Senators Investigate Medicaid Eligibility System Failures Amid Work Requirement Changes
In a significant move, U.S. senators have initiated an inquiry into several companies that have received billions in taxpayer funding to develop Medicaid eligibility systems. This investigation comes in response to alarming findings that these systems are riddled with errors, potentially jeopardizing health coverage for millions of Americans. The inquiry highlights concerns that the impending work requirements mandated by recent legislation could further complicate an already convoluted process for low-income individuals seeking healthcare.
Background of the Inquiry
On October 10, a group of Democratic senators, including Ron Wyden of Oregon, Elizabeth Warren of Massachusetts, Raphael Warnock of Georgia, and independent Bernie Sanders of Vermont, sent letters to four major contractors: Deloitte, GDIT, Gainwell Technologies, and Conduent. This action follows a detailed investigation by KFF Health News, which uncovered widespread issues in states utilizing Deloitte’s systems to assess Medicaid eligibility. The investigation revealed that these technological failures have led to the wrongful loss of health coverage and other essential benefits for vulnerable populations.
As of June 2023, approximately 70.5 million individuals were enrolled in Medicaid, according to the Centers for Medicare & Medicaid Services (CMS). The senators expressed their concerns that the companies involved are prioritizing profits over the well-being of Americans, stating that these contractors are “essentially health care middlemen that are in the business of red tape.”
The Role of Contractors in Medicaid Systems
Most states do not manage their Medicaid eligibility and enrollment systems independently; instead, they rely heavily on contractors. Deloitte, a global consulting firm that reported revenues of $70.5 billion in fiscal year 2025, has secured contracts in 25 states for eligibility systems, amounting to at least $6 billion. This dominance raises questions about accountability and oversight, especially given the history of performance issues associated with these contractors.
Kinda Serafi, a partner at Manatt Health, noted that states are currently in a “major sprint” to adapt their systems to incorporate new work requirements by 2027. This urgency has led to an influx of proposals from vendors eager to secure lucrative contracts, underscoring the financial stakes involved.
The Implications of Work Requirements
The new work requirements, part of a tax and domestic spending law signed by former President Donald Trump in July, mandate that Medicaid beneficiaries must work or engage in qualifying activities for at least 80 hours a month to maintain their benefits. The Congressional Budget Office (CBO) projects that by 2034, approximately 5.3 million enrollees could lose their coverage due to these requirements.
Historically, states that have implemented similar work requirements have faced significant challenges. For instance, Georgia’s program, which does not adopt the Affordable Care Act (ACA) Medicaid expansion, has resulted in only a fraction of eligible individuals receiving coverage. As of mid-August, only 9,157 out of nearly 110,000 applicants were enrolled in Georgia’s Georgia Pathways to Coverage program, despite the state spending $109 million on the initiative.
Specific Failures and Accountability
The senators’ letters highlighted specific failures in Deloitte-run systems. In Florida, for example, the eligibility system mistakenly cut benefits for new mothers, while a glitch in Kentucky delayed coverage applications for ten months, costing the state over $522,000 to resolve. These examples illustrate the critical need for reliable systems that can accurately determine Medicaid eligibility.
The senators have requested responses from the companies by October 31, seeking clarity on whether their contracts include financial incentives tied to the removal of Medicaid enrollees and whether they face penalties for erroneous terminations. They also demanded an accounting of lobbying expenditures over the past five years, emphasizing the need for transparency in how these companies operate.
The Future of Medicaid Eligibility Systems
As states prepare to implement the new work requirements, they face the daunting task of upgrading their eligibility systems. In Missouri, for instance, the state anticipates spending approximately $33 million on system upgrades to comply with the new regulations. Meanwhile, California is also preparing for changes, with expectations that upgrades will be processed through existing contractual agreements.
The challenges posed by these new requirements are compounded by the complexities of existing systems. Tessa Outhyse, a spokesperson for the California Department of Health Care Services, indicated that while contracts often allocate funds for changes, the actual costs may exceed initial estimates.
Conclusion
The inquiry into Medicaid eligibility systems underscores a critical juncture in the U.S. healthcare landscape. As states grapple with the implementation of work requirements, the performance of contractors like Deloitte will be under intense scrutiny. The senators’ call for accountability and transparency is a necessary step in ensuring that the systems designed to support vulnerable populations do not become barriers to access. With millions of lives at stake, the effectiveness of these eligibility systems will be pivotal in shaping the future of Medicaid in America.
