Oregon health officials have abandoned a first-of-its-kind Medicaid expansion that would have provided health coverage to people preparing to leave jails and prisons—an initiative advocates once hailed as a potential model for other states.
The decision, confirmed this week in an internal memo from the Oregon Health Authority (OHA), comes after months of delays and uncertainty surrounding the future of federal Medicaid funding under the new Republican-led “One Big Beautiful Bill” (House Resolution 1).
A Program Meant to Bridge a Deadly Gap
The now-canceled $64 million “reentry benefits” program had been years in the making. It aimed to close a critical gap in care that leaves most people exiting incarceration without insurance—often resulting in untreated illnesses, relapse, or fatal overdoses in the first weeks after release.
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Under the original plan, Oregon would have provided incarcerated adults with basic health services for up to three months prior to release, including addiction counseling, behavioral health care, and short-term prescriptions. The goal was to ensure individuals were enrolled in Medicaid (through the Oregon Health Plan) by the time they returned to the community.
When the federal government approved the program in 2023 under the Biden administration, Oregon became one of the few states granted permission to extend Medicaid coverage to people behind bars—a major policy breakthrough. The initiative was set to begin in early 2026, pending federal renewal in 2027.
Funding Cuts and Bureaucratic Hurdles
In the memo circulated Monday, OHA officials cited technical challenges and funding restrictions introduced by the new federal spending law as the primary reasons for scrapping the initiative.
OHA spokesperson Kristen Lambert said the state was left with “little flexibility or time” to update its eligibility systems under the new rules, which impose stricter Medicaid requirements and deep funding reductions.
The decision also reflects new federal guidance under the Trump administration, which has signaled plans to curb states’ use of so-called “designated state health programs”—a funding tool that allows states to creatively direct Medicaid dollars toward initiatives not traditionally covered under the program.
Federal officials have accused states of stretching those waivers too far, using them to fund unrelated programs like rural internet infrastructure or housekeeping services for non-Medicaid recipients. In an April statement, the Centers for Medicare and Medicaid Services (CMS) called such uses “creative interpretations” that divert federal resources away from Medicaid’s core mission.
“A Tremendous Loss” for Oregon’s Health System
State Rep. Pam Marsh (D-Ashland), a vocal supporter of health reform in correctional settings, said she understands OHA’s difficult choice but called the outcome “a tremendous loss.”
“This program could have been a huge breakthrough,” Marsh said. “It’s disappointing, but I recognize that OHA is facing enormous challenges just trying to keep Oregon’s Medicaid program functional under these new federal restrictions.”
Oregon Medicaid Director Emma Sandoe praised the team’s efforts, saying OHA “remains committed to expanding health care access and improving outcomes for incarcerated and formerly incarcerated Oregonians.”
She emphasized that the decision does not affect other upcoming Oregon Health Plan expansions, such as nutrition stipends for low-income families and new health coverage for youth exiting foster care or juvenile detention.
Advocates Warn of Increased Overdose Risks
Public health advocates warn the consequences of this policy reversal could be severe.
“This decision risks making addiction recovery harder and our communities less stable,” said Angela Kim, a former ICU nurse who was once incarcerated at Coffee Creek Correctional Facility and now works with the Oregon Justice Resource Center.
“We know what happens when people leave prison without health care,” Kim said. “We see more overdoses, untreated illness, and preventable deaths. Medicaid reentry coverage was our chance to change that.”
Research consistently shows that people released from incarceration face an elevated risk of fatal overdose—up to 40 times higher than the general population in the first two weeks after release. The reentry benefits program had been specifically designed to address that risk.
Political and Practical Fallout
Beyond the immediate human toll, lawmakers worry the collapse of the reentry initiative could stall other public health innovations tied to Oregon’s opioid response strategy.
Marsh, who helped pass a $10 million grant program to assess and treat opioid addiction inside jails, said that without Medicaid support, local facilities will struggle to sustain those efforts.
“Our jails already fall short of providing even basic care,” she said. “The Oregon Health Plan was supposed to fill that gap. Without it, we’re setting people up to fail the moment they walk out.”
Oregon’s waiver for the reentry program had been set to expire in 2027, meaning it would soon fall under the jurisdiction of the Trump administration, which has shown little interest in renewing experimental Medicaid projects. With the administration now signaling an end to federal support for such waivers, Oregon officials concluded it was “futile to proceed.”
What Comes Next
For now, OHA says it will redirect focus toward maintaining coverage for the nearly 1.5 million Oregonians who rely on the Oregon Health Plan, even as federal cuts loom. The agency also plans to continue collaborating with correctional institutions and nonprofits to connect people with community-based care post-release—though without Medicaid’s financial backing, those efforts will be limited.
The end of the reentry benefits program underscores a growing divide between state innovation and federal austerity. For Oregon’s health advocates, it’s a sobering reminder that progress in public health can vanish as quickly as it’s built.
As Kim put it, “We were so close to creating a system that treated people with dignity when they needed it most. Now, it feels like we’ve taken ten steps back.”
