The Medicaid Churn Crisis: Impact on Healthcare Access

As of spring 2025, more than 13 million Americans have lost Medicaid coverage since the end of the federal COVID-19 public health emergency. While some losses were expected, the scale and speed of disenrollments—many due to technical errors—have sparked a national debate about the use of automation and artificial intelligence in determining healthcare eligibility.

With the Trump administration accelerating policy shifts laid out in the Project 2025 playbook, including new work requirements, premiums, and time limits, the Medicaid eligibility system is being re-engineered in real time. But critics warn that the very technologies designed to streamline enrollment are now becoming obstacles to care.

Redetermination Meets Algorithmic Oversight

Since April 2023, states have been re-evaluating Medicaid eligibility as pandemic-era continuous coverage protections expire. Many rely on automated systems to verify income, employment, and residency using third-party data sources. But these systems—built by a patchwork of public and private contractors—have led to widespread errors.

In Arkansas, for example, a KFF report found that nearly 78% of those disenrolled by mid-2024 were removed for “procedural reasons,” such as missing paperwork or system-generated flags—not because they were actually ineligible.

“There’s growing evidence that automated systems are prioritizing speed over accuracy,” said Joan Alker, Executive Director of the Georgetown University Center for Children and Families. “The result is preventable loss of coverage for children, the elderly, and people with disabilities.”

Technology Vendors in the Crosshairs

Many states have contracted with major eligibility and claims processing firms—such as Maximus, CivicActions, and Accenture—to modernize Medicaid operations. These systems often use AI or machine learning algorithms to identify risk factors for fraud or ineligibility.

But AI tools trained on historical data may amplify biases or overlook social determinants of health that influence eligibility. Critics point to opaque algorithms, minimal oversight, and the lack of appeals transparency as systemic risks.

“States are delegating life-changing decisions to black-box systems without requiring vendors to explain how those decisions are made,” said Michele Gilman, professor of law at the University of Baltimore and an expert on AI and public benefits. “That violates basic due process.”

The Trump Policy Overlay

Compounding the problem is a shifting federal policy environment. Under Project 2025, the Trump administration has signaled support for stricter Medicaid eligibility controls, including:

Nationwide work requirements for able-bodied adults
Monthly premiums tied to income levels
Lifetime caps on Medicaid coverage

While these policies face legal challenges, some states are moving ahead using waivers granted under Trump’s Centers for Medicare & Medicaid Services (CMS). Georgia’s implementation of work requirements began in March 2025 and is already under federal scrutiny for its error-prone rollout and limited coverage gains.

In Florida, CMS is reviewing a state-submitted waiver that would automate disenrollment for beneficiaries who fail to log into a benefits portal within a 30-day window—raising further alarm among patient advocates.

Revenue and Risk for Health Systems

Hospitals and health systems are increasingly worried about the financial impact of Medicaid churn. The American Hospital Association (AHA) has warned that increased uninsurance will reduce patient volumes, drive up uncompensated care, and weaken safety-net hospitals—particularly in the South and Midwest.

In Texas, UT Health System reported a 13% rise in charity care costs over the past two quarters, driven largely by patients who lost Medicaid coverage mid-treatment.

Revenue cycle vendors and eligibility vendors are also under pressure to adjust systems quickly to accommodate evolving federal and state eligibility criteria. Companies that offer real-time eligibility intelligence or appeals support—like FindHelp and Provata Health—are seeing spikes in customer inquiries and pilot programs.

The Opportunity for Reform—Or Exploitation

As enrollment systems become more automated, new business models are emerging to address gaps. Several digital health startups are exploring AI-driven benefits counseling tools, while others are piloting language-accessible Medicaid renewal bots. But without robust oversight, there is concern that some solutions may optimize for efficiency rather than equity.

“The risk is that Medicaid becomes a system that optimizes for minimizing enrollment, not maximizing access,” said Dr. Danny Weiss, policy fellow at the Commonwealth Fund. “That’s not a tech problem—it’s a policy choice.”

What Comes Next

Litigation over Medicaid disenrollment practices is already underway in several states. Meanwhile, CMS is expected to release updated technical guidance this summer clarifying the use of AI and automation in state Medicaid systems, particularly around redeterminations and appeals.

For now, health tech leaders must navigate a Medicaid environment defined by regulatory volatility, technological fragmentation, and rising patient need. Those that can balance compliance, innovation, and ethics may find new partnerships with state agencies and health systems. Those that can’t may be swept away in the churn.

Sources:

The Medicaid Churn Crisis: How Automation, Policy Shifts, and AI Are Rewriting Access to Care