, which has rural clinics in rural Montana and Wyoming, said low reimbursement rates can hurt their patients who need care elsewhere, as more healthcare providers decide they can’t afford to accept Medicaid.

Montana’s Legislative Finance Committee recommended the state’s leadership find a way to cut costs without stalling the increases. Gianforte will have the final say. He must make that decision before the state begins its new budget year on July 1, the same day Medicaid work requirements begin.

Medicaid enrollees will have three months to show they’re working before the state begins dropping people for noncompliance in October. That gives the state time “to work out the bugs,” said state Rep. Ed Buttrey, a Republican who is also president of the Montana Hospital Association.

‘Completely in the Dark’

The work requirements won’t apply to everyone. There are exemptions for people who are severely sick, children, adults older than 64, and Native Americans, among others. Even so, most people will have to submit proof that they’re exempt. For some, how to do that remains murky.

Health officials don’t have clear-cut definitions for medical conditions on the exemption list. They’re also awaiting federal guidance on what documents someone needs to prove a hardship that temporarily prevents them from working. “Providers are completely in the dark as to how we reduce the administrative burden,” said Shawna Yates, a family medicine doctor in Butte and president of the Montana Medical Association’s executive committee.

Health officials have said implementing work requirements early means figuring out some details as they go.

Montana’s Medicaid enrollment is at its lowest point in roughly a decade, according to a recent report by Manatt, a consulting firm that has studied the state’s Medicaid program for years. Enrollment plummeted amid states’ scramble to determine whether tens of millions of people still qualified for Medicaid when the federal government lifted a pandemic-era disenrollment freeze in 2023.

Many lost coverage primarily because of paperwork problems rather than ineligibility. National health advocates worry similar administrative problems will arise with implementing work requirements.

In Montana, the state’s Medicaid data signals continued red flags, according to a new analysis by the nonprofit Montana Budget and Policy Center. That includes long waits to access public assistance and low renewal rates due to paperwork issues.

Julie Anderson, a mental health and addiction counselor in Livingston, Montana, helps people navigate public aid at a food bank. She said she recently spent three hours on hold on the state’s public assistance helpline, trying to help a patient with limited cellphone minutes troubleshoot a Medicaid application. Anderson said she had to hang up to help other people before anyone answered.

“It’s already a cumbersome system,” she said. Once the new requirements go in place, Anderson added, “it’s going to be a nightmare.”

The health department has worked for months to expand its public assistance team. As of early March, Montana had filled 39 of 59 new positions state officials projected are needed for the intensified Medicaid eligibility checks.

“The problem with that is that it takes a lot of training to get caseworkers up to speed,” said Kim Winchell, who helps people enroll in health coverage at Glacier Community Health Center in Cut Bank.

State officials said they’ll try to automatically confirm through existing data whether people are exempt or meet the rules. When that doesn’t work, applicants will have 30 days to provide proof of eligibility.

Charlie Brereton, director of the Montana health department, told lawmakers in May that the agency considered a public service campaign to get the word out. But he said the state’s budget problems curtailed that idea.

Brereton said the state could reevaluate that option, “depending on how implementation goes.”