An Optimist’s Take on What's Next for Health Tech in Medicaid

Laura Nolan is with Manatt Health, an integrated health care advisory group combining legal and consulting services. Laura has worked for ten years with public and private partners at the state and federal levels on Medicaid-related data, policy, product, and research.Laura Nolan is with Manatt Health, an integrated health care advisory group combining legal and consulting services. Laura has worked for ten years with public and private partners at the state and federal levels on Medicaid-related data, policy, product, and research.

2025 was a tough year for Medicaid. I've spent the past decade consulting and researching across the Medicaid space, which covers almost 80 million Americans, and 2025 hit hard.  

For the uninitiated, Medicaid is America’s health insurance program for low-income individuals, which includes 40% of all kids, 40% of all births, and 60% of all nursing home residents. Nearly 70% of adults have some connection to the Medicaid program – as a member themselves, or through a family member or close friend – although many don’t even realize it. And Medicaid was a lifeline during the pandemic – providing healthcare to millions of individuals who lost their jobs, and letting them stay on the program until the end of the Public Health Emergency, despite income changes. 

But memories are short, and the political winds have shifted. The budget reconciliation bill (H.R. 1), signed into law on July 4, 2025, implements funding cuts and more stringent eligibility requirements, among other hits to the program. It is inevitable that millions of people will lose access to Medicaid. And policy priorities have shifted away from allowing the use of Medicaid funds to cover interventions that address the social drivers of health (e.g., housing and transportation), although those factors contribute to 80% or more of health outcomes. 

Despite the headwinds, there are still companies thriving in the Medicaid space – doing well and doing good – and there’s a lot to learn from them. 

Over the past few months, I’ve been researching these players and spending time with their investors to understand how they’re adapting in the current market. I walked away feeling motivated. I’m not a venture capitalist, but I do know that the best investment returns involve contrarian bets, meaning not everyone will be rushing in the same direction to throw down capital. So for those looking for a more creative, outside-the-box opportunity – why not Medicaid? 

There are at least two dozen rapidly-growing VC-backed companies that are already building technology specifically for Medicaid – either building explicitly for Medicaid members, or building for providers, systems or processes predominantly serving Medicaid members. These companies are providing care coordination, extra support during high-need times such as pregnancy and childbirth or substance abuse treatment, and reducing transportation barriers and administrative burden with tech-enabled or virtual care. Established platforms are also stepping into the Medicaid space, even despite the challenges. For instance, Maven Clinic, in the women’s health space, is developing and scaling in Medicaid after building up its primary business selling into the commercial market. Elektra Health is serving the Medicaid market too.

— (@)

I called up Carli Sapir of Amboy Ventures, who just co-led Nest Health’s Series A, to hear her take on why she’s continuing to fund businesses serving Medicaid members. Nest Health is purpose-built for family healthcare, with a focus on Medicaid. I asked Carli how she responds to founders and investors who are worried about changes to the program. Her answer was immediate: “Show them Pomelo”. 

Pomelo Care is a virtual, data-driven, value-based approach to care for pregnant women and kids that reduces expensive NICU stays, cesareans, and other poor maternal outcomes with a focus on Medicaid members. As a private company, we don’t have access to Pomelo’s financials, but the company did just raise an impressive $92 million Series C at a $1.7 billion valuation. Pomelo Care assigns a personalized care team to the birthing person/baby dyad to provide continuous monitoring during pregnancy to identify risks early, and provides unlimited pregnancy and newborn care support (think nutrition counseling, birth planning, lactation support, 24/7 answers to questions) during pregnancy and for a year after delivery. While Pomelo Care began with a focus on pregnant and postpartum Medicaid enrollees and their kids, they’ll use the new funding to expand beyond maternity care to support women and children across the life course.

As I canvassed the VC market, I saw plenty of other gaps, including large segments of healthcare where I only saw one or two companies. Behavioral health is a great example, where Brave Health is a standout. So where are other opportunities in Medicaid? Here are just three spaces in which there has been some investment, but huge opportunities remain for founders considering Medicaid: caring for complex older adults, holistic behavioral health treatment, and improving Medicaid program administration.  

Focus on complex, older adults

With the exception of the 37 million kids enrolled in Medicaid and low-income adults, Medicaid enrollees are some of the highest-cost individuals across the life span: complex newborns, pregnant women, elderly, and individuals with disabilities. 

The vast majority (75%) of Medicaid enrollees are covered under managed care, meaning that, for a per-member-per-month cost, insurance companies cover care for Medicaid enrollees the way they do members in other lines of business. So payers have an incentive to consider innovations that improve outcomes and reduce costs, particularly among their most complex members. That incentive may not exist in other areas of healthcare. 

In the last 5 years, there has been a sustained focus on complex older adults who are often eligible for both Medicaid and Medicare (called “dual eligibles”). Companies that stand out to me here include:

• Papa Pals, a digital platform connecting older adults and individuals with disabilities to companions to reduce loneliness and help with activities of daily living
• WelbeHealth, a Program of All Inclusive Care for the Elderly (PACE) that supports frail and/or elderly seniors aging at home and in the community 
• Pair Team, a care coordination platform that connects individuals with complex needs to medical, mental health, and social support

Although companies in this space have shown they can reduce costs and improve outcomes for plans, the next frontier is showing they can hit the scale needed to improve the lives of millions more older adults. 

Where I think there is a wide open opportunity to better care for complex older adults is in “dementia tech”. Most people with dementia have Medicare, but many also end up on Medicaid, which covers nursing home care (Medicare does not) after spending down their resources. Existing startups like Isaac Health and Rippl Care are a start, but there is an immense, untapped opportunity in helping the millions of people with memory loss live more safely and comfortably at home. Startups should focus on bringing more services to the home, and on wearables and in-home devices adapted to the needs of individuals with memory loss and their caregivers, provided at an accessible price point.

Double Down on Behavioral Health

Another space of both innovation and opportunity is behavioral health (mental health or substance use disorder, SUD), conditions that are more prevalent in Medicaid enrollees than in the general population. Early innovations focused on both virtual-only and hybrid options offering therapy and/or medication. The Peterson Health Technology Institute has found that virtual solutions for depression and anxiety reduce symptoms and address barriers to care, like stigma and lack of transportation. For example, for mental health needs, Marble Health works with schools to provide mental health care to students. Other startups like Bicycle Health offer medication-assisted treatment for SUD. 

The wide open opportunity here is in addressing co-occurring conditions. Co-occurring mental health and SUD conditions, co-occurring behavioral health and physical health conditions, and co-occurring serious mental illness (e.g., schizophrenia) and SUD and physical health conditions are extremely common. Co-occurrence can make it very challenging to adhere to and benefit from treatment for a behavioral health condition. New models integrating peers, advocates, and/or care coordinators are promising, such as Marigold Health and Benchmark Health, which aim to reduce isolation and steer individuals and their families to wrap-around support and evidence-based treatment, respectively. But they are still in early stages and need to show ROI.

Improve Medicaid Program Administration 

I can’t write about technology and innovation in Medicaid without addressing the need for innovation in the administration of the Medicaid program itself. It’s hard for individuals to apply for and stay enrolled in Medicaid. It’s hard for providers to register in and get paid by Medicaid. It’s hard for plans to track and fulfill complex contractual and reporting requirements for their Medicaid line of business. And it’s hard for states to keep up with and implement Medicaid policy changes. Better technology can help.  

A bright spot in Medicaid program administration innovation for members is Fortuna Health, which was backed in 2025 by Andreessen Horowitz and others. The company helps reduce applicants’ administrative burden when applying for Medicaid, reporting a 5x faster process for applicants than the status quo. 

The wide open opportunity I see here is in better technology for states’ administration of the Medicaid program itself. States invest enormous sums of money in eligibility verification, claims and encounter processing, provider network validation, contract management, quality measure calculation, reporting to CMS, and innumerable other activities that are required by law. States’ administrative costs have continued to rise and the impacts on state budgets are starting to be covered in the press (see here for how expensive it is for states to obtain wage data and here for concerns about the robustness of state data systems). There is an opportunity to adopt advanced technologies and solutions such as AI-enabled Medicaid application assistance, automated verification, real-time data matching, and integrated Medicaid–Marketplace platforms that reduce administrative burden and protect coverage.

So yes, 2025 was not a great year for Medicaid, but there’s reason to be optimistic about 2026. Companies are showing measurable impact for the Medicaid population, attracting funding, and improving lives. The headwinds are real, but the flip side of that is an increased openness to change, and an appetite for new ideas that improve outcomes, reduce costs, and increase access to healthcare for vulnerable populations. Veenu Aulakh of Acumen America told me she hopes that “with great change [in 2025] comes a willingness to try something new.” 

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