Three States Pause Medicaid Reentry Plans as Budget Law Bites

At least three states — Oregon, Rhode Island and Michigan — have paused or withdrawn plans to switch on Medicaid coverage for people before they leave jail or prison, casualties of the budget and eligibility changes required by last year's federal reconciliation law, according to reporting published Wednesday by the nonprofit health newsroom Tradeoffs. Nineteen states hold federal approval to run those programs. Four have actually started.

The initiative is one of the few Medicaid efforts of the past decade with bipartisan support in both red and blue states. Congress directed federal health officials to work on prerelease coverage in 2018, and beginning in 2023 states started winning Section 1115 waivers letting Medicaid pay for a limited set of services in the 30 to 90 days before someone is released — a period when overdose risk spikes. Research published in the New England Journal of Medicine found former inmates face sharply elevated death rates in the first two weeks after release, with overdose the leading cause.

What the four operating states are doing

California, Washington, Montana and New Hampshire are the states with programs up and running. Tens of thousands of incarcerated people there are being screened for substance use disorder, started on medications for opioid use disorder and connected to a community clinician before the gate opens. Federal guidance issued in 2023 sets the floor: addiction treatment, a supply of medication at release, and a case manager to hand the patient off to outside care.

It is early for outcome data. Officials in Washington say people enrolled before release have been less likely to return to custody, but no state has published mortality or emergency-department figures yet.

The build itself has proven to be the hard part. States spent years writing data-sharing agreements, persuading county sheriffs to participate, and reconciling two bureaucracies that share almost no vocabulary.

"What we really needed was a translator between the Medicaid agency and the jails," Marc Stern, a Washington physician who has worked in correctional health for 25 years, told Tradeoffs. "Because Medicaid doesn't speak jail, and jail doesn't speak Medicaid."

The reconciliation law consumed the staff who would have done it

H.R. 1, the reconciliation package known as the One Big Beautiful Bill Act, requires state Medicaid agencies to stand up work requirements, run eligibility checks more often, and absorb spending reductions. Those are the same administrators who would otherwise be negotiating with corrections departments.

Oregon Medicaid Director Emma Sandoe said her state still wants prerelease coverage but cannot get to it. "What physically can be done with the amount of time, with the amount of resources available, is limited," she said.

Rhode Island withdrew its reentry request in June 2025. Michigan rescinded its application last December, citing insufficient funding and writing that the initiative "will be archived and considered for future efforts to support reentry populations." Advocates tracking the work say most other states are still moving ahead, at least on paper.

Louisiana shows what approval now costs

Louisiana is the test case for what the current administration will sign. Gov. Jeff Landry announced in April that the state had rewritten its waiver to comply with Section 71118 of H.R. 1, which imposes budget-neutrality requirements on Medicaid demonstrations starting Jan. 1, 2027 — the first state in the country to do so.

Deputy Medicaid Director Pete Croughan described the negotiation as an "intensive delete process." What survived: mental health care, medications for addiction treatment, infectious disease screening, and durable medical equipment such as wheelchairs. What did not: primary care inside the facility. Under the revised plan, people will be introduced to a clinician they can see after release rather than treated before it.

"There's definitely evidence that folks with untreated mental health and addiction issues are more likely to die. So we have to solve for that," Croughan said. "I don't know that there's evidence for that for someone with untreated knee pain."

The state also asked Washington for less startup money, planning to draw instead on the new Rural Health Transformation Fund and an existing federal source. Rollout would begin at the eight state prisons run by the Department of Public Safety and Corrections, then extend to parish jails as they are ready.

Asked whether other states must now follow Louisiana's template, the Centers for Medicare & Medicaid Services declined to say. A spokesperson said the agency "understands that states may face varying challenges during implementation" and remains committed to supporting states.

The argument over what gets cut

Lauren Brinkley-Rubinstein, a Duke University professor who studies health after incarceration, said Louisiana kept the right core — medications for opioid use disorder are the intervention with the clearest mortality benefit. Her objection is to what falls away around it. People leaving prison frequently carry several chronic conditions that went poorly managed inside, and under a stripped-down waiver they arrange that care themselves while also looking for housing, food and work.

"Going to the doctor and refilling that prescription is just never going to rank higher than those other things," she said. "It makes it more likely that they are going to come back through the [jail or prison] door."

That tension — a narrow program that can be approved and financed against a broad one that addresses co-occurring conditions — is now the design question in every state still pursuing a waiver. It arrives on top of the older problem these programs were meant to fix: many jails still do not offer opioid use disorder medication at all, and the ones that do often make people wait weeks for a first dose.