Picture a 79-year-old widow on a fixed income who needs round-the-clock care for her Type 1 diabetes and a few other chronic health conditions. Or a 30-something couple with three small children; the husband works full-time as a warehouse packer and makes $28,000 a year. Or a 21-year-old man who uses a wheelchair and lives in an assisted living facility. Or a 43-year-old woman, newly divorced, who has just launched her own web design business.
These are just a few examples of Medicaid beneficiaries:
- Older adults who need long-term care in senior communities that include assisted living facilities and nursing homes
- Adults under age 65 with low incomes, the majority of whom work
- Adults with disabilities
- Children, including newborns, from households with low incomes
When a family makes too much money to qualify for Medicaid but not enough to afford health insurance, their children can qualify for the Children’s Health Insurance Program (CHIP), also a joint federal-state program funded through the U.S. Centers for Medicare and Medicaid Services (CMS). Together with CHIP, Medicaid is the no.1 health insurer for children from low-income households. The public program also covers the cost of more than 40 percent of all births nationwide.
Established in1965, Medicaid is currently the single-biggest source of health care coverage in the United States. More than 70 million Americans are covered by Medicaid—80 million when the total includes CHIP. Federally Qualified Health Centers (FQHCs) and other community health centers are part of the safety net, welcoming patients who are uninsured or on Medicaid.
Yet despite the enormous gaps it continues to fill, Medicaid is under imminent threat.
A Funding Threat in the Form of a “Big, Beautiful Bill”
On February 25, 2025, the U.S. House of Representatives voted to make drastic cuts totaling $2 trillion across 10 years. The goal is to pay for President Trump’s $4.5 trillion in tax relief, which would mostly benefit the wealthiest one percent of Americans as well as large corporations.
Of these cuts, $880 billion is expected to be made by the Energy and Commerce Committee’s Subcommittee on Health, which has jurisdiction over Medicaid. Although it was not specifically called out in the resolution, based on prevailing sentiments to leave Medicare and Social Security intact, Medicaid is a vulnerable target.
GOP budget hawks view Medicaid as a useful program that has grown too big over the past several years. In their view, it encourages wasteful spending and outright fraud. In a recent CNN interview, House Speaker Mike Johnson explained: “Medicaid is for single mothers with small children who are just trying to make it. It’s not for 29-year-old males sitting on their couch playing video games. We’re going to find those guys and we will send them back to work.”
But the data doesn’t support these cynical assumptions.
In fact, most Medicaid beneficiaries under the age of 65 are working low-paying jobs that don’t provide health insurance. And the incidence of individual Medicaid fraud is extremely low. For communities still recovering from the economic impact of the Covid-19 pandemic, Medicaid is a lifeline, as reflected in increased enrollment numbers.
At the Health Foundation, we believe Medicaid should be a top priority, not a line item to be cut. If budgets are moral documents—and we believe they are—then Medicaid funding should be strengthened, not weakened.
Disrupting a Joint Federal-State Partnership
Unlike other public safety net programs, Medicaid reflects a joint federal-state partnership. It’s administered by individual states following broad federal rules and is jointly funded. The federal government covers at least 50 percent of the program’s cost, while states fund the rest. The amounts can increase or decrease depending on the need.
While we all wait to find out what happens when the U.S. Senate revisits the budget resolution in the next few weeks, health and social care providers are anxiously preparing for the devastating impact of Medicaid cuts on their communities.
Here are some measures Republican lawmakers are considering:
- Impose work and/or work reporting requirements: 92 percent of Medicaid beneficiaries work full- or part-time, so any new work requirements would seem at best redundant. Imposing reporting requirements places an administrative burden on both the working individual and the state. The reporting process can be confusing or time-consuming for an enrollee who has low literacy skills and/or is juggling several part-time jobs. Also, a reporting system can be expensive for a state to implement.
- Cap federal spending with block grants: This means that the amount given by the federal government would not change based on enrollment numbers or cost of services. States would be forced to absorb the cuts by reallocating their budgets, resulting in reduced services. States like New York that participate in the Medicaid expansion would be especially harmed.
- Institute a per capita cap: Forcing a per capita cap on federal reimbursements for Medicaid would set a fixed federal contribution per enrollee, with no mechanism to adjust for rising costs. Each state would need to tighten Medicaid eligibility criteria or spend more money to maintain its current enrollment levels.
- Roll back the Medicaid expansion successes: Over the years, the Medicaid expansion through the Affordable Care Act has resulted in greater numbers of people being insured and having access to preventive services, including screenings for infectious disease, chronic conditions, and cancer. The program has also played a major role in supporting rural health systems. Rolling back these successes would force providers to scale back or eliminate services and even close hospitals, resulting in poorer health outcomes.
Why a Strong Public Health Program Benefits All of Us
The consequences of Medicaid cuts can be far-reaching. If, for instance, a person has a medical problem but lacks health insurance, they might head to the emergency room—even if their situation does not constitute an emergency. Who pays for the ER visit when a patient is uninsured? Ultimately, the burden is shared by all of us—and future generations—in the form of higher hospital costs, and higher insurance copayments and premiums.
Indeed, cuts will only increase the rate of people who are uninsured, disproportionately harming individuals and families across socioeconomic, racial, ethnic, and geographic lines. According to the National Rural Health Association, 20 percent of adults and 40 percent of children living in rural areas are enrolled in Medicaid and CHIP. In addition to the individuals who rely on Medicaid for health coverage, cuts threaten the operability of community health centers and other health care providers that rely on Medicaid funds. If those resources are reduced, the social and health care systems that care for our community—systems that are already under strain—will struggle even more to meet the needs of the people they serve.
Ensuring that each person—regardless of age, race, ethnicity, income level, geographic location, or any other demographic factor—can access quality health care coverage is, we believe, essential, for a functioning democracy.
Until the system gives way to a better solution, a strong safety net program like Medicaid is vital to our nation’s overall health. Continuing to fund the program at its current level makes economic sense. And it’s the right thing to do.
