Oregon abandons Medicaid expansion for people leaving prison, months after delaying launch

Oregon Health Authority this week notified state prisons and other officials that it no longer intends to implement a novel Medicaid initiative that would have provided targeted health services to those about to exit jail or prison.

The move comes several months after health officials quietly placed the program’s launch on hold, anticipating the passage of sweeping changes to shrink federal Medicaid spending as part of the Republican-led tax cuts package, House Resolution 1, also known as the “One Big Beautiful Bill.”

Referred to as “reentry benefits,” the $64 million Medicaid expansion program had been in the works for more than two years as a way to bridge a critical gap in care that leaves most incarcerated people uninsured upon release, putting them at a higher risk of serious health complications or overdoses.

In a memo Monday, Oregon health officials pinned the decision on the extensive technical and administrative work required to meet the Big Beautiful Bill’s new Medicaid eligibility requirements, and the looming expiration of Oregon’s federal authorization for the program.

Oregon Health Authority spokesperson Kristen Lambert said in an email that the federal spending bill leaves the state “little flexibility or time” to update its online system for managing Medicaid eligibility in order to implement the reentry health care program.

The memo also mentioned the Trump administration’s plans to rein in the use of a funding tool  that allows states to use Medicaid dollars for programs that are typically not eligible, arguing it has been used too liberally by states. Oregon planned to use the tool to finance the reentry benefits.

State Rep. Pam Marsh, D-Ashland, who has advocated to increase resources for prison health care, says she understands the Oregon Health Authority’s decision to nix the initiative before it can get off the ground, seeing as how health officials have “tremendous challenges” ahead to rework the state’s Medicaid program to continue operating with less funding and new work requirements, as mandated by the Big Beautiful Bill.

“Having said that,” Marsh continued, “it’s a tremendous loss because it would have been a huge breakthrough.”

Oregon Medicaid Director Emma Sandoe said the Health Authority is “proud of the work on this program to date” in a statement to InvestigateWest.

“OHA remains committed to collaborating with partners toward increasing health care access and improving outcomes for incarcerated and formerly incarcerated [Oregon Health Plan]/Medicaid members,” she said.

Sandoe noted that the move does not impact other soon-to-be-launched programs for low-income Oregonians through the Oregon Health Plan, such as a forthcoming nutrition stipend and expansion of health services for young adults and juveniles exiting detention or foster care settings.

Oregon had originally planned to launch the reentry benefits program for incarcerated adults in early 2026, the date approved by the Centers for Medicare and Medicaid Services under the Biden administration. However, as InvestigateWest reported in July, the approval was part of a waiver that is only good through 2027, meaning it would have been up to the Trump administration to decide whether to renew it.

While it has not made any public statements on reentry benefits, the Trump administration informed states in April that it will not extend or approve new funding requests for health programs known as “designated state health programs.” These are state-led initiatives that are not normally eligible for Medicaid funding, but can receive these funds under a waiver.

The Trump administration said prior requests have employed “creative interpretations” of waivers to shift what should be supported by states to the federal government. It instead wants to reprioritize federal dollars on programs related to Medicaid’s traditional scope of care.

“Mounting expenditures, such as covering housekeeping for individuals who are not eligible for Medicaid or high-speed internet for rural healthcare providers, distracts from the core mission of Medicaid, and in some instances, serves as an overly-creative financing mechanism to skirt state budget responsibilities,” Centers for Medicare and Medicaid Services said in an April 10 release on the move. The agency did not immediately respond to a request for comment. An automatic email reply stated that responses would be delayed due to the ongoing federal government shutdown.

When the reentry program was approved, Oregon was granted the ability to use designated state health program dollars to cover its portion of the program’s financing. The state also needed an exemption from a longstanding federal policy that largely prevents people living in certain facilities, like prisons, from accessing Medicaid benefits.

The experimental initiative would have provided those nearing the end of their time of incarceration basic health services using Medicaid up to three months before their release. Those services could have included consultations with outside providers, access to behavioral health and addiction counseling, and a short-term supply of prescription medications.

The goal was to help link income-eligible people with Medicaid before they are released from jail or prison and move back into the community. Under federal rules, inmates lose their Oregon Health Plan benefits while confined, meaning that many leave incarceration unsure of where or how they can access any care they may need.

State officials were particularly focused on the impact this lapse in care has on those struggling with substance use disorders: Formerly incarcerated Oregonians are much more likely to experience an opioid overdose than those in the general public — a risk that is especially acute in the first weeks after release, as one 2023 study noted.

Advocates and those who work with people in the justice system viewed the benefits as an opportunity to upend the status quo, where success in transitioning out of incarceration largely depends on how people have been set up by their parole officer or by jail staff.

“We know what happens when people leave prison without health care. We see more overdoses, untreated illness and even preventable death,” said Angela Kim, a former critical care nurse who was previously incarcerated at Coffee Creek Correctional Facility in Wilsonville, Oregon. Kim now works with the Oregon Justice Resource Center’s health advocacy team.

“This decision risks making addiction recovery harder and our communities less stable if people come out underprepared for the health challenges of reentry,” she continued.

Marsh, the Democratic lawmaker, says she’s also now concerned about what the reentry benefits program’s failure to get off the ground could mean for other pilot initiatives to address Oregon’s opioid crisis from behind bars. Medicaid was viewed as the best option to fund these programs in the long term.

One such program Marsh sponsored unlocked $10 million to support Oregon’s jails in assessing people for opioid addiction during their intake and providing medication treatment in the facility.

“Our jails struggle to provide basic care for people, and many times that’s why we’re falling well short of what we all agree would be reasonable health care standards,” Marsh told InvestigateWest. “That’s the bottom line, that’s why we need the [Oregon Health Plan] there.”

InvestigateWest (investigatewest.org) is an independent news nonprofit dedicated to investigative journalism in the Pacific Northwest. Visit investigatewest.org/newsletters to sign up for weekly updates.