Four states have filed a lawsuit to prevent the federal government from mandating Medicaid work requirements under threat of funding loss. The attorneys general of Minnesota, Oregon, New Mexico, and Washington argue that this coercion is unconstitutional, echoing a 2012 Supreme Court ruling that made Medicaid expansion optional.
A Legal Challenge to Federal Coercion
The lawsuit, filed in U.S. District Court in Oregon, claims that the federal penalty for non-compliance—the loss of all Medicaid funding—exceeds Congress’s spending power. The states seek a ruling that participation in the work requirements should be optional, according to Minnesota Attorney General Keith Ellison.
This case draws parallels to the 2012 Supreme Court decision in National Federation of Independent Business v. Sebelius, where the court ruled that Congress could not force states to expand Medicaid by threatening existing funding. The current lawsuit argues that the work requirements fundamentally alter Medicaid’s purpose, and the same constitutional limits should apply.
Ellison described the situation as “a bait-and-switch and it’s unconstitutional.” The complaint further asserts that the changes will cause “irreparable sovereign, fiscal, and public-health harms.”
Impact on Medicaid Enrollees
The work requirements, set to take effect on January 1, 2027, mandate that adults aged 19 to 64 covered through Medicaid expansion must demonstrate 80 hours of monthly work, community service, or education. The Urban Institute projects that 3 million to 7 million people could lose coverage nationally if the work requirements take effect.
In Minnesota alone, approximately 243,000 residents will be subject to these rules. The groups most vulnerable to losing coverage include hourly and seasonal workers, caregivers, individuals with chronic illnesses, and those without stable addresses.
For now, enrollees should prepare as if the rules will take effect, updating their contact information and keeping records of work, school, or volunteer hours. Community health centers and legal aid groups can provide assistance with notices and appeals.
The Administration’s Defense and State Implementation
The work requirements stem from H.R. 1, the 2025 budget law, and apply to 43 states and Washington, D.C. Supporters argue that these rules align Medicaid with other assistance programs that have long-standing work requirements. CMS Administrator Dr. Mehmet Oz stated in June that the rule “helps Americans build skills and independence through work, education, job training, or community service.”
Nebraska became the first state to enforce the rules, starting May 1. Federal officials can grant temporary extensions into 2028 for some states, though the states involved in this lawsuit seek a ruling rather than a delay. The Centers for Medicare & Medicaid Services has not commented on the pending litigation, as reported by MPR News.
Potential Coverage Losses and State Responses
Critics highlight the risk of coverage losses if the work requirements take effect. In Arkansas, a similar program in 2018 led to approximately 18,000 adults losing coverage before a federal judge halted it. Later studies found no significant increase in employment among those affected.
In Minnesota, about 1.2 million residents rely on Medical Assistance, the state’s Medicaid program. Even a win for the states would not end the requirements nationwide, and the federal government could appeal, while states that choose to implement the rules would still do so on the current timeline.
Enrollee Preparations and Potential Risks
Enrollees in the affected states should continue preparing as if the rules will take effect on January 1, 2027. Those who believe they qualify for an exemption should consult their clinic or caseworker to determine which documents are necessary.
Exemptions are available for pregnant and postpartum individuals, medically frail people, parents and caregivers of children 13 or younger, veterans with a total disability rating, and other specified groups.
No one should skip needed care while paperwork is pending, and hospital emergency departments must screen and stabilize patients regardless of coverage.
The lawsuit was filed less than 60 days before the January deadline, and no public hearing schedule has been reported. Even if the states succeed, the ruling would only apply to the four states involved, and the federal government could appeal. States choosing to implement the rules would proceed as planned, leaving the national impact uncertain.
