Under President Biden’s leadership, the number of people enrolled in Medicaid reached a new record.
Donald Trump’s return the White House, along with a Republican-controlled Senate will change this.
Republicans in Washington plan to use regulatory changes and funding cuts to dramatically shrink Medicaid. This government health insurance program, which costs nearly $900 billion a year, is used by 79 million Americans, mainly low-income, or disabled.
These proposals include reversing the Affordable Health Care Act expansion of Medicaid that added approximately 20 million low-income adult to its rolls over the past 11 years. Trump has stated that he wants to cut government spending drastically, which could be required for Republicans to extend the 2017 tax cuts expiring at the end this year.
During the campaign for 2024, Trump did not mention Medicaid. In the first Trump administration, work requirements were approved in several states. However, only Arkansas implemented them before a federal court ruled that they violated law. The first Trump administration tried to block state grant funding.
House Budget Committee chair Jodey Arrington (R-Texas) told KFF Health News Medicaid and other federal entitlements programs require major changes in order to reduce the federal debt. Without them, this country will sadly fall into fiscal collapse.
Rep. Chip Roy (R-Texas), a member the Budget Committee said that Congress should explore reducing federal spending on Medicaid.
Roy stated that “you need to reform health care in a wholesale manner, including undoing a great deal of damage caused by Obamacare and the ACA.” “We could provide better service if done the right way,” Roy said.
The advocates for the poor are concerned that cuts to funding by the GOP will lead to more Americans being left without health insurance and make it difficult for them get medical care.
Joan Alker of Georgetown University Center for Children and Families, Executive Director, said that Medicaid is a clear target for massive cuts. “An existential battle about Medicaid’s fate likely lies ahead.”
Medicaid, which celebrates its 60th birthday in July, has entered a period of disruption, as the COVID coverage protections from the pandemic era expired in 2023, and all enrollees were required to prove that they met eligibility requirements. Over 25 million people have lost their coverage in the 18 months since the “unwinding,” though the latest census data shows that the number of uninsured has not increased significantly.
Matt Salo is the former executive director of the National Association of Medicaid Directors and the founder of that organization. He said the disruptions caused by the unwinding could be dwarfed in comparison with what will happen in the next four to five years. He said that the next four years will see a more significant seismic shift in Medicaid’s coverage and operations.
Salo says that any attempt to reduce the program would be met with opposition.
He said that “a lot of powerful entities – state governments, managed care organizations, long-term providers, and anyone who wants to make money by doing good – want to see Medicaid function efficiently and receive adequate funding.” “They will be motivated to fight back against what they perceive as draconian cutbacks, because they could impact their business model.”
The GOP has several strategies to reduce Medicaid’s size:
- Moving to block grants. Switching from annual block grants to federal funding could reduce the amount of money that states receive to run the program, while giving them more discretion on how they spend it. The government currently matches a percentage of the state’s spending every year, with no limit. Since Ronald Reagan, Republican presidents have tried to block-grant Medicaid without success. Arrington has said that he supports ending open-ended federal funding for states, and replacing it with an annual amount based upon the number of people in each state’s Medicaid program.
- Cuts to ACA Medicaid Funding. Under the ACA, Medicaid provided funding to Americans who earned up to 138% federal poverty levels, or $20783 per person last year. The federal government covers 90% of costs for adults who are covered by the Medicaid expansion, adopted by 40 states plus Washington, D.C., under the law. The GOP could try to reduce that funding rate to the average 60% match the federal government pays states for all other participants in the program. Arrington stated, “We must be aware that we are subsidizing the Medicaid expansion population who are healthy and able to work at a greater rate than the poorest, sickest of us. This was the original intention of the program.” “That’s wrong.”
- Reducing federal matching funds. Ever since Medicaid was introduced, the federal match has been based upon the relative wealth of the state’s residents, with the poorer states getting a higher match and no state receiving anything less than 50%. The base rate is paid to ten states, all of which are Democratic states. This includes New York and California. The GOP could try to reduce the base rate by 40% or more.
- Work requirements. In the first Trump administration, federal courts ruled Medicaid coverage could not be conditional on enrollees working or looking for work. The GOP could try again. Rep. Tom McClintock (R-California) told KFF Health News that imposing strict work requirements for adults who are able-bodied could save a lot of money. Since most Medicaid recipients already work, attend school, or are caregivers, critics claim that such a requirement will only add to the red tape of obtaining coverage and have little impact on employment.
- Enrollment hurdles. In about 10 states, some people can stay enrolled in the program for many years without needing to renew. This policy has been proven to keep enrollees in the program longer due to hardships and paperwork issues, preventing them from having to pay unexpected medical bills or incurring debt. The Trump administration may seek to repeal waivers allowing states to grant continuous coverage for multiple years. This would force people to apply annually.
Democrats and health professionals say that if the GOP’s plans for shrinking Medicaid are implemented, low-income individuals forced to purchase private insurance will have difficulty paying the monthly premiums, as well as the high copayments and large deductibles associated with commercial plans, which don’t typically exist in Medicaid.
The Paragon Health Institute is a conservative think-tank run by former Trump advisor Brian Blase. has issued reports that say the billions of dollars in additional money states received to expand Medicaid as part of the ACA have been a boon for private insurers who manage the program, and it has said relatively wealthy people shouldn’t be enrolled.
Josh Archambault is a senior fellow at the conservative Cicero Institute. He said that he hoped the Trump administration would hold states accountable for paying Medicaid providers too much and enrolling ineligible people on Medicaid. Conservatives cite CMS reports that claim states pay Medicaid providers improperly billions of dollars per year. However, the federal government says this is mainly due to a lack of documentation.
He said that the GOP would look to reduce Medicaid for its “traditional” population of children, pregnant woman and people with disabilities. He said that the majority of people believe that Medicaid is not performing well. According to polls , most Americans, including majorities of Republicans and Democrats, are positive about the program.
KFF Health News, a national newsroom producing in-depth journalism on health issues, is one of KFF’s core operating programs. KFF is an independent source for research and polling about health policy and journalism.
