4 states sue HHS to stop Medicaid work requirements

Dive Brief:

• Four states are suing the HHS over Medicaid work requirements, arguing the CMS did not have constitutional authority to impose them. The requirements are set to take effect on Jan. 1.
• The plaintiffs are asking the court to block cuts to federal Medicaid funding for states that do not enact work requirements, according to the suit filed Thursday in a federal court.
• The lawsuit is another shot fired at the work requirements policy and follows an October court decision striking down CMS’ medical frailty provision.

Dive Insight:

The Medicaid work requirements were passed as part of the GOP’s “Big Beautiful Bill” in July 2025. Per the requirements, individuals who receive Medicaid via the Affordable Care Act’s Medicaid expansion must complete 80 hours of work, volunteering or schooling each month to maintain coverage.

In the new lawsuit, filed by state attorneys general from Oregon, Minnesota, New Mexico and Washington, plaintiffs argue that this goes beyond the scope of the CMS’ authority and infringes on states’ sovereign interests. Under the law, states have little option but to comply with the work requirements, considering the federal Medicaid funding at stake. [AV: Changed “attorney generals” to “attorneys general” — a very weird plural lol]

But the work requirements significantly “transform” Medicaid essentially into a new program, the plaintiffs argue. Previous court rulings have held that the CMS cannot threaten existing Medicaid funds for participation in such a substantially altered Medicaid program.

The lawsuit asks the court to declare the withholding of federal Medicaid funds unconstitutional. The plaintiffs also seek a preliminary and permanent injunction on funding cuts for states that do not enact work requirements.

The lawsuit also touched on the financial impacts the Medicaid work requirements could have on the states. The plaintiffs argue that the work requirements impose direct administrative compliance costs and put states at risk for secondary costs, such as higher uncompensated care costs due to higher uninsurance rates.

The arguments echo those made in similar lawsuits challenging the Medicaid cuts. In June, 25 states plus Washington, D.C., sued the Trump administration, citing high administrative costs to carry out Medicaid work requirements. A federal judge rejected that bid in July.

Late last month, that same judge did agree that the “medical frailty” provision of the work requirements, which provides an exemption for certain sick people, went beyond Congress’ original intent. The judge also gave a six-month stay on enforcing medical frailty determinations.

States are less than 60 days out from the start date for the new Medicaid eligibility requirements. However, this lawsuit and the decision on medical frailty could complicate timing for the implementation deadline.