Last spring we walked through Medicaid’s role in supporting early childhood educators and subsequently the risks of proposed federal Medicaid cuts to the child care system. Fast forward to July 4th: the HR 1 “Megabill” was rushed through reconciliation and signed into law, leading to the biggest cut in Medicaid’s 60-year history. These cuts– and many others in the bill, including those to SNAP– will pervade communities and families across the US, including harming child care workers and the young families they serve.
The child care market is already facing “unworkable” challenges. These challenges are caused by underinvestment, exceptionally high costs, and insufficient compensation and supports for the workforce. And because child care programs tend to be small businesses where employer-sponsored coverage is too expensive, many child care workers are covered through Medicaid, and specifically the Affordable Care Act (ACA) Medicaid expansion. In fact, 43% rely on assistance programs like SNAP, TANF, the Earned Income Tax Credit, and/or Medicaid. Child care providers have reported increased difficulty meeting basic needs like health care and housing, with the RAPID survey’s March 2025 data hitting an all-time high for material hardship. Further weakening these essential supports and safety nets for an already strained workforce– and many of the families they serve– will have a far-reaching spillover effect on program access and quality of care for young children.
So, what do cuts to Medicaid mean for the child care workforce it supports?
The new law has considerable implications for the child care workforce and consequently the young families who rely on them, particularly with regard to provisions targeting the ACA Medicaid expansion. Effective January 2027, individuals covered through Medicaid expansion will be required to report work, community service, or work program participation of at least 80 hours per month. There are exemptions for certain groups such as pregnant people, parents of children under age 13, and those with special medical needs, but it is mandatory and non-waivable for all states with ACA Medicaid expansion (40 states and DC) plus certain states that use waivers to cover expansion adults (Wisconsin and Georgia).
The Congressional Budget Office estimated that this policy alone will lead to 5.2 million expansion adults losing coverage. As evident in individual states’ work requirements over the years, a significant portion of these disenrollments will be caused by procedural errors, excessive paperwork, and other red tape that comes with reporting monthly hours. In other words, early childhood educators regularly working 80+ hours/month and parents or caretakers of young kids are still at risk of losing their coverage and at the very least will have new stressors and administrative burdens added to their plates as they aim to document that they are meeting the mandatory requirement or are eligible for an exemption. The work requirement is joined by four other provisions that undermine the ACA’s Medicaid expansion, one of which requires states to conduct eligibility redeterminations every six months (as opposed to the current 12 months) for those who qualify under the expansion. Comparing the uninsurance rate for child care workers in expansion versus non-expansion states shows that states without expansion have an uninsurance rate nearly four times higher (7.4% versus 27.3%), therefore revealing the consequential role of expansion for child care professionals. Between these two provisions, individuals enrolled through Medicaid expansion will now have significantly more red tape and paperwork hurdles to overcome on a regular basis in order to stay covered.
H.R. 1’s cuts to immigrant eligibility also stand to negatively impact the child care landscape. Section 71109 eliminates Medicaid and CHIP eligibility for many lawfully present immigrants, including refugees and asylees, victims of human trafficking and domestic violence, those here for humanitarian reasons, and more. Once this provision takes effect in October 2026, there will only be three immigrant designations eligible for full Medicaid services under federal law: lawful permanent residents (typically following a five-year waiting period), Cuban and Haitian entrants, and Citizens of the Freely Associated States (COFA migrants). A fourth group, lawfully residing children and pregnant adults, may have access to full Medicaid services but only if their state has taken up the Immigrant Children’s Health Improvement Act (ICHIA) option.
Almost 500,000 early childhood educators, or 21% of the workforce, are immigrants. The Center for the Study of Child Care Employment’s new data found this percentage gets significantly higher in Florida (38%), California (39%), and New York (40%). For immigrant child care workers who do not fit into one of the three legal distinctions above, Medicaid will no longer be an option unless they live in one of the seven states (CA, CO, IL, MN, NY, OR, WA) and DC providing health coverage to immigrants regardless of immigration status using state-only funds. Further compounding these changes to Medicaid eligibility are numerous anti-immigrant policies that will impact young families’ access to basic needs, including H.R. 1’s SNAP provisions cutting immigrant eligibility and new guidance from five federal agencies reinterpreting definitions under the Personal Responsibility and Work Opportunity Reconciliation Act by expanding the list of “federal public benefits” in a way that may make it harder for immigrants to access needed services. The Department of Health and Human Services’ (HHS) changes include restricting eligibility for Head Start, a program that provides early learning and developmental supports for kids birth to age 5, which will have extensive implications for immigrant families with young kids.
Nearly 30% of the child care workforce relies on Medicaid and there are now multiple provisions in motion that will make accessing and qualifying for health care more difficult. Added red tape and administrative barriers for people eligible for Medicaid expansion, redefined immigrant eligibility across public benefits such as Head Start, and overall spending cuts to essential programs like SNAP and Medicaid undermine the stability necessary for young children, families, and child care workers to thrive. The child care system is already in crisis with high burnout and turnover rates amongst early childhood educators and closures of centers across the country. These federal changes will make a bad situation worse.