Series 14: State Implementation of Work Requirements
On January 28, 2025, Governor Sarah Huckabee Sanders stood at a podium in the Arkansas State Capitol and announced what she framed as a fresh start. The state was submitting a new Section 1115 waiver amendment requesting work requirements for ARHOME, the state’s Medicaid expansion program. The proposal was called “Pathway to Prosperity,” and Sanders described it as fundamentally different from what came before. “This new waiver reduces administrative hurdles and other issues for legitimate Medicaid expansion recipients while still achieving our policy goal: to have Medicaid serve as a safety net rather than a poverty trap,” the governor told reporters. DHS Secretary Kristi Putnam added that the approach was “not punitive” but rather “about purpose.”
What no one at the podium mentioned, and what everyone in the room knew, was that Arkansas had tried this before and the results were catastrophic. In 2018, under Governor Asa Hutchinson, Arkansas became the first state in the nation to implement Medicaid work requirements. Over nine months, 18,164 adults lost coverage. A federal court struck down the program. Research published in the New England Journal of Medicine documented that 95% of those who lost coverage had been working or qualified for exemptions. No increase in employment was detected. The coverage losses were concentrated among the populations least equipped to absorb them, in the Mississippi Delta counties where poverty, poor health outcomes, and limited infrastructure were already most severe.
Arkansas is now attempting to demonstrate that it has learned from that failure. But the state is doing so under circumstances more complex than 2018, because the One Big Beautiful Bill Act signed July 4, 2025, established federal work requirements that apply nationwide regardless of what any individual state designs. Arkansas’s Pathway to Prosperity waiver, submitted to CMS on April 10, 2025, with a target start date of January 1, 2026, now coexists with a federal mandate effective January 1, 2027, that imposes its own set of requirements. Whether the state’s deliberately softer approach can survive alignment with the harder federal standard is the question that defines Arkansas’s second attempt.
The Evidence That Cannot Be Unlearned#
The research from Arkansas’s 2018-2019 implementation remains the most comprehensive evidence base on what happens when work requirements meet real populations. Benjamin Sommers and colleagues at Harvard tracked outcomes across two studies published in the New England Journal of Medicine (2019) and Health Affairs (2020). Their findings established several facts that subsequent policy design cannot ignore.
The coverage losses were overwhelmingly documentation failures, not work failures. Of the 18,164 adults who lost coverage, 97% were terminated for failure to report rather than failure to work. One-third of those subject to the requirements had never heard of them. More than half of those who were aware of the requirements were confused about how to comply. Among those ages 30-49 who were subject to the requirements, uninsured rates rose from 10.5% to 14.5%. No increase in employment was detected over 18 months of follow-up. Among those who lost coverage, 50% reported problems paying medical debt, 56% delayed care due to cost, and 64% reported problems affording prescriptions.
The design that produced these outcomes was built on online-only reporting in a state where 41% of the population lives in rural areas with limited internet access. Monthly deadlines gave members until the 5th of the following month to report prior month hours, and missing three deadlines in a calendar year triggered termination. The system assumed that people who did not report were not working. The reality was that most were working or exempt and simply could not navigate a reporting infrastructure that was never designed around their circumstances.
In March 2019, Judge James Boasberg vacated CMS’s approval, finding that HHS had failed to consider whether work requirements would further Medicaid’s core objective of providing health coverage. The same judge simultaneously struck down a similar Kentucky waiver. The legal principle from these cases informed subsequent challenges across multiple states.
Kevin De Liban and Trevor Hawkins, the Legal Aid attorneys who successfully litigated against Arkansas Works, wrote in a New York Times opinion piece following the OBBBA’s passage that there was “reason to believe” the new requirements could have the opposite effect from what proponents claim. Their argument was simple: when people lose health insurance, otherwise manageable health conditions become unmanageable work barriers.
Pathway to Prosperity: The Redesign#
Arkansas’s 2025 proposal attempts to address each identified failure point from 2018. The design changes are substantial enough to represent genuine learning, though whether they are sufficient to prevent similar outcomes at scale remains untested.
The most significant change is the shift from termination to suspension. Under the old program, losing compliance meant losing coverage entirely and having to reapply from scratch. Under Pathway to Prosperity, noncompliant individuals have their ARHOME benefits suspended but remain enrolled in Medicaid. Benefits can be restored when the individual indicates their intention to engage with Success Coaching and get “on track” with their Personal Development Plan. Senate Bill 527, passed by the state legislature in April 2025, codified this suspension-rather-than-termination approach in state law.
The second change replaces self-reporting with data matching. Rather than requiring members to log into a portal to document work hours, the state proposes using administrative data and periodic audits to verify compliance. Employment data, SNAP and TANF participation records, educational enrollment, and other existing data sources would identify members already meeting requirements or qualifying for exemptions. The verification burden shifts from the individual to the state.
The third change adds support infrastructure. Success Coaching provides focused care coordination connecting unemployed individuals with career training, transportation, and other resources. Personal Development Plans create individualized goals for increasing wages and hours worked over time. The framing shifts from enforcement to enablement: the state describes the approach as helping people find pathways to economic independence rather than punishing them for noncompliance.
The waiver also does not prescribe specific monthly hour thresholds. Where the original Arkansas Works required 80 hours monthly and the federal OBBBA mandate also specifies 80 hours, Pathway to Prosperity focuses on progress toward personal development goals rather than a fixed numeric standard. This creates flexibility but also creates ambiguity about how the state’s softer approach will reconcile with the federal law’s harder requirements.
The Alignment Problem#
After the OBBBA became law in July 2025, Arkansas confirmed it would not withdraw its pending waiver. DHS spokesperson Gavin Lesnick stated that the state would “work to ensure that Pathway to Prosperity meets the requirements outlined in the One Big Beautiful Bill Act.” But the alignment between the two frameworks is not straightforward.
The federal mandate requires 80 hours monthly of work, education, training, or community service. Pathway to Prosperity does not prescribe specific hours. The federal law imposes marketplace exclusion for noncompliant individuals. Pathway to Prosperity suspends benefits but keeps members enrolled. The federal law requires semi-annual redeterminations. Arkansas under its existing ARHOME waiver operates on annual renewals. The federal law establishes specific exemption categories. Pathway to Prosperity includes broader exemptions but also broader success coaching requirements.
KFF vice president Robin Rudowitz noted that CMS may approve pending waivers like Arkansas’s ahead of 2027 but that “going forward, the bill disallows waivers related to provisions of the work requirements.” Once the federal effective date arrives, the statutory parameters become difficult to vary across states regardless of state-level design preferences. This means Arkansas may operate Pathway to Prosperity in its own form through 2026, but by January 2027, it must conform to federal standards that may be less flexible than its own design.
The cost projections reflect this ambiguity. DHS estimates Pathway to Prosperity will cost $42.8 million over five years. The state projects $122.8 million in savings from suspended benefits and from individuals leaving Medicaid due to increased income. These projections were developed before the OBBBA changed the operating environment and before the compounding effects of simultaneous SNAP changes, semi-annual redeterminations, and HRSN funding rescission were factored in.
Arkansas Advocates for Children and Families projects that 131,000 Arkansans will lose health insurance coverage over the next decade as a result of the OBBBA, with another 57,000 at risk. Combined with an estimated 25,000 losing SNAP benefits, close to 200,000 Arkansans face potential loss of health coverage, food assistance, or both.
The Private Option and Its Consequences#
Arkansas has never operated a traditional Medicaid expansion. Since 2014, the state has used Medicaid funds to purchase Qualified Health Plans on the marketplace for expansion adults. This “private option” structure, now called ARHOME, means that beneficiaries carry private insurance cards and access private provider networks rather than traditional Medicaid.
This structure matters for work requirement implementation in several ways. Suspension of benefits means the state stops making premium payments to QHPs on the member’s behalf. The member remains technically enrolled in Medicaid but has no active coverage. Restoration of benefits requires the state to resume premium payments, which may involve administrative lag. The infrastructure for tracking eligibility involves both Medicaid and marketplace systems, adding coordination complexity.
There is a partial upside to the private option structure. Because ARHOME members are already connected to marketplace plans, transition to marketplace coverage with premium tax credits may be smoother than in states where Medicaid and marketplace operate as entirely separate systems. An individual whose income increases above 138% of the federal poverty level can remain in the same plan with the same provider network, with federal tax subsidies replacing Medicaid premium payments. This seamless transition is unique to Arkansas and provides a potential buffer against the coverage cliff that Medicaid beneficiaries in other states face when they lose eligibility.
SB 527 also increased the medical-loss ratio required of QHPs participating in ARHOME from 80% to 90%. This forces plans to spend a higher proportion of premium revenue on actual healthcare rather than administration and profit, potentially improving value for members but also reducing the financial margin available to plans for absorbing additional work requirement administrative costs.
The Delta and the Mountains#
Arkansas’s geography creates two distinct implementation challenges that no single policy design can simultaneously resolve.
The Mississippi Delta region in eastern Arkansas contains the state’s highest poverty rates, largest Black populations, most severe health outcomes, and least infrastructure. Eight of eleven counties with the worst health outcomes in Arkansas are in the Delta. Phillips County has lost 13.7% of its population since 2020. Desha County lost 12.4%. These are places where major employers have left, public transit does not exist, healthcare workforce shortages mean many counties lack specialists, and educational attainment gaps limit employment options. Fourteen counties in the state carry the designation of both persistent poverty and persistent child poverty, and they are concentrated in this region.
The Delta is where coverage losses concentrated in 2018 and where they will likely concentrate again. Work requirements in these counties confront structural employment scarcity rather than individual unwillingness to work. The Success Coaching model imagines connecting people with career training and transportation, but in counties where the school district and county government are the largest employers, the training pathway to what?
The Ozark and Ouachita mountain counties in western Arkansas present different but related challenges. Mountainous terrain creates physical isolation, and communities in these areas have limited broadband access, few workforce development programs, and small populations spread across large areas. These counties share characteristics with Appalachian Ohio and West Virginia and face the same fundamental problem: policy designed around urban employment markets does not translate to rural economies.
Northwest Arkansas, centered on Bentonville and Springdale, is a different world entirely. Benton County grew 14.2% since 2020. Washington County grew 9.9%. Walmart headquarters, Tyson Foods, J.B. Hunt, and a growing technology sector create employment opportunities that make work requirement compliance straightforward for most expansion adults in the region. The Marshallese community concentrated in Springdale presents specific cultural and linguistic considerations, but the economic base supports compliance in ways the Delta cannot replicate.
Substance Use and Maternal Mortality#
Arkansas’s substance use crisis intersects with work requirements in ways that the exemption framework only partially addresses. The state has the second-highest opioid prescription rate nationally at 71.7 to 72.2 prescriptions per 100 persons. Methamphetamine use runs 40% above the national average. Polysubstance use is increasing, with 60% of fentanyl-positive tests also showing methamphetamine.
The geographic distribution of treatment access creates a particular problem. Only four counties in the entire state have opioid treatment programs, all urban: Pulaski, Saline, Crawford, and Miller. Fourteen counties have no office-based buprenorphine providers. Eleven counties are identified as both high-need for medication-assisted treatment and high social vulnerability. The SUD treatment exemption exists in the federal law, but accessing that exemption requires being in treatment, and being in treatment requires treatment to be available. For people in the counties where treatment is scarce, the exemption is theoretical rather than practical.
Arkansas also holds the grim distinction of the nation’s highest maternal mortality rate. The leading cause of death in the year following childbirth is accidental poisoning, including overdose. Work requirements interact with this crisis by creating compliance pressure during pregnancy and the postpartum period, though the federal exemption for pregnant women and those within 60 days postpartum provides some protection. Whether the 60-day postpartum window is sufficient given the state’s maternal health outcomes is a question the policy does not answer.
The Second Attempt#
Arkansas cannot escape its history. The state that produced the most definitive evidence of work requirement failure is now attempting to demonstrate that design modifications can produce different results. The suspension model, data matching, and Success Coaching represent genuine corrections to identifiable failure points. Whether they are sufficient to address the structural realities of a state with extreme rural poverty, limited service infrastructure, severe substance use disorder prevalence, and concentrated geographic disadvantage is the question.
The 2018 experience proved that most people subject to work requirements were already working or legitimately exempt. If that remains true, and there is no evidence suggesting the underlying population characteristics have changed, then the critical test is whether Pathway to Prosperity can verify existing compliance and identify existing exemptions without creating the documentation barriers that caused 18,164 people to lose coverage last time.
The federal mandate complicates this test. Even if Arkansas builds a softer system, the OBBBA’s harder requirements ultimately apply. The marketplace exclusion provision for noncompliance creates consequences beyond benefit suspension. Semi-annual redeterminations double the frequency of verification. And the simultaneous SNAP changes, HRSN funding rescission, and state-level administrative cost increases create compounding pressures that did not exist in 2018.
Arkansas will be among the first states to implement under both its own waiver and the federal mandate, potentially operating two overlapping frameworks during 2026 as Pathway to Prosperity runs under the waiver while federal requirements take effect January 2027. How these frameworks are reconciled, and what the human experience of that reconciliation looks like for a Medicaid member in Phillips County or Desha County, will determine whether the second attempt produces different outcomes than the first.
The research community that documented the 2018 failure will be watching. The legal advocates who challenged the first program have signaled concern about the second. And 220,000 Arkansans whose healthcare coverage depends on whether this time is different do not have the luxury of treating the question as academic.