Healthcare has always existed at the intersection of policy and politics, a reality that directly affects how managed care organizations design, fund, and deliver programs. For Medicaid and Dual-Eligible Special Needs Plans (D-SNPs), that intersection has never been more consequential. Changes in federal and state leadership, regulatory priorities, and budgetary negotiations are reshaping the ground beneath payers’ feet.
At the same time, health plans are navigating a market defined by margin pressure, demographic shifts, and integration mandates. Even modest regulatory adjustments like eligibility verifications, matching-rate recalculations, and D-SNP alignment rules can significantly alter enrollment dynamics and financial projections.
Evaluate how today’s evolving political environment is redefining Medicaid and D-SNP markets and how health plans and MCOs can stay resilient amid uncertainty.
Why the Political Environment Matters
At its core, health policy change is driven by which party or coalition holds the presidency, Congress and state legislatures, and equally by which states choose to act when federal momentum slows.1 Government determines how healthcare is financed, delivered and regulated. When federal power is divided, major legislative initiatives often stall, but regulatory and administrative levers still move.¹
For Medicaid and D-SNPs, the dual federal–state partnership means:
- Federal policy sets guardrails for eligibility, matching rates, program structure, and oversight
- States execute, adopting expansion, setting Medicaid MCO contracts, determining procurement strategy, and issuing oversight rules for dual-eligible plans
Changes in either arena reverberate through plan design, network requirements, enrollment flows and financial modelling.
Key Areas of Uncertainty for Medicaid
Eligibility and expansion dynamics. Medicaid’s expanded adult eligibility under the Affordable Care Act remains optional for states; changes in federal policy or fiscal incentives may influence whether some states pause, reverse, or limit expansion depending on budget pressures or regulatory shifts.1 For plan sponsors, state decisions on expansion or contraction directly affect the size and risk profile of insured cohorts.
Federal funding and matching changes. Funding for Medicaid is shared between federal and state governments. Any federal proposals to alter matching rates, impose caps, or change eligibility verification requirements would affect state program budgets and could lead to downstream impacts on MCO contracts and plan reimbursement.¹
State contract and waiver flexibility. States hold significant discretion through mechanisms such as the State Medicaid Agency Contract (SMAC) to specify requirements for D-SNPs: data submission, service area alignment, coordination of long-term services and supports (LTSS), and care coordination performance.2 The pace and direction of these state-level changes remain difficult to predict for payers, particularly when state budget constraints or political shifts are in play.
Implications for D-SNPs
D-SNPs occupy a unique space: they straddle Medicare and Medicaid, and regulatory frameworks are shifting toward tighter alignment of these benefits. Recent guidance from the Centers for Medicare & Medicaid Services (CMS) highlights this movement.
With 2027 and 2030 milestones on the horizon for exclusively aligned enrollment and affiliated Medicaid-MCO contracts, health plans must be forward-looking in operational readiness. From a payer perspective, key areas of focus include:
Contracting and service-area alignment. In 2027, D-SNPs affiliated with Medicaid MCOs in the same service area will only be able to newly enroll full-benefit dually eligible individuals who are also enrolled (or enrolling) in the affiliated Medicaid MCO. Non-aligned enrollment will be phased out by 2030. These changes create implications for product portfolio design, service-area selection and enrollment strategy.
Operational systems and integration demands. Plan systems, from enrollment to data exchange, claims, care-coordination, and provider networks, must support integration across Medicare and Medicaid benefits. States are also exercising contracting authority to require D-SNPs to submit Medicare encounter data and Medicaid utilization data as part of oversight. The implications: technology investments, carefully aligned provider networks, and enhanced analytics capabilities.
Enrollment risk and market positioning. Dual-eligible enrollment dynamics fluctuate with every policy recalibration. Shifts in eligibility verification, alignment mandates, and integration models can influence not only membership size but also the acuity and cost structure of enrolled populations. For payers, success depends on anticipating changes and building differentiated programs that address the care coordination and cost-management needs of dual members.
Strategic Considerations for Health Plan Leaders
For organizations designing and managing Medicaid products or D-SNP offerings, the shifting environment suggests several strategic imperatives. Two focus areas stand out.
1. Operational Readiness & State-Specific Strategy
- Monitor rulemaking at CMS and state Medicaid agencies: enrollment windows, alignment rules, benefit integration, quality metrics.
- Assess each state’s Medicaid contracting posture. Are SMACs being revised? Is the state moving toward fully integrated D-SNP models or carve-out approaches?
- Align technology, data and process capabilities to support complex dual-eligible operations (e.g., LTSS coordination, behavioral-health integration, ICD-10 risk scoring across Medicare/Medicaid).
2. Flexible Business Modelling
- Recognize that while major legislative overhauls are rare, incremental regulatory and state-level shifts (eligibility changes, matching-rate adjustments, contract requirements) are continuous.¹
- Incorporate scenario planning. What if a state introduces work requirements? What if automatic alignment mechanisms shift enrollment flows or default assignment rules?
- Develop differentiated member-value propositions. Duals often present higher acuity, comorbidities, and social-determinants-of-health needs. Models that integrate Medicare and Medicaid benefits, coordinate LTSS/behavioral health, and improve member experience will be more defensible amid policy shifts.
Positioning for Stability
The political and regulatory landscape for Medicaid and D-SNPs is changing, and for health plans and MCOs, the stakes are high. Because dual-eligible populations are among the most expensive and complex, small shifts in policy can have outsized impact on program design, risk flow, and operational execution.
That said, the narrative isn’t about picking winners or sides in a political debate. Uncertainty is inherent and must be treated as a strategic design variable. For payers especially, prioritizing operational flexibility, state-specific execution readiness, and deep insight into dual-eligible care models will distinguish the leaders from the followers.
Working with a consultancy like Clearlink can help teams assess readiness, model scenarios, align plan design to regulatory and state-contracting requirements, and deploy systems and processes tailored to dual-eligible populations and integrated care models.
In short: the policy winds may shift, but the underlying fundamentals remain clear. Stay alert. Stay agile. And build a plan that can adapt.
Get in touch with us for clinical and operational management services that help health plans strengthen performance, enhance member outcomes, and maintain compliance amid policy uncertainty.
Sources:
1. The Politics of Health Care & Elections, KFF
2. Optimizing State Medicaid Agency Contracts, MACPAC