Republicans in Congress and the incoming Trump administration could make deep cuts in funding for two programs: Medicaid and the Affordable Care Act (ACA). If spending goes down significantly, at least nine states could end their Medicaid expansion initiatives, throwing millions of low- and moderate-income Americans off of their government-funded health insurance, health policy experts predict.
As we reported last month, a Republican-backed Congress and President-elect Trump are expected to cut spending for Medicaid and the ACA. During Trump’s presidential campaign, he said he would not cut Medicare or Social Security, leaving Medicaid as the next biggest target. Those cuts are designed to offset the costs of Trump’s planned cuts to taxes.
When Congress passed the ACA in 2010, lawmakers included a provision to pay 90% of the cost of expanding Medicaid coverage for the poor, leaving the states to pay the remaining 10%. In that year, almost 49 million Americans (16%) were uninsured. But as a result of the ACA and the Medicaid expansion, more than 26 million Americans (7.9%) were uninsured by the first half of 2024, according to reports from the National Center for Health Statistics.
For health journalists, deep cuts in government funding for health insurance is a story in every state. For example, this ProPublica article written by Lomi Kriel and Jessica Pries wrote, shows that Texas insures more than 4 million residents through Medicaid, including three in eight children, three in five nursing home residents and two in seven people with disabilities. Also, Medicaid is the top funder for nursing homes and long-term care services for the disabled and elderly, and it pays for nearly half of all births in the state, they added.
The effects of cutting Medicaid
“Cuts in Medicaid will definitely cause a big surge in the number of uninsured Americans,” Edwin C. Park said, in an interview. Park is an expert on financing for Medicaid, the Children’s Health Insurance Program (CHIP) and the ACA. He is also a research professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.
Park’s prediction is based on the 2023 budget from the Center for Renewing America (CRA) and on last year’s budget from the Republican Study Committee (RSC), which calls for cutting nearly half of the federal funding for Medicaid, CHIP and the ACA’s premium tax credits over the next decade, Park wrote. The CRA is a right-leaning nonprofit organization that Russell Vought founded. Vought is the former director of the federal Office of Management and Budget under Trump and has been named to fill the same job in the coming year.
As Trump prepares to return to the White House and the Republicans take full control of Congress in 2025, cutting funds for the ACA’s Medicaid expansion could put more than 3 million adults in nine states at risk of losing their health coverage, Phil Galewitz reported for KFF Health News. If federal Medicaid cuts are deep enough, those nine states (Arizona, Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah, and Virginia) have trigger laws that would end their Medicaid expansions, he explained.
The most recent expansion state is North Carolina, which has a trigger requirement that if federal funding drops at all, the expansion would end automatically, Park said. Any cuts in federal funding would force the 40 states and the District of Columbia that have expanded Medicaid to make up the difference or end the expansion, he added.
“There are some proposals that would lower that matching rate and that could be as low as 50% in some states,” Park explained. “That’s obviously a huge burden on the states, leading some states to drop the expansion if they can’t sustain it over time.”
A huge safety net
Medicaid and CHIP provide health and long-term care insurance to more than 72.3 million adults and 7.2 million low-income children, pregnant women, adults, seniors, and people with disabilities in the 50 states and the District of Columbia, according to Medicaid enrollment data.
According to this report from KFF, Medicaid, the nation’s largest safety-net program, provides significant funding for the following:
- Hospitals, community health centers, physicians, nursing homes and community-based long-term services.
- More than one in five Americans, many of whom have complex and costly needs for care and is the principal source of coverage for those in long-term care.
- About 20% of all personal health care spending in the United States.
- Coverage for low-income Medicaid beneficiaries to help them pay for premiums, cost sharing and services that Medicare doesn’t cover.
In particular, Medicaid is significant for children and adults in poverty (those with annual income under $31,200 for a family of four) and for those who are Black, Hispanic and American Indian American Native (AIAN), KFF noted.
While the federal and state governments contribute $860 billion in funding for Medicaid in 2023, some low-income states, such as Mississippi, get more federal funds than other states, as KFF reported on this page.
Under Medicaid, states are guaranteed federal matching funds without a cap for the services it provides to eligible adults and children. That fact is important because the Republican budgets Park cited call for ending that guarantee for federal matching funds by using either block grants or per-capita caps.
Revisiting block grants or per-capita caps
In 2017, conservative groups and Republicans in Congress endorsed using block grants or per-capita caps to slash federal matching payments for the ACA and Medicaid expansion, as we explained in our earlier reporting.
Either method would limit federal spending and likely force states to cut what they spend as well, said Akeiisa Coleman, a senior program officer for Medicaid at the Commonwealth Fund. Under block grants, each state would get a set amount; with per-capita caps, states would get a certain amount per Medicaid or CHIP member.
“There would be a reduction either way,” Coleman explained. “It could be most extreme under a block grant, because there’s not any acknowledgment that there could be an increase in the number of low-income people, or even the number of people residing in the state, who would be eligible for Medicaid.”
Both are onerous, however, because neither would be indexed to the growth in health costs, which rise faster than the standard, the Consumer Price Index, she noted.
Another problem with block grants is that they led to a fiscal and debt crisis when they were used in Puerto Rico, Coleman said. In 2021, a Commonwealth Fund report showed that using block grants in Puerto Rico led to large federal Medicaid funding shortfalls that contributed to the commonwealth’s fiscal and debt crisis.
The problem with block grants or per-capita caps is that states would be responsible for all Medicaid costs that exceed funding levels for any reason, the report showed.
States could add work requirements
Another way to limit Medicaid funding is to require beneficiaries to show that they’re working or seeking work, said Ellen Andrews, executive director of the Connecticut Health Policy Project. “In the few states that have done it, there are exceptions for people who are elderly, disabled and can’t work,” she added. “But, otherwise, you have to work.”
In 2021, 67% of working-age adults on Medicaid were either in school or working full- or part-time and 13% of people on Medicaid were either caregivers, working part-time or enrolled in school or work-training programs, the Commonwealth Fund reported.
For states, work rules require monitoring enrollees who must work, adding huge administrative costs, as Andy Miller and Renuka Rayasam reported for KFF Health News. From July 2023 to March 2024, about 3,500 people signed up, they wrote. The work rules Georgia’s conservative alternative to the ACA’s Medicaid expansion cost taxpayers at least $26 million, more than 90% of which went to administrative and consulting costs rather than medical care for low-income people, they added.
Resources
- Webinar: How Medicaid Works & What’s at Stake in 2025, recording, Dec. 10, 2024, McCourt School of Public Policy, Center for Children and Families.
- The Budget Resolution and Reconciliation Process Explained, Dec. 11, 2024, McCourt School of Public Policy, Center for Children and Families.
- Federal Funding Cuts to Medicaid May Trigger Automatic Loss of Health Coverage for Millions of Residents of Certain States, Nov. 27, 2024, McCourt School of Public Policy, Center for Children and Families.
- Congressional Republican Leaders Start to Show Their Hand: Draconian Medicaid Cuts on the Agenda for Next Year, Nov. 18, 2024, McCourt School of Public Policy, Center for Children and Families.
- GOP Push to Make Trump Tax Cuts Permanent Makes Medicaid Top Target for Draconian Cuts, Sept. 4, 2024, McCourt School of Public Policy, Center for Children and Families.
- Prominent Conservative/GOP Plans Share Common Priority: Medicaid Block Grants and Per Capita Caps, Aug. 14, 2024, McCourt School of Public Policy, Center for Children and Families.
- This Year’s House Republican Budget Resolution Also Includes Severe Medicaid Cuts, Aug. 7, 2024, McCourt School of Public Policy, Center for Children and Families.
- Republican Health Coverage Proposals Would Increase Number of Uninsured, Raise People’s Costs, Center for Budget and Policy Priorities, Nov. 27, 2024.
- Premium Tax Credit Improvements Must Be Extended to Prevent Steep Rise in Health Care Costs, Center for Budget and Policy Priorities, Nov. 14, 2024.
- Four Million People Will Lose Health Insurance If Premium Tax Credit Enhancements Expire in 2025, the Urban Institute, Nov. 14, 2024.
- Few Georgians Are Enrolled in the State’s Medicaid Work Requirement Program, Commonwealth Fund, Sept. 11, 2024.
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