From left: U.S. Vice President JD Vance, Senator Tom Cotton, a Republican from Arkansas, Senator John Barrasso, a Republican from Wyoming, President Donald Trump, Senator Shelley Moore Capito, a Republican from West Virginia, and Senate Majority Chief John Thune, a Republican from South Dakota, converse to the media on Jan. 8, 2025.
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Valerie Plesch/Bloomberg/Getty Photos
Congressional leaders want to make massive reductions to federal spending to pay for President Trump’s priorities, and so they’ve singled out Medicaid as a program the place they might discover important financial savings.
Trump mentioned final month that he would not make cuts to the nation’s public medical insurance program for low-income and disabled People. However the White Home and Republicans in Congress are contemplating a menu of choices that might add as much as $2.3 trillion in potential cuts to Medicaid over the following decade.
Conservative Medicaid specialists famous that among the cuts would possible overlap, making it deceptive to easily add all of them up. Different specialists mentioned among the proposals might cut back Medicaid spending much more than congressional leaders estimate, which means they might nonetheless quantity to greater than $2 trillion in cuts — and will doubtlessly push hundreds of thousands of individuals off this system.
Medicaid gives medical insurance to 80 million low-income and disabled People and, in 2023, price taxpayers $870 billion in 2023.
Many conservatives and libertarians have lengthy believed {that a} smaller Medicaid program that covers fewer individuals can be a greater Medicaid program.
“Medicaid isn’t working for People,” mentioned Robert F. Kennedy Jr. final week at his affirmation hearings to turn into Trump’s secretary of well being and human providers.
“We’re spending $900 billion and our persons are getting sicker each single 12 months,” he added later. (In different elements of the hearings, Kennedy confirmed minimal understanding of the fundamentals of Medicaid.)
The well being podcast Tradeoffs interviewed 13 specialists who collectively have many years of expertise engaged on Medicaid for conservative assume tanks, Republican presidents, members of Congress or state Medicaid applications. They didn’t agree on the whole lot, however a couple of themes emerged that illustrate why many Republicans wish to shrink this system.
Questioning whether or not Medicaid makes individuals more healthy
Some conservatives cite the extremely regarded Oregon Medicaid Experiment that discovered Medicaid does little to enhance individuals’s bodily well being.
“Each member of Congress must be asking questions on either side of the aisle about, hey, we’re spending tons of of billions of {dollars} [on Medicaid]. What are we getting for it?” mentioned Josh Archambault, a senior fellow on the Cicero Institute.
Archambault and others place plenty of worth on the Oregon experiment as a result of it is the one randomized research (the gold normal in analysis) of the impacts of Medicaid.
In 2008, Oregon used a lottery to broaden its Medicaid program, which allowed researchers to match outcomes after two years for individuals who obtained Medicaid and people who did not.
They discovered that folks on Medicaid have been extra possible than these with out medical insurance to get preventive care and to report being in higher well being. These on Medicaid have been additionally much less prone to be depressed or get hit with massive medical payments. However the researchers turned up no variations between the 2 teams on three particular measures of bodily well being: levels of cholesterol, blood strain and maintaining diabetes underneath management.
“I feel that ought to elevate some very massive questions in our thoughts concerning the effectiveness of Medicaid,” Archambault mentioned.
Many Medicaid specialists — together with a number of who served as state Medicaid administrators underneath Republican governors — informed Tradeoffs Medicaid is efficient, pointing to the many research which have discovered important well being advantages to this system, together with saving lives. One research confirmed a 5% discount in childhood mortality for teenagers on Medicaid, and one other confirmed a 9% discount in grownup mortality over the primary 4 years of Medicaid enlargement after the Inexpensive Care Act.
“Medicaid might help individuals be more healthy,” mentioned Kevin Bagley, who ran Nebraska’s Medicaid program from 2020 to 2023. “Plenty of children particularly have higher entry to care and higher well being outcomes because of this [of being on Medicaid].”
‘It is nearly free cash’ for states
The commonest concern conservative specialists introduced up was that states have a robust monetary incentive to develop their Medicaid applications.
States and the federal authorities share program prices, with the federal authorities matching between 50 and 90 cents of each greenback states spend, relying on a number of components together with the wealth of the state.
Tom Scully, who ran the Facilities for Medicare and Medicaid Providers for President George W. Bush, mentioned it is too simple for states to attract down federal {dollars}.
“It is nearly free cash for the states, and there is no accountability for it,” he mentioned.
Scully in contrast the dynamic to an allowance: Should you give your child $20 every week, they are going to be extra considerate about spending it than for those who give them your bank card.
Particularly, Scully and different conservatives take concern with what’s often known as a supplier tax which permits states to lift income from hospitals and nursing properties for his or her applications.
Underneath this provision, for instance, if a state needs to extend Medicaid spending by $1 million, it might assess a $500,000 tax on hospitals, after which spend that cash on Medicaid providers. The federal authorities would, in response, minimize a $500,000 verify to match.
Critics like Scully deride supplier taxes as “cash laundering” as a result of states typically return these supplier tax {dollars} to the hospitals within the type of greater reimbursement charges. Because of this, hospitals break even or higher, and the states, like the child with the bank card, have extra money and might spend it with much less fiscal duty.
These preparations are authorized, and lots of specialists observe they’re notably helpful to states throughout powerful financial instances when different state funds dry up; shedding the supplier tax would require states to seek out different methods to fund their applications or shrink them.
Some Medicaid recipients might get medical insurance elsewhere
A number of conservative Medicaid specialists shared the idea that some individuals on Medicaid might afford personal insurance coverage.
“Medicaid is forcing taxpayers to pay for issues that folks might present for themselves,” mentioned Cannon, from the libertarian Cato Institute.
Well being economists typically agree that some individuals on Medicaid might get protection by way of their employer or by way of the Obamacare exchanges, however what number of is much less clear. Some research recommend that it may very well be as many as a number of million individuals.
Some specialists fear that efforts to take away individuals with different protection choices from this system would inevitably result in many individuals with out different insurance coverage decisions additionally shedding protection and ending up uninsured.
Most conservative reforms would minimize federal Medicaid funding
Republicans have floated quite a few proposals to reform Medicaid. Whereas they’ve but to launch any detailed proposals, they nearly all pursue the identical purpose.
“Finally, you must cap the quantity of federal funding that states are capable of get,” mentioned Chris Pope, a senior fellow on the conservative Manhattan Institute.
One possibility can be for Washington to pay states much less to cowl the 21 million individuals added to Medicaid underneath Obamacare. The federal authorities at present picks up 90% of the prices to cowl low-income adults who make as much as $45,000 in a household of 4.
A proposal by the conservative Paragon Well being Institute would regularly cut back the federal authorities’s share over the following decade to the speed Washington pays for conventional Medicaid enrollees — between 50% and 77%, relying on every state’s per capita earnings. Paragon estimates the transfer would save the federal authorities $250 billion over the following decade, although it could enhance the uninsured inhabitants by 3 million individuals.
The nonpartisan Congressional Price range Workplace estimated {that a} comparable proposal would save the federal authorities $561 billion over 10 years; the CBO assumes some states would select to “un-expand” their Medicaid applications, doubtlessly kicking hundreds of thousands of individuals out of this system. No less than 9 states have so-called set off legal guidelines that might rapidly finish their expansions if the federal contribution to Medicaid funding was lowered, although the states might change these legal guidelines.
A number of different concepts conservatives talked about to Tradeoffs: requiring some individuals to work to obtain Medicaid, limiting or banning supplier taxes, setting a cap on how a lot the federal authorities would ship states for every individual enrolled in Medicaid, or giving a state a lump sum of federal {dollars} every year for its total Medicaid program, often known as a block grant. The CBO estimates these proposals would minimize tons of of billions from the federal funds over the following 10 years and trigger states to scale back enrollment and the providers supplied to sufferers, and shrink funds to suppliers.
Chopping Medicaid spending comes with tradeoffs
Many conservatives agree that shrinking federal spending on Medicaid could have two main advantages. One is price financial savings — much less Medicaid spending might release money to spend on different priorities like colleges, public security or curbing the nationwide debt.
Liz Matney, who ran Iowa’s Medicaid program from 2021 to 2024, additionally argues that sending states much less cash would encourage them to slim their focus to the unique Medicaid inhabitants.
“Medicaid’s authentic function was to offer medical providers to people with disabilities and low-income households,” Matney mentioned. “It is a problem for states to deal with making strong enhancements in these areas when their focus is repeatedly shifted to shinier priorities.”
Many research present increasing Medicaid has improved entry to take care of low-income individuals. However some conservatives level to a handful of papers displaying individuals on Medicaid needed to wait longer to get appointments, ambulances took longer to answer medical emergencies, and spending on children and seniors grew extra slowly than in non-expansion states.
A number of former state Medicaid administrators from Republican-led states mentioned they’d welcome the elevated flexibility to run their applications as they see match — a flexibility that’s typically part of proposals that would scale back federal Medicaid spending. However a number of are additionally involved concerning the potential well being and monetary penalties to sufferers if Washington imposes extreme cuts and hundreds of thousands of individuals lose their Medicaid protection.
Barbara Roshon Sears, who ran Ohio’s Medicaid program from 2016 to 2018, mentioned state Medicaid applications and hospitals are extremely reliant on federal funding. She mentioned she worries particularly about older People, who depend on Medicaid to pay for issues Medicare would not like nursing house care, and folks with disabilities. These two teams account for most of Medicaid spending.
“These are the populations that get hit if I run out of [federal] {dollars},” Sears mentioned.
Brian Blase, a former prime well being coverage advisor to President Trump and present president of the Paragon Well being Institute, mentioned he believes most protection losses from the Republican proposals would hit low-income adults who have been added to this system by the Obamacare enlargement. He sees few downsides to this group shedding Medicaid.
Blase believes some would discover protection by way of their work or by way of the Obamacare exchanges. For many who would find yourself uninsured, he refers again to the Oregon experiment and questions how a lot of a distinction it could make to individuals’s bodily well being. Any state anxious about individuals shedding Medicaid, Blase mentioned, can hold individuals enrolled by utilizing state funds.
“States must make selections. States must interact in tradeoffs,” he mentioned. “We wish states to have applications that present worth.”
Can Republicans get any of those cuts handed?
Even many Republicans keen to chop Medicaid imagine will probably be troublesome to make sizable modifications to this system in 2025, regardless of full management of Congress and the White Home.
Democrats are anticipated to oppose any Medicaid reductions, and hospitals have traditionally achieved the identical as a result of Medicaid funds make up one-fifth of hospital income within the U.S. Some congressional Republicans are already pushing again.
“It is very simple to suggest these fixes. It is rather exhausting to get them handed,” mentioned Tom Scully, whose efforts to reform Medicaid date again 35 years.
Working example, Republicans didn’t move comparable Medicaid fixes throughout President Trump’s first administration, the final time the get together had full management in Washington.
The Trump administration, by itself, might encourage states so as to add work necessities or flip their federal subsidies into block grants. Any govt motion, nonetheless, would have far much less impression than if Congress handed modifications to the basic form of this system.
“One thing ought to have been achieved to repair this 40 years in the past. And 30 years in the past and 20 years in the past and 10 years in the past,” Scully mentioned. “But it surely’s by no means occurred as a result of the native and state politics are too brutal, and it is too difficult — individuals again off and give up.”
Ryan Levi is a reporter and producer for Tradeoffs, a nonprofit information group that reviews on well being care’s hardest decisions. You can too join Tradeoffs’ weekly e-newsletter to get the most recent tales in your inbox every Thursday morning.
