Biggest challenges facing Florida Medicaid, 2026–27

Florida’s Medicaid program faces a convergence of operational, fiscal and policy pressures in 2026–27. The most urgent issues are falling enrollment that masks unmet need, procedural disenrollments, a major managed-care transition, provider network stress, federal funding shifts and political resistance to Medicaid expansion. Each problem amplifies the others. This article explains the problems, shows the likely downstream impacts, and lists targeted actions policymakers and providers should prioritize.

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1. Rapid enrollment decline and hidden coverage gaps

Florida’s Medicaid rolls fell sharply after the end of federal continuous enrollment protections. By mid-2025 enrollment stood at roughly 4.15 million, down hundreds of thousands from the 2023 peak. That drop both reduces program costs on paper and hides a critical problem: many people who remain eligible lost coverage for procedural reasons and now face coverage gaps. Lower enrollment creates a false sense of relief in budget projections while leaving unmet health needs in the community.

Why it matters. People who lose coverage for administrative reasons often postpone primary care, rely on emergency services, and re-enter coverage sporadically. That drives worse health outcomes and higher long-term costs.

2. Procedural disenrollment and administrative failure

A large share of terminations nationwide have been procedural, not eligibility-based. In Florida advocates and reporting show the same pattern: missing paperwork, returned mail, portal issues and identity verification delays caused many terminations. Procedural disenrollments are concentrated among families with complex medical needs and children who face gaps moving between Medicaid and CHIP.

Operational consequence. Administrative churn strains call centers, enrollment contractors and community partners. Re-enrollment often requires clinical intervention that local clinics and hospitals must absorb. This lowers continuity of care and erodes trust in the safety net.

3. Large managed-care reprocurement and continuity-of-care risks

Florida began a major SMMC 3.0 contract transition in early 2025 that reassigns many enrollees into new managed-care plans and reorganizes regions and vendor responsibilities. While the contracts include continuity-of-care provisions, large transitions always risk interrupted provider relationships, pharmacy authorizations and case management for complex patients.

What to watch in 2026–27. Continuity for children with complex needs and long-term services is fragile. If managed-care plan networks are narrow or administrative handoffs are weak, families will experience delays in specialty appointments, durable medical equipment, and therapy authorizations.

4. Provider participation and network adequacy

Low payment rates and administrative burden drive some physicians and behavioral health providers to limit or stop accepting Medicaid patients. Rural hospitals and safety-net clinics are particularly vulnerable. If network adequacy deteriorates, access falls even when people are technically enrolled. Reports from the field in 2024–25 already flagged provider stress and access problems for specialty and behavioral health care.

Impact on patients. Reduced provider access means longer waits, more travel, and increased use of emergency services. For elderly patients needing long-term services and supports (LTSS) the result is worse outcomes and higher costs.

5. Long-term services, workforce shortages, and home-and-community-based care

Florida’s aging population increases long-term care demand. Home health, personal care attendants and nursing staff are in short supply. Workforce shortages slow placement in appropriate settings and increase reliance on institutional care. That raises costs and reduces patient choice. Workforce shortages also undermine the state’s ability to implement value-based LTSS initiatives. (See state workforce analyses and LTSS program reports for local data.)

Practical effect. Delays in home-based services push more people into nursing homes or hospitals, increasing Medicaid expenditures and lowering quality of life.

6. Behavioral health access and integration

Behavioral health demand rose during and after the pandemic. Florida’s system faces insufficient inpatient beds, limited community-based providers, and capacity gaps for children’s mental health. Behavioral health integration into primary and managed care networks remains incomplete. Without targeted investment and stable reimbursement, behavioral health access will continue to be a bottleneck.

7. Prescription drug management and pharmacy controversies

Pharmacy benefit management and drug rebate flows are a major cost driver. Florida has experienced disputes with large managed-care contractors and PBMs about passing rebate savings back to the state. Contracts, settlements, and transparency around rebate retention will shape pharmacy budgets in 2026–27. A high-profile settlement in 2025 highlighted risks to state savings and raised questions about oversight.

Why it matters. If rebate savings are not fully secured, the state faces larger net drug costs. That puts pressure on plan payments, provider rates, and program benefits.

8. Federal funding changes and DSH reductions

Federal policy changes can alter hospital Disproportionate Share Hospital (DSH) payments and other supplemental funding. National DSH reduction schedules beginning in Federal Fiscal Year 2026 threaten to remove billions from hospital support mechanisms. For Florida that means an expected multi-year reduction in DSH allocations that could stress hospitals serving high volumes of Medicaid and uninsured patients. State planners must model these cuts and identify offsetting mechanisms.

State-level risk. Without mitigation, DSH cuts can accelerate rural hospital closures and reduce access for low-income communities.

9. Budget pressure and forecasting mismatch

At the surface, lower enrollment reduces short-term state costs. But forecast models can be misled if unmet need grows off-roll. Recent state economist forecasts showed spending pressures for Medicaid managed-care plan payments and long-term services that contributed to budget shortfalls or mid-year adjustments. A mismatch between enrollment-based projections and actual care needs risks creating year-end deficits and ad-hoc cuts.

Fiscal takeaway. Budget planners must stress-test scenarios where enrollment falls while per-enrollee costs rise. Contingency funds and careful contract oversight are required.

10. Fraud, oversight and program integrity

The scale of Medicaid leaves room for waste and error. High-value contracts, PBM arrangements and complex managed-care payments require robust state oversight. When contractors fail to pass savings or mismanage obligations, the state bears costs and loses public trust. Strong audits, transparent contracting and clear remedial pathways matter in 2026–27.

11. The political and legal barrier to Medicaid expansion

Expanding Medicaid to cover adults up to 138% of the federal poverty level would close a major coverage gap and bring federal dollars into Florida. Several advocacy groups pushed expansion, but legal and legislative obstacles slowed ballot initiatives and legislative action. In 2025 a major ballot drive delayed plans to 2028 because of new state rules that constrain petition campaigns. Political resistance and legal barriers mean expansion is unlikely in the immediate 2026–27 window. That keeps about 1–2 million low-income adults in a coverage gap or in unstable marketplace coverage.

Policy implication. Without expansion, state policymakers must design targeted programs to reach the near-poor and avoid costlier downstream care.

12. Health inequities and concentrated county-level impacts

The enrollment decline and access problems are not evenly distributed. Counties with lower provider density, higher poverty, or limited safety-net capacity will feel the effects more acutely. Children with special healthcare needs and people with complex disabilities are more likely to experience disruption when managed-care transitions and procedural terminations occur.

Recommended priorities for 2026–27

1. Restore administrative reliability. Invest in a simplified redetermination process, multilingual outreach, reliable address/ID verification, and expanded community navigation. Prioritize preventing procedural disenrollments.

2. Protect continuity of care. Enforce robust COC rules in managed-care contracts. Require temporary direct provider payments where transitions cause gaps.

3. Stabilize provider networks. Raise targeted reimbursements for primary care, behavioral health, and LTSS workforce supports. Use directed payments and incentives tied to access metrics.

4. Secure pharmacy savings and PBM transparency. Strengthen contract language to ensure rebate pass-through and audit rights. Publish program-level pharmacy spend.

About the Author

Ask Medicaid Florida is a trusted independent author focused on simplifying Medicaid news, policy updates, and healthcare resources for Florida residents. With a mission to make complex Medicaid issues understandable, Ask Medicaid Florida provides clear, factual, and timely insights that help readers stay informed and empowered. "You are valued, thank you for visiting our website".

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