Medicaid Coverage Gaps Widen as States Face Funding Shortfal

States across America are grappling with significant challenges in maintaining and expanding Medicaid coverage, even as lawmakers attempt to address critical healthcare gaps. From Washington’s $20 million shortfall in long-term care funding to Virginia’s limited doula access, vulnerable populations are bearing the brunt of administrative hurdles and federal policy changes.

The growing pains reveal a troubling pattern: ambitious healthcare initiatives often fall short of their intended reach when faced with budgetary realities and complex federal regulations. These shortcomings are forcing state officials, healthcare advocates, and families to confront difficult questions about who receives care and how limited resources should be allocated.

Washington’s Long-Term Care Crisis Deepens

Washington state lawmakers approved nearly $20 million this year to ensure immigrants could retain long-term care insurance coverage they are set to lose under federal law. Legislators and advocates initially believed that funding would put the state on a path to cover nearly 1,200 lawfully present noncitizens, but revised projections reveal it will only be enough for 173 people.

Adam Glickman, secretary-treasurer for Service Employees International Union 775, the caregivers’ union that pushed hard for the funding, called the revelation “disappointing and frustrating” based on changing assumptions from federal guidance. The original goal of wider coverage would require tens of millions more dollars each year to achieve, according to Rep. Nicole Macri, D-Seattle, who explained that lawmakers assumed the $20 million would cover about 300 people in the current fiscal year ending June 30, 2027.

“It puts individuals and families in really difficult situations, and really, in some cases, dangerous and unhealthy situations,” Glickman said.

The crisis stems from congressional Republicans’ legislation passed last year that cuts Medicaid coverage for most noncitizans, with state officials projecting nearly 14,000 residents in Washington will lose coverage on the insurance program for low-income residents starting October 1. That includes around 1,500 noncitizens receiving long-term care services, who received notices of the change last month and will get termination notices in late August.

Federal Law Strips Coverage for Refugees and Asylees

The federal law eliminates Medicaid coverage for refugees and asylees and other lawfully present immigrants, including people who fled the war in Ukraine, while maintaining eligibility for lawful permanent residents and other select categories. Department of Social and Health Services Secretary Angela Ramirez acknowledged her agency would “continue to look under every rock to see what we can do” but issued a stark warning at a Seattle roundtable on the issue.

“But make no mistake: When this cut hits, it’s going to be harmful,” Ramirez said.

Virginia’s Doula Deserts Leave Medicaid Mothers Without Support

Meanwhile, Virginia faces a different but equally concerning Medicaid coverage problem centered on doula care access. Taja Iglesias, founder of The Momager Co., a doula agency in Alexandria, Virginia, built a comprehensive space for pregnancy, birth, and childcare services after experiencing isolation during her own childbirth when medical staff dismissed her preferences not to have an epidural for pain.

Doula care, which has been associated with improved breastfeeding initiation and less maternal anxiety, covers education about pregnancy and birth, advocacy for new parents in the hospital, and help after delivery with lactation and recovery. Doulas often work alongside doctors or midwives who provide medical care, serving as dedicated advocates who already know what parents want for their “dream birth,” according to Iglesias.

“We’re somebody that is standing on the side of the parent,” Iglesias explained.

Only Nineteen Northern Virginia Doulas Accept Medicaid

In 2022, Virginia became the fourth state to start reimbursing doulas through Medicaid, part of a nationwide push to address the country’s maternal mortality rates, which are higher than in other high-income countries. The services offered and the number of visits covered by Medicaid vary by state, but today doulas are covered in 26 states and Washington, D.C., with an additional 20 states having considered proposals or currently implementing similar policies.

However, a review of the Virginia Certification Board’s Doula Registry this June found just 19 doulas based in Northern Virginia accept payment from Medicaid. Doulas say the administrative and logistical challenges they encounter are trickling down to mothers, creating significant barriers between policy intentions and real-world access.

Indiana Prepares for Work Requirements Rollout

Adding to the national Medicaid landscape shifts, the Indiana Family and Social Services Administration is rolling out a variety of tools to prepare Hoosiers on the Healthy Indiana Plan for new work requirements beginning January 1, 2027. Indiana will implement work requirements for new applicants and existing Medicaid members eligible under HIP, which provides healthcare coverage for the state’s Medicaid expansion population.

Adults generally will have to complete and report at least 80 hours per month of work, job training, education, community service, or another qualifying activity to remain covered, with the state reviewing compliance at least every six months. Anyone applying starting January 1 will have to meet the requirements going back to October, while current members will have to prove compliance on a rolling basis when their renewal date comes up.

The changes will not apply to everyone on Medicaid, with children, pregnant women, older adults, people enrolled in Medicare, and many people with disabilities or caregiving responsibilities expected to be exempt. A parent caring for a child age 13 or younger, for example, would not have to meet the requirement.

States Deploy Outreach Efforts Amid Coverage Changes

To raise awareness of the new work requirements, starting July 21, Indiana will periodically text HIP members general information about the new requirements from the phone number 43816. The state has also created a screening tool for HIP members to check whether they would be subject to or exempt from the work requirements, with responses used only to generate individual screening results and not stored or shared.

The Indiana Family and Social Services Administration, in partnership with Covering Kids & Families, will also host a series of public town halls across the state to help HIP members, providers, and community partners learn more about the upcoming changes. These multifaceted outreach efforts represent states’ attempts to navigate the complex intersection of federal mandates, state budgets, and healthcare access for their most vulnerable residents.