Montana to Implement Medicaid Work Requirements in July Amid $183 Million Budget Shortfall
Why It Matters
Montana is preparing to become one of the first states in the nation to enforce new Medicaid work requirements, even as the state’s health department grapples with a major funding gap. The timing is drawing concern from medical providers and patient advocates who warn that low-income residents could lose coverage just as the system’s capacity to serve them is shrinking.
What Happened
Montana is scheduled to activate Medicaid work requirements on July 1, making it the second state after Nebraska to do so — a full six months ahead of the federal deadline set by the One Big Beautiful Bill Act signed by President Trump. The law requires most Medicaid enrollees to document at least 80 hours per month of work, school, or qualifying activity to maintain coverage.
Montana first authorized work rules in 2019 but lacked federal approval to move forward until now. State health officials say the years-long runway gave them time to prepare for implementation.
At the same time, the Montana Department of Public Health and Human Services is dealing with a $183 million shortfall in state and federal funds — the product of an underestimate of Medicaid enrollment and an overestimate of federal contributions. The department has been forced to borrow against next year’s budget to cover the gap.
To partially offset those costs, the department is weighing whether to withhold a 3% provider rate increase that lawmakers and Gov. Greg Gianforte had previously approved. Healthcare organizations are pushing back hard, arguing that current Medicaid reimbursement rates already fall short of actual care costs, making it difficult to recruit and retain staff.
By the Numbers
- $183 million — combined state and federal funding shortfall in Montana’s Medicaid budget
- July 1 — Montana’s planned start date for enforcing Medicaid work requirements
- 80 hours per month — minimum work, school, or qualifying activity required under the federal mandate
- ~$1 trillion — projected reduction in federal Medicaid spending over 10 years under the One Big Beautiful Bill Act
- 15% — approximate workforce shortage at behavioral health nonprofit Aware, which reports more than 70 unfilled group-home beds
Voices from the Field
Jean Branscum, CEO of the Montana Medical Association, expressed concern about whether state agencies have the bandwidth to manage so many simultaneous changes. “Our concern is, is the department ready?” she said. “Does the capacity exist for all this to be done right and ensure that patients don’t pay the price?”
Matt Bugni, head of the behavioral health nonprofit Aware, said his organization was counting on the approved rate increase to stabilize staffing. “There are waiting lists,” he said. “We just can’t staff it.”
Sierra Riesberg of the Montana Behavioral Health Alliance said the state’s provider network has yet to fully recover from cuts made nearly a decade ago, when the state’s caseworker system was largely dismantled and more than half of Montana’s public assistance offices closed. “We still are struggling,” she said.
Gov. Gianforte signed a $300 million behavioral health investment package in 2023 aimed at rebuilding those services, and created an initiative to channel Medicaid funds into addiction treatment gaps. Riesberg acknowledged progress but noted that some beds created through those efforts remain empty due to difficulty recruiting staff at current reimbursement levels.
Zoom Out
Montana’s situation is drawing attention from national health policy analysts as a preview of what other states will face. Georgetown University researcher Joan Alker noted that the federal law shifts a larger share of food assistance program costs onto states while creating tax provisions that could reduce state revenues. “States are the ones that are gonna have to do the dirty work of implementing cuts,” she said.
The new law also requires states to re-evaluate Medicaid enrollees every six months rather than annually, adding administrative burden at a time when many state agencies already struggle with backlogs and understaffing. For rural states like Montana, where provider shortages are already a serious challenge, the layered demands are compounding pressure on a system that was already strained.
What’s Next
Montana’s July 1 implementation date is rapidly approaching, and state health officials have directed questions to an informational website rather than answering directly. Providers are waiting for a final decision on whether the rate increase will be withheld. Nationally, the Jan. 1, 2027 deadline for the remaining 42 Medicaid expansion states means Montana’s rollout will serve as an early case study for how work requirements function in practice — and what disruptions they produce along the way.
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