Budget Reconciliation Leaves Reentry Programs Intact But Vulnerable

Medicaid’s role in correctional health care is becoming embedded in federal policy through sustained, bipartisan action even as the overall Medicaid program is facing cuts. Over the past several years, Congress and federal agencies have worked across administrations to support a new vision of continuity of care for people leaving incarceration. Recent changes to this crucial transition are significant because historically a variety of policies, especially the Medicaid Inmate Exclusion Policy, have severely restricted the ability of carceral and community providers to work hand in hand to promote the health of reentrants. As a result, people leaving incarceration face significant and alarming rates of infectious disease, chronic health issues, and preventable deaths. Smoothing the transition from incarceration back to the community and better enabling a variety of providers to play a supportive role works to mitigate those trends. While there are signs that Medicaid reentry programs continue to enjoy support from both sides of the aisle, these programs (and their patients) will inevitably be impacted by impending cuts and changes to Medicaid.

Momentum Signals Medicaid Reform In Corrections Is Here To Stay

For the past six years, there has been strong bipartisan support for improving access to Medicaid for people leaving incarceration. Key momentum began with the SUPPORT Act of 2018, passed under the first Trump administration, which required the Centers for Medicare & Medicaid Services (CMS) to issue guidance allowing states to request waivers of the longstanding Medicaid inmate exclusion. Since then, states across the political spectrum have adopted these waivers to provide Medicaid coverage during the reentry transition period. The widespread uptake demonstrates that the value of providing care before release transcends party lines.

The Consolidated Appropriations Act of 2022, passed during the Biden administration with bipartisan support, further solidified this vision. Section 5121 requires states to provide Early and Periodic Screening, Diagnostic, and Treatment and targeted case management services for Medicaid-eligible youth up to 30 days before release from incarceration. This law went live on January 1, 2025, although implementation has been uneven. Section 5122, which allows coverage for pretrial youth, remains an unutilized but significant opportunity for states.

To support state-level implementation of these provisions, in 2024 CMS launched a Notice of Funding Opportunity, offering up to $5 million per awardee to help states build the necessary infrastructure. The current Trump administration extended this program, signaling an intent to follow through on its implementation. The continuity across administrations demonstrates that the political will to reform correctional health care is not fleeting.

It’s worth noting that amidst these statutory changes, there have been other bills that have not been included in any final legislation yet have garnered significant support. When Vice President JD Vance was the junior senator from Ohio, he was an original cosponsor of both the Reentry Act—which would allow Medicaid to cover incarcerated individuals 30 days before release—and the recently reintroduced Due Process Continuity of Care Act, which would allow for pretrial detainees to maintain their Medicaid benefits before their trial. These bills demonstrate the strong bipartisan support for the idea that access to care should not be severed simply due to detention status.

Meanwhile, the Health Resources and Services Administration (HRSA) has created new implementation pathways by finalizing a 2024 Policy Information Notice allowing Federally Qualified Health Centers (FQHCs) to deliver services inside correctional facilities in the 90 days prior to release. This change unlocks new possibilities for local governments and FQHCs to partner on reentry care and strengthen continuity. FQHCs are well-positioned for this role, with access to a Prospective Payment System rate, discounted drugs through the 340B program, and liability protection under the Federal Tort Claims Act. These supports help make care in jails and prisons sustainable.

With bipartisan legislation on the books, federal infrastructure in place, and administrative support spanning two administrations, Medicaid reform in corrections has demonstrated its staying power.

Threats To Medicaid Are Threats To Bipartisan Progress

Despite the success that Medicaid reform in corrections has enjoyed, it is still part of the Medicaid program. That means that significant cuts to Medicaid will impact Medicaid reentry programs, despite efforts to avoid this outcome.

The exact structure and implications of proposed Medicaid cuts  have yet to be seen, but the consequences of reduced eligibility and increased administrative burden, in any form, are more than likely to directly undermine the potential of prerelease coverage. For example, the final budget bill imposes work requirements in all Medicaid programs for able-bodied adults but it also includes a carve out for individuals incarcerated and for individuals within 90 days post-incarceration.

The carve out is important and again signals that access to Medicaid for individuals involved with the carceral system is an ongoing priority for lawmakers. However, it does not fully account for the many obstacles that accompany reentry, especially those that pertain to employment barriers once back in the community. Mandated work requirements are more likely to complicate coverage for people who have been incarcerated by increasing the complexity of reintegration into their community.

Work requirements also serve to undermine two key functions of the waivers. The waivers include a requirement for states to provide case management during the pre- and post-release period and to use that service to mitigate the structural barriers that prevent access to Health-Related Social Needs (HRSN), like employment and housing. Conditioning coverage of post-release case management on a work requirement, as the bill would eventually require, will inevitably lead to loss of coverage for those that cannot find employment within months of release. Coverage loss can not only potentially undo meaningful relationship building and program engagement developed during the transition period, but it would also predictably reinforce the complex barriers that warrant assisted access to employment, housing, and other social needs in the first place.

Other more technical proposed changes to the Medicaid program, like a shift in budget neutrality calculation or changes to cost-sharing, are expected to shift the burden of funding more heavily to states. This may force states to cut provider rates. Such a shift is especially concerning because the providers who work closely with low-income communities, where carceral involvement is often disproportionately high and therefore so are instances of reentry, already experience a heightened demand and a lack of resources. Cutting rates further will make it more difficult for providers to continue to serve low-income patients, including patients who have recently returned to the community from jail or prison.

At first glance, these changes may seem divorced from reentry reforms, but increased budgetary pressure at the state level will inevitably result in reduced spending on new infrastructure and systems transformation—overwhelmingly important components of facilitating better communication and collaboration amongst carceral, government, and community partners. Moreover, the temporary and experimental nature of the waiver programs make them particularly vulnerable to increased pressures on Medicaid—in other words, with less money and more requirements, states will likely be forced, or at least incentivized, to reduce optional programming.

The Consequences Of Sweeping Executive Actions

Reentry efforts may not be at the center of the contentious budget discussion in Congress or the rapid-pace efforts of the executive branch, but like most of the US health ecosystem, they will not come away unscathed by the changing federal landscape. Through a slate of actions including Executive Orders, reorganizing the Department of Health and Human Services (HHS), and the development of a new health commission, President Trump and his HHS Secretary, Robert F. Kennedy Jr., have made clear that this administration plans to significantly shift the regulatory landscape for health care access by eliminating health equity initiatives, crafting new agency structure and practices, and rolling back certain Biden administration priorities.

Key government partners, like the Centers for Disease Control and Prevention, the Substance Abuse and Mental Health Services Administration, and the Health Resources and Services Administration now exist under a new entity that plans to “improve coordination of health resources for low-income Americans.” While undergoing mass restructuring, HHS has also seen steps to eliminate some of the offices dedicated to the prevention and elimination of HIV as well as various efforts dedicated to addressing the overdose crisis. And in contrast to commitments to public safety, the administration has cut $820 million in Department of Justice grants, many of which funded services that aim to relieve over-reliance on carceral interventions and facilities. Thus, jails and prisons—where overall prevalence of substance use disorder, mental health conditions, and infectious disease, among other chronic illnesses, is high but treatment is often lacking—will also share in the consequences.

Prisons and jails across the United States house disparate rates of people of color, especially Black people; LGBTQ+ people, especially trans people; and people from low-income communities. In fact, nearly half of all Black transgender people in the US are likely to experience incarceration at some point in their life. To reduce such significant and stark disparities in these and other communities, meeting one of the broad goals of reentry reforms, communities will need to use targeted campaigns and initiatives that account for cultural differences and varying, distinct needs. Attacks on equity further complicate and deter those initiatives that seek to directly address heightened rates of chronic illness or to better engage community members from disparately impacted groups.

Finally, although untouched by restructuring, CMS has also seen changes signaling a new course for the federal government when it comes to social determinants of health. In early March the Trump administration rescinded Biden-era guidance on health-related social needs, signaling a more conservative approach to the use of Medicaid funds for services related to housing, transportation, and nutrition, among others. This is particularly complicated for the reentry waivers, which as mentioned, are designed to mitigate the barriers often faced by people leaving incarceration as they attempt to address their health-related social needs.

What’s Next

Reforms at the intersection of health and reentry have succeeded on assurances that they will provide solutions to some of the costliest and most pressing issues faced by carceral and health care systems alike, but the most transformative promises of these reforms are those most likely to face significant obstacles to success under proposed changes. Medicaid is the most important pathway to meaningful health care coverage for those leaving incarceration, which makes the bipartisan support for Medicaid reentry programs a bright spot in health policy in the recent years, and there are signs that Medicaid reentry will continue to enjoy bipartisan support.

But Medicaid overall is undeniably harmed by restrictive proposals on eligibility and access to care. Building carve outs for people leaving incarceration is helpful and appropriate, but these patients will still be impacted by a Medicaid program that is underfunded and has significant procedural requirements, like eligibility verifications every six months.

Finally, these stark predictions do not fully cover the complications arising from budget reconciliation or the sharp shift in national priorities under a new administration. Federal lawmakers seemingly agree that the high costs of incarceration must be addressed, and recent policymaking indicates there is still broad agreement that Medicaid is a critical tool in supporting the millions of low-income people behind bars with complex health needs. However, incarceration and reentry cannot be divorced from health equity, nor the structural integrity of Medicaid, if real change is to be realized.

——————