About 25% of Jackson residents live in poverty, and the city struggled for years with water quality problems and understaffing at its water treatment plants.
Health officials have said Mississippi could receive about $1 billion a year from the federal government for Medicaid expansion.
A nurse shortage accelerated during the COVID-19 pandemic and the exodus has added further strain on the health care system.
The department filed a proposal to appoint a third-party manager for the Jackson water system.
