Series 14: State Implementation of Work Requirements
A 42-year-old construction worker in Laredo earns $14,000 annually, well below the federal poverty level of $15,060 for a single adult. He has no dependent children. He works 35 hours per week during busy seasons, less when construction slows. He has diabetes but cannot afford insulin. He is categorically ineligible for Texas Medicaid. He earns too little to qualify for marketplace premium subsidies, which begin at 100% of poverty. He exists in the coverage gap: too poor for subsidized insurance, too healthy for disability Medicaid, too childless for parent Medicaid, simply too Texan for coverage.
H.R. 1, signed July 4, 2025, transformed Medicaid work requirements from a state-option policy experiment into a federal mandate affecting approximately 18.5 million expansion adults nationwide. The law requires 80 hours monthly of work, education, training, or qualifying community engagement activities, with semi-annual redetermination cycles for adults aged 19-64 who gained Medicaid eligibility under the ACA’s optional expansion. States that expanded Medicaid face a January 1, 2027 implementation deadline, though good-faith extensions are available through December 31, 2028 for states demonstrating genuine progress toward compliance infrastructure.
Texas is not subject to these federal work requirements because Texas never expanded Medicaid under the ACA. By declining expansion since 2014, the state ensured that no residents gained coverage through the expansion pathway that now carries work requirement conditions. The federal mandate applies exclusively to expansion adults, a population that does not exist in non-expansion states. This exemption does not mean work requirements are absent from Texas policy discourse. The state maintains some of the nation’s most restrictive Medicaid eligibility criteria, effectively achieving through categorical exclusion what work requirements attempt through conditional access. Adults without dependent children cannot qualify for Texas Medicaid regardless of income or work status. Parents with dependent children qualify only with household incomes below 14-17% of the federal poverty level, approximately $4,100 annually for a family of three.
Texas operates the nation’s largest coverage gap: 617,000 to 726,000 adults with incomes below 100% FPL who remain ineligible for any affordable health coverage. They earn too little for marketplace subsidies but cannot access Medicaid because Texas restricts eligibility far below poverty-level incomes. This population represents 40-45% of the entire national coverage gap. Approximately 74% are people of color, and over 60% are employed, primarily in low-wage jobs without employer-sponsored coverage. The cruel irony is stark: federal work requirements were designed to encourage employment among expansion populations, but Texas’s working poor receive no coverage at all while expansion states at least provide coverage, albeit with new conditions.
Traditional Medicaid Eligibility: Categorical Exclusion as Policy#
Texas Medicaid serves approximately 4.4 million people, primarily children, elderly, and disabled populations. The program’s restrictiveness for working-age adults makes work requirements essentially redundant. Understanding this eligibility architecture is essential for grasping why the federal mandate debate has fundamentally different implications for non-expansion states.
Children qualify with household incomes up to 198% FPL (ages 0-1), 144% FPL (ages 1-5), and 133% FPL (ages 6-18). Pregnant women qualify up to 203% FPL including CHIP Perinatal coverage. These eligibility thresholds create reasonably comprehensive coverage for children and pregnant women, though post-partum coverage drops to 60 days under federal requirements, creating cliff effects for new mothers.
Parent eligibility represents the most restrictive element of Texas Medicaid. Parents with dependent children qualify only with household incomes up to 14-17% FPL. This translates to approximately $4,100 annually for a family of three, or roughly $340 monthly. A single parent working half-time at minimum wage ($7.25 per hour) already earns too much to qualify. This threshold is so low that the vast majority of working parents are categorically excluded from Medicaid regardless of whether they meet any conceivable work requirement. The policy achieves extreme restriction through income limits rather than behavioral conditions.
Adults without dependent children face complete exclusion. A childless adult earning $0 per year cannot qualify for Texas Medicaid. Disability or age (65+) provides the only pathway to coverage for this population. This represents a fundamental policy choice: Texas Medicaid serves populations defined by vulnerability status (children, pregnancy, disability, age) rather than income status. The result is that able-bodied working-age adults, regardless of poverty level, receive no coverage.
The Coverage Gap Population: Working Without Coverage#
The ACA’s designers assumed all states would expand Medicaid, creating premium tax credits beginning at 100% FPL for marketplace coverage. This design created a coverage gap in non-expansion states where adults earn too much for traditional Medicaid but too little for subsidized marketplace plans. Texas operates the nation’s largest such gap.
The 617,000-726,000 adults in Texas’s coverage gap represent a population that would be immediately subject to federal work requirements if Texas expanded Medicaid. These individuals are predominantly working-age adults (19-64) without dependent children, exactly the population H.R. 1 targets. Based on national data and Georgia’s experience with its Pathways program, approximately 60% of coverage gap adults are already working. An additional 20-25% would likely qualify for exemptions due to caregiving responsibilities, health conditions, or other factors. The remaining 15-20% would need to engage with education, training, or community service activities to maintain coverage if expansion occurred with work requirements.
These adults work disproportionately in industries that rarely offer affordable health insurance: restaurant and food service, retail sales and cashiers, building cleaning and maintenance, agricultural work, home care and personal assistance, construction labor. Median income for coverage gap adults approximates 56% FPL, roughly $10,000-$12,000 annually for individuals. They are precisely the population who, in expansion states, would now face work requirements. In Texas, they simply have no coverage option despite meeting or exceeding any conceivable work threshold.
The occupational profile reveals the fundamental paradox of Texas’s position. Work requirements are designed to encourage employment among Medicaid recipients. Texas’s coverage gap population already works. Their problem is not insufficient work effort but insufficient state policy ambition. Non-expansion functions as the ultimate work requirement failure: millions of working adults remain uninsured precisely because their state refuses to cover them regardless of their employment status.
Legislative History: Persistent Rejection Through 2025#
Texas has consistently rejected Medicaid expansion since the ACA’s passage, despite repeated legislative efforts. The 2025 legislative session continued this pattern. Multiple expansion bills were introduced during the 89th Legislature, including HB 197 (Rep. Julie Johnson), HB 807, and several others. All failed to advance beyond committee stage. The House voted down expansion 63-85 in April 2025, a largely party-line vote reflecting entrenched political opposition.
Governor Greg Abbott and Lieutenant Governor Dan Patrick have maintained firm opposition to expansion throughout their administrations. Patrick has explicitly characterized ACA Medicaid expansion as harmful, stating in 2022 that Texas was fortunate not to participate because expansion states faced fiscal pressure. The Texas Public Policy Foundation, a conservative think tank with significant influence in state policy, has advocated for Medicaid reform focused on reducing enrollment and strengthening work-support programs outside the healthcare system rather than expanding coverage.
Polling suggests Texas voters support expansion at approximately 73%, but this public preference has not translated into legislative action given Republican supermajorities and leadership opposition. The political environment heading into the 2027 legislative session (Texas legislators meet only in odd-numbered years) shows no indication of change. If anything, the passage of H.R. 1 with mandatory work requirements may have strengthened arguments against expansion by adding federal conditions that complicate the political calculus.
What H.R. 1 Means for Texas#
Although work requirements do not apply, other H.R. 1 provisions significantly impact Texas healthcare infrastructure and populations. The law’s effects on non-expansion states operate through different mechanisms than expansion state impacts.
The elimination of enhanced federal matching for expansion populations does not directly affect Texas since the state never received this funding. However, the elimination removes a significant financial incentive for future expansion. States that expanded Medicaid previously received 90% federal matching for expansion adults; now that incentive has diminished toward traditional matching rates. The American Rescue Plan’s temporary 5 percentage point increase in traditional Medicaid matching for newly expanding states has also expired. Texas faces a less attractive fiscal proposition for expansion than existed before H.R. 1 passage.
Disproportionate Share Hospital (DSH) payment reductions, accelerated under H.R. 1, particularly impact Texas given the state’s large uncompensated care burden. Texas hospitals provide approximately $8 billion annually in uncompensated care. DSH payments partially offset these costs. With reductions now in effect as of October 2025, safety-net hospitals face intensified financial pressure without any corresponding coverage expansion to reduce uncompensated care demand. The Chartis Center for Rural Health identifies 47 Texas rural hospitals as vulnerable to closure. One-third of the state’s 157 rural hospitals have fewer than 10 days cash on hand, and one-third operate at a loss.
The $50 billion Rural Health Transformation Fund established under H.R. 1 may provide temporary relief, but Texas must compete with other states for these limited funds, and the funding sunsets after five years while structural challenges persist. The funding does not address the fundamental coverage gap issue; it merely attempts to maintain provider infrastructure serving uninsured populations.
H.R. 1 reduces retroactive Medicaid coverage from 90 days to 60 days beginning January 2027, affecting all Medicaid beneficiaries including Texas’s existing population. Individuals who delay applying for Medicaid will face increased medical debt exposure. The requirement for semi-annual eligibility redetermination beginning December 2026 will affect Texas’s existing Medicaid population, not just expansion adults. Children, pregnant women, elderly, and disabled populations will face more frequent verification requirements. Texas’s experience during the COVID-19 public health emergency unwinding, when over one million Texans lost coverage with significant procedural disenrollments, suggests that more frequent redeterminations could produce similar coverage disruptions.
Cross-Program Context and SNAP Changes#
H.R. 1 imposes stricter work requirements for SNAP beginning in late 2025, affecting approximately 2.8 million Texans who received SNAP benefits before the changes. The law also shifts SNAP administrative cost burden from 50-50 federal-state split to 75% state responsibility beginning October 1, 2026. This cost shift occurs well before the 90th legislative session, creating budget pressures that the 2027 legislature will need to address.
Texas operates SNAP Employment & Training programs through Workforce Solutions, the state’s workforce development system. If Texas ever expanded Medicaid, cross-program verification between SNAP and Medicaid would be essential for reducing beneficiary burden. Deemed compliance for individuals meeting SNAP work requirements, as Michigan implemented, could significantly reduce verification demands. However, Texas has not developed these cross-program connections because it has no expansion work requirements to coordinate.
The state’s TANF program already includes work requirements for parents receiving cash assistance. This infrastructure could theoretically support Medicaid work requirement implementation if expansion occurred, but TANF serves a much smaller population than Medicaid expansion would cover.
Managed Care Landscape Without Expansion Requirements#
Texas operates one of the largest Medicaid managed care programs in the nation, with approximately 68% of Medicaid spending flowing through MCOs. The state’s managed care architecture includes STAR (children, pregnant women, families), STAR+PLUS (elderly and disabled populations, including long-term services and supports), STAR Kids (children with disabilities), and STAR Health (children in foster care).
Major MCOs operating in Texas include Centene (Superior HealthPlan), Elevance (Amerigroup), UnitedHealthcare, Molina Healthcare, Community First Health Plans, and Texas Children’s Health Plan. Because work requirements do not apply, Texas MCOs do not face the navigation, verification, and retention challenges confronting MCOs in expansion states. Their challenges relate to serving existing populations efficiently rather than managing compliance for expansion adults.
This creates an interesting divergence in managed care capabilities. Texas MCOs have extensive experience with traditional Medicaid populations but no institutional knowledge of work requirement verification systems, exemption processing, or compliance appeals. If Texas ever expanded with work requirements, MCOs would need to build these capabilities essentially from scratch, potentially learning from expansion states’ experiences but facing the challenge of implementing at Texas scale: over one million potential expansion adults, a population larger than most states’ entire Medicaid programs.
Tribal Considerations and IHS Infrastructure#
The three federally recognized tribes in Texas would have been exempt from work requirements had Texas expanded. The exemption for tribal members, enshrined in H.R. 1, applies to “Indians” as defined under federal law who are enrolled in federally recognized tribes. The Alabama-Coushatta Tribe of Texas (Big Thicket region, approximately 1,200 enrolled members), Kickapoo Traditional Tribe of Texas (Eagle Pass area, approximately 650 members), and Ysleta del Sur Pueblo (El Paso, approximately 4,700 enrolled members) maintain small reservations and can access care through Indian Health Service facilities and urban Indian organizations like Texas Native Health in Dallas.
Medicaid provides supplemental coverage and revenue for tribal health facilities, but the work requirement debate is largely theoretical given Texas’s non-expansion status. Tribes in expansion states receive both IHS funding and Medicaid reimbursement for tribal member care. Texas tribes operate only with IHS funding for tribal members, missing the supplemental Medicaid revenue stream available in expansion states.
Looking Forward: The 2027 Legislative Session and Beyond#
Texas will continue operating outside the work requirement framework unless it expands Medicaid. No expansion appears likely in the near term given entrenched political opposition and Republican legislative supermajorities. The 2027 legislative session could revisit expansion, but political dynamics suggest continued resistance. Federal cuts to Medicaid and marketplace subsidies may increase pressure by destabilizing the existing safety net, but could also strengthen arguments that Medicaid is an unsustainable program best avoided.
For the 617,000+ Texans in the coverage gap, the work requirement debate in other states is academic. Their challenge is not meeting verification requirements but convincing their state to offer them coverage in the first place. The federal mandate’s passage has not changed this fundamental reality; if anything, it has made expansion politically more complicated by adding federal conditions to an already contentious state policy choice.
If Texas ever does expand, the state would need to build work requirement implementation infrastructure essentially from scratch. Unlike states with prior experience or developed systems, Texas would have minimal institutional knowledge of verification systems, exemption processing, or compliance monitoring. The scale of Texas’s potential expansion population, over one million people, would dwarf most other states’ implementation challenges. Any Texas expansion would likely adopt lessons from other states’ failures: automatic verification using existing data systems, maximum use of exemptions and deemed compliance, and avoiding monthly reporting requirements that proved impractical in states like Georgia.
The larger question remains unanswered: does Texas prefer categorical exclusion of working adults from coverage over conditional inclusion through expansion with work requirements? The state’s trajectory suggests the former. Whether that preference will persist through changing political circumstances, legal challenges, or evolving federal policy remains genuinely uncertain. For now, Texas stands as the clearest example of non-expansion as policy choice, leaving the nation’s largest coverage gap population without coverage while expansion states implement complex systems to verify their expansion adults are working.