Wonk Data Drop: The OBBBA’s Impact on Children’s Coverage

By Meredith Dost, PhD and Robin Ghertner, MPP

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The OBBBA’s Impact on Children’s Coverage

Children with Chronic Health Conditions Are More Likely to Lose Medicaid Coverage due to New Community Engagement Requirements

By Meredith Dost, PhD and Robin Ghertner, MPP

The One Big Beautiful Bill Act’s (P.L. 119-21, OBBBA) made significant structural changes to Medicaid.

One of those is a first-ever national creation of community engagement requirements, known colloquially as work requirements.

We found that those community engagement requirements will lead to fewer children and parents enrolled in Medicaid, including those with chronic health conditions and behavioral health issues. 

These losses will be primarily due to administrative burden; increased red tape and enrollment system complexity that can lead to otherwise eligible children losing coverage.

We created ballpark projections for how this may affect, in particular, children with chronic health conditions.

• Up to 68,000 children could lose Medicaid because their parents lose coverage as a result of the work requirements. 

• This includes up to 14,500 children with chronic health conditions who could lose coverage. 

• They would lose coverage because the burden of maintaining enrollment is too high, or because states commit errors, NOT because they are actually ineligible

• At least 1.9 million children have a parent who is at risk of losing Medicaid coverage.

• Children with chronic conditions are more likely (12.8%) to have a parent at risk of losing coverage, compared to Medicaid children without a chronic condition (5.1%).

• Children on Medicaid who take psychotropic medications are more likely (10.1%) to have a parent at risk of losing coverage compared to those not taking these medications (5.3%).

OBBBA doesn’t target children, but they will be affected

One key change to Medicaid from OBBBA is the introduction of community engagement requirements in every state.

Adults ages 19–64 will be required to prove that they work, complete community service, or attend school for at least 80 hours per month, or qualify for an exemption.

OBBBA’s changes aren’t supposed to affect children’s coverage — but they will through indirect impact. And, as a consequence, child welfare systems need to be prepared.

For one thing, Medicaid pays for behavioral health and other supportive services that many parents need to safely care for their children.

Losing Medicaid-funded services may put their children at risk of entering the child welfare system (Brown et al., 2019). 

That’s because parental substance use disorders and other behavioral health conditions are a major driver of child welfare involvement.

In 2023, the Children’s Bureau reported that  38 percent of entries to foster care were at least in part because of parental drug or alcohol use. Given data reporting issues, that percentage is likely much higher.

Furthermore, when parents lose coverage, even when their children remain eligible, the children may also lose coverage. 

Children are more likely to remain covered when their parents are enrolled in Medicaid (Sommers, 2006; Devoe et al., 2015).

We know from the experience of families subject to work requirements in Arkansas, Georgia, and New Hampshire that fewer eligible adults maintained enrollment for two reasons. 

First, administrative burden: it’s hard for anyone to navigate and comply with complex eligibility rules and requirements (Sommers et al., 2020). 

Second, state Medicaid systems must create brand-new processes and IT systems to implement the requirements, which are costly, time-intensive, and error-prone.

Interruptions to children’s health care coverage have many negative consequences, from absenteeism in schools (Roy et al., 2021) to poorer health outcomes (Cha et al., 2023). 

All of this in turn undermines healthy child development and can lead to system involvement. 

Our own work here at the Wonk shows that children in foster care already have higher behavioral health diagnoses, which may be due to undiagnosed issues before entering foster care.

The conversation on Medicaid community engagement requirements hasn’t addressed the impact on children with chronic conditions and behavioral health issues

There’s been little discussion about how children with chronic illnesses or behavioral health conditions will be affected. 

Topline discussion has focused on who work requirements impact  directly; adults who do not have a disability or dependent children under the age of 14.

That misses the policy’s indirect impact on children’s coverage. 

We haven’t seen anyone estimate how many children - particularly those with chronic health conditions - could lose coverage. 

These conditions require preventive and reactive health care and can be very costly. Both chronic and behavioral health conditions are on the rise in children (Forrest, 2025) .

We estimate that, from 2020–2022, an annual average of 3.2 million children on Medicaid were treated for a chronic health condition; anything from asthma to autism. 

It is critical to understand how the new work requirements will raise the risk of disenrollment for this population of children who are eligible for Medicaid and have demonstrable need for services.

In this analysis, we present two sets of ballpark estimates to analyze this issue.

These are admittedly rough, given the uncertainty about how things will play out, but it’s critical that decisionmakers have something to start with.  

First, we provide projections for how many children may lose Medicaid coverage, with a focus on certain health conditions.

Second, we provide estimates on the number of children on Medicaid whose parents may lose Medicaid coverage. These estimates are stronger methodologically (though still not perfect).

So let’s dive in.

Our Approach to Projecting the Effect on Children’s Medicaid Enrollment

We don’t want to drown you in the methods, but it’s important to understand some things up front about the assumptions we have to make. 

National work requirements have never been implemented in Medicaid so there’s limited research to draw upon.

If you are interested in the details, jump to the Methodological Details section at the end.

For the previous House version of the final bill, CBO estimated that 10.9 million could lose Medicaid coverage by 2034 due to OBBBA’s changes to the Medicaid program, including work requirements.

We haven’t seen anyone publish estimates on how children will be affected under the OBBBA.

We quantify how the burden of implementing work requirements will affect enrollment.

We are interested in people likely to lose coverage because of administrative burden: red tape and unprepared systems. 

This includes some adults who do meet work requirements but are disenrolled because the system is too complex and they are unable to re-enroll. It also includes many of their children.

Based on experience with Arkansas’s and New Hampshire’s implementation of Medicaid work requirements, this is very common. (Georgia had unique experiences that we didn’t use to directly inform our analysis).

When parents lose coverage, their children often do as well - what we call a “reverse welcome mat” (Hudson and Moriya, 2019). 

We use the distinct experiences of work requirements in Arkansas and New Hampshire to create a range of projections. This approach has been taken by others (Karpman et al, 2025; Mann et al., 2025). 

Arkansas and New Hampshire both tried out work requirements in Medicaid, and had very different infrastructure to enforce compliance. 

Arkansas had relatively stronger data systems to automatically assess compliance and was therefore able to streamline eligibility and verification processes. 

New Hampshire was on the opposite end of the spectrum. In both cases, a number of eligible people lost coverage due to system errors and administrative burdens.

Our analysis uses the latest data from the Medical Expenditure Panel Survey (MEPS) for years 2020–2022. 

Other data may provide more accurate estimates of all children, but MEPS is the best national survey on health conditions, medication use, and interaction with the health care system. 

MEPS allows us to hone in on the children we have been focusing on at the Wonk: those with behavioral health challenges and those who are at risk of entering foster care.

Up to 68,000 Children May Lose Medicaid Coverage, Including up to 14,500 With Chronic Conditions

Figure 1 presents our rough projections of the number of children who may lose Medicaid coverage as a result of a parent’s disenrollment:

• Between 55,000 and 68,000 children could lose Medicaid because their parents lose coverage as a result of the work requirements. 

  • They would lose coverage because the burden of maintaining enrollment is too high, or because states commit errors.

• For kids with different conditions, coverage losses vary:

  • Between 11,500 and 14,500 children with chronic health conditions.

  • Between 9,000 and 11,000 children with a mental or behavioral health diagnosis.

  • Between 11,000 and 13,500 children taking psychotropic medications.

These numbers are imprecise and are intended to give an idea of the scale of what may happen.

The projections are short-term — we would consider these the immediate effects in the first year or so of implementation.

As state systems get better at automating verification, there may be less drop-off in enrollment among those eligible. 

But we have to start where states are now, not where they will be years down the road.

Parents Will Lose Coverage, With Higher Losses Among Children With Chronic Conditions and Taking Psychotropic Medication

An estimated 5.8 percent of all children on Medicaid (1.9 million) have a parent who is subject to the OBBBA community engagement requirements and at risk of losing Medicaid coverage. 

As Figure 2 shows, there are important differences based on children’s health conditions:

• Children with chronic conditions are more likely (12.8%) to have a parent subject to the requirements, compared to Medicaid children without a chronic condition (5.1%).

• Children with a mental or behavioral health condition were just as likely as those without such a condition to have a parent at risk of losing coverage. 

  • While the estimates differ (8.2% vs. 5.5%), they do not show a statistically significant difference.

Children taking psychotropic medications are more likely (10.1%) to have a parent subject to the requirements compared to those not taking these medications (5.3%).

Our Main Takeaway: Implementing this Policy Will Lead to Children With Chronic Conditions Losing Coverage

Though children are not directly subject to the OBBBA community engagement requirements to be eligible for Medicaid, they are nevertheless affected by them. 

Children with chronic conditions and those taking psychotropic medications are especially likely to lose Medicaid coverage as a result of their parents losing coverage.

Children’s Behavioral Health May Suffer, and Lead to Further System Involvement

Children with mental or behavioral health conditions were no more likely to lose coverage, or have a parent lose coverage, than children without such conditions. 

This is counter-intuitive; given their greater need, we would expect legislative protection against such coverage loss. 

But the law doesn’t provide any special protection for these children. 

The fact that children taking psychotropic medications are more likely to have parents who lose coverage is also a signal worth noting, as it could impact continuity of treatment. 

What This Means for Child Welfare Systems and Others Providing Care to Children

More children may enter the system with undiagnosed conditions and no treatment.

More families may enter the system when parents do not have access to treatment they need to keep their children safe.

It will fall on child welfare systems to address these conditions, in large part through Medicaid.

What Does This Mean to You?

We want to hear your thoughts about what this analysis means to you in your work, and what further questions it raises for you.

Feel free to write us and answer any of these questions that motivate you:

• Which groups of children are you most concerned about losing coverage?

• What federal changes can help state Medicaid and child welfare agencies be prepared for unintended consequences on children’s Medicaid coverage?

• What approaches can state agencies — Medicaid or in children and family services — take to reduce loss of coverage for eligible children and families who face a high compliance burden?

Methodological Details

Here we describe the data, coding decisions, and methodological approach used in this analysis. 

We use a nationally representative survey commissioned by the U.S. Department of Health and Human Services called the Medical Expenditure Panel Survey (MEPS), for years 2020-2022 (latest available). The MEPS surveys families and individuals along with their medical providers and employers to provide in-depth data on the cost and use of health care in the U.S. For each year, we link the full-year consolidated data files with the medical conditions file and the prescriptions file. We then identified parental relationships in the MEPS and attached parents’ variables to their children’s observations to be able to identify which children had parents who were subject to Medicaid community engagement requirements.

Finally, we pool all three years’ linked files together and merge in the pooled linkage file for common variance structure which allows us to compute accurate estimates that take into account the complex sampling structure. We divide the person-level survey weight (PERWT) by three, the total number of pooled years, to compute estimates that represent annual averages. All analyses were conducted in R and primarily used the “survey” package.

We create each of the recoded variables as follows:

• Parent exempt from Medicaid community engagement requirements is any individual who has a dependent child in their household and meets any of the following criteria, per the OBBB:

  • Age 65+

  • Has a dependent child in their household ages <= 13

  • Disabled, based on Supplemental Security Income (SSI) recipient, which is consistent with how the Supplemental Nutrition Assistance Program (SNAP) classifies disability status

  • Is a student, which was identified by a response that they were not currently working due to being in school

  • Blind, based on if the individual is treated for “blindness” or “low vision”

  • Has a substance use disorder, based on if the individual is treated for any specific substance use disorder (e.g., alcohol, opioid, tobacco)

  • Not on Medicaid (Medicaid is self-reported)

• Parent subject to Medicaid community engagement requirements is any individual who has a dependent child in their household and meets none of the above exemptions.

• Chronic health condition: We classified 20 health conditions as “chronic” based on the classification scheme developed and utilized by the U.S. Department of Health and Human Services. This definition has been used in prior scholarly work (Davis-Ajami et al, 2019; Goodman et al, 2013). An individual is coded as having a chronic condition if they are treated for any of the 20 conditions, which include: arthritis, asthma, autism spectrum disorder, cancer, cardiac arrhythmias, chronic kidney disease, chronic obstructive pulmonary disease, congestive heart failure, coronary artery disease, dementia, depression, diabetes, hepatitis, HIV infection, hyperlipidemia, hypertension, osteoporosis, schizophrenia, stroke, and substance use disorders.

• Mental or behavioral health condition: An individual is coded as having a mental or behavioral health condition if they are treated for any mental, behavioral, or neurodevelopmental disorder (includes all MEPS condition codes beginning with “MBD”).  

• Psychotropic medication use: An individual is coded as taking at least one psychotropic medication if they take a psychotherapeutic agent or a central nervous system agent. These include antidepressants, antipsychotics, anticonvulsants, antimanic, antiparkinsonian, anxiolytics-sedatives, benzodiazepines-barbiturates, central nervous system agents, hypnotics, and stimulants.

Our projections in Table 1 shows the number of children who may lose coverage using the above definition of a parent subject to Medicaid community engagement requirements. To compute how many children may lose coverage, we multiplied the total number of children with a parent subject to the requirements by 25% or 30%, corresponding with half of the percentages that New Hampshire and Arkansas, respectively, were able to automatically determine exempt or compliant using state-held data. We use half of the percentages because we identified nearly all individuals who would be exempt, and data from Arkansas show that about half of the people the state identified as exempt or compliant were compliant due to having wages consistent with working > 80 hours. Then, we multiply the resulting number by 72% or 82%, which are the proportion of adults subject to work requirements in Arkansas and New Hampshire, respectively, who were estimated (Karpman et al, 2025; Mann et al, 2025) to have lost coverage as a direct result of the requirements. 

We do not estimate a scenario with no to very little state automation of work requirement administration, as in Georgia, because OBBBA requires states to automate to the best of their ability. Finally, we multiply the resulting number by 5.7%, a likely conservative estimate of the “unwelcome mat” effect of children losing Medicaid coverage because their parents did, even if children (or their parents) are eligible, due to procedural reasons.

Limitations

Our approach has two key limitations. 

First, like any survey, MEPS undercounts Medicaid enrollment, primarily due to respondents’ underreporting and survey non-response, which is in part mediated by weighting. One study found that the 2007 MEPS undercounts Medicaid enrollment by 11% (Bernard et al., 2012), and it references an internal federal government memo which estimated the 2006 MEPS Medicaid undercount at 12% (Banthin and Sing, 2006). Compared to the Community Population Survey (CPS), MEPS is a much better estimate of Medicaid coverage: CPS has been estimated to undercount Medicaid by around 40% (Davern et al., 2009; Hartman, 2022). The MEPS Medicaid undercount is on par with, to slightly worse than, the American Community Survey (ACS) undercount, which estimates have found ranges from 3.9%-15.5% (McIntyre, 2024; Boudreaux et al., 2019; Hest, 2023), getting larger in recent years. Our estimates should therefore be conservative, underestimates of the number of children affected.

The second limitation is that experiences from two states’ implementing work requirements is not representative of all states. Using Arkansas and New Hampshire has the benefit that they had different system capacities which may reflect a range of how prepared states are. New Hampshire provides a case of having some, though not high, capacity to identify exempt and compliant individuals in state data systems, and Arkansas represents a state with high data systems capacity. 

In the time since these work requirements were implemented (and eventually blocked by the courts), the unwinding of expanded Medicaid coverage from COVID-19-era policy (from April 2023 through 2024) occurred, which is also informative about states programs’ recent capacity across the U.S. States had to redetermine eligibility for all Medicaid recipients, and despite technological advances and streamlining of enrollment and verification processes, state Medicaid programs struggled to navigate this process. 69% of those disenrolled from Medicaid were actually eligible (Tolbert and Corallo, 2024), but they were disenrolled due to procedural reasons or state errors. 4.2 million children lost coverage in this unwinding (Alker et al., 2024), and federal estimates indicate that about three-quarters of these kids were likely disenrolled for procedural reasons (ASPE, 2022). 

When the states begin implementing these national work requirements, there will be a range of state capacity, and we would expect that technological capacity and procedures have improved and will continue to improve over time based on implementation experiences.

References

Alker, J., OSorio, A., Brooks, T., & Park, E. (2024). Child Medicaid Disenrollment Data Shows Wide Variation in State Performance as Continuous Coverage Pandemic Protections Lifted. 

Center for Children and Families, Georgetown Unviersity McCourt School of Public Policy. https://ccf.georgetown.edu/2024/05/02/child-medicaid-disenrollment-data-shows-wide-variation-in-state-performance-as-continuous-coverage-pandemic-protections-lifted/

ASPE. (2022). Unwinding the Medicaid Continuous Enrollment Provision: Projected Enrollment Effects and Policy Approaches (Issue Brief HP-2022-20). Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. https://aspe.hhs.gov/reports/unwinding-medicaid-continuous-enrollment-provision

Banthin, J. S., & Sing, M. (2006). How Medicaid Enrollment Estimates from MEPS Compare with Administrative Totals (Working Paper). Agency for Health Research and Quality.

Bernard, D., Cowan, C., Selden, T., Cai, L., Catlin, A., & Heffler, S. (2012). Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2007. Medicare & Medicaid Research Review, 2(4), mmrr.002.04.a09. https://doi.org/10.5600/mmrr.002.04.a09

Boudreaux, M., Noon, J. M., Fried, B., & Pascale, J. (2019). Medicaid expansion and the Medicaid undercount in the American Community Survey. Health Services Research, 54(6), 1263–1272. https://doi.org/10.1111/1475-6773.13213

Brown, E. C. B., Garrison, M. M., Bao, H., Qu, P., Jenny, C., & Rowhani-Rahbar, A. (2019). Assessment of Rates of Child Maltreatment in States With Medicaid Expansion vs States Without Medicaid Expansion. JAMA Network Open, 2(6), e195529. https://doi.org/10.1001/jamanetworkopen.2019.5529

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Davern, M., Klerman, J. A., Baugh, D. K., Call, K. T., & Greenberg, G. D. (2009). An Examination of the Medicaid Undercount in the Current Population Survey: Preliminary Results from Record Linking. Health Services Research, 44(3), 965–987. https://doi.org/10.1111/j.1475-6773.2008.00941.x

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Forrest, C. B., Koenigsberg, L. J., Eddy Harvey, F., Maltenfort, M. G., & Halfon, N. (2025). Trends in US Children’s Mortality, Chronic Conditions, Obesity, Functional Status, and Symptoms. JAMA. https://doi.org/10.1001/jama.2025.9855

Hartman, L. (2022). Understanding the Undercount of Medicaid Enrollees in the 2020 Current Population Survey Health Insurance Coverage Data. State Health Access Data Assistance Center. https://www.shadac.org/news/understanding-undercount-medicaid-enrollees-2020-current-population-survey-health-insurance

Hest, R. (2023). Tracking the Medicaid Undercount in the 2021 ACS Coverage Data. State Health Access Data Assistance Center. https://shadac-pdf-files.s3.us-east-2.amazonaws.com/s3fs-public/publications/Medicaid_Undercount_ACS_1.23.pdf

Hudson, J. L., & Moriya, A. S. (2017). Medicaid Expansion For Adults Had Measurable ‘Welcome Mat’ Effects On Their Children. Health Affairs, 36(9), 1643–1651. https://doi.org/10.1377/hlthaff.2017.0347

Karpman, M., & Haley, J. M. (2025). Assessing Potential Coverage Losses among Medicaid Expansion Enrollees under a Federal Medicaid Work Requirement. Urban Institute. https://www.urban.org/sites/default/files/2025-03/Assessing-Potential-Coverage-Losses-among-Medicaid-Expansion-Adults-under-a-Federal-Medicaid-Work-Requirement.pdf?utm_source=80m.beehiiv.com&utm_medium=referral&utm_campaign=the-reality-of-work-requirements-designed-to-cut-not-to-put-people-to-work

Mann, C., Serafi, K., Eder, J., Polk, E., & Toups Tranchina, M. (2025). No Place to Hide: Children Will Be Hurt by Medicaid Cuts. Manatt Health. https://lpfch.org/wp-content/uploads/2025/05/No-Place-to-Hide-Children-Will-Be-Hurt-by-Medicaid-Cuts-Brief-FINAL-05-06-2025.pdf

McIntyre, A., Smith, R. B., & Sommers, B. D. (2024). Survey-Reported Coverage in 2019-2022 and Implications for Unwinding Medicaid Continuous Eligibility. JAMA Health Forum, 5(4), e240430. https://doi.org/10.1001/jamahealthforum.2024.0430

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Sommers, B. D., Chen, L., Blendon, R. J., Orav, E. J., & Epstein, A. M. (2020). Medicaid Work Requirements In Arkansas: Two-Year Impacts On Coverage, Employment, And Affordability Of Care. Health Affairs, 39(9), 1522–1530. https://doi.org/10.1377/hlthaff.2020.00538

Tolbert, J., & Corallo, B. (2024). An Examination of Medicaid Renewal Outcomes and Enrollment Changes at the End of the Unwinding. KFF. https://www.kff.org/medicaid/issue-brief/an-examination-of-medicaid-renewal-outcomes-and-enrollment-changes-at-the-end-of-the-unwinding/