Slashing Medicaid for Trump's tax cuts would hurt millions

Medicaid, the program that provides vital health insurance coverage to one in five Americans, is being targeted for deep cuts.

The effects could be devastating for some of the most vulnerable Americans, including children, pregnant women, seniors and people with disabilities. And data show that for children who lose coverage or access to basic health services, the consequences could be lifelong.

Republicans in Congress and other allies of President-elect Donald Trump are discussing significant changes to the program to help pay to extend the sweeping tax cuts he gave the wealthy in 2017.

Several proposals are reportedly under discussion, ranging from introducing work requirements to fundamental changes in how money for the program is provided to states. Funding is currently awarded based on how many people are enrolled, but under a block grant model, for example, states would be given a lump sum.

While not a talking point during the election, there are clues that an overhaul is coming. Trump has said he has no intention of cutting Medicare, Social Security, or defense spending. That leaves one big line item to target: Medicaid.

"Despite the fact that there is very little public discussion, despite the fact that Medicaid is very popular, there is a great deal of interest among some Republicans to make severe and disabling cuts," says Joan Alker, a professor at Georgetown University’s McCourt School of Public Policy. "I think everything is on the table."

One big unknown is how Dr. Mehmet Oz’s nomination as administrator of the Centers for Medicare and Medicaid Services might affect all of this. Every health policy expert I spoke with struggled to explain how Oz might approach the job, let alone his stance on Medicaid.

Trump’s pick to lead the Office of Management and Budget might be a better harbinger of what’s to come, Alker says. Late Friday, Trump named Russell Vought, who led the office during his first administration. Vought is one of the authors of Project 2025 and founder of the conservative nonprofit Center for Renewing America, which has proposed significant reforms to the program that would result in draconian cuts to funding.

Lawmakers floating these cuts will say they plan to protect some of the most vulnerable. The problem is trying to protect any one group comes at a cost to others. As McIntyre points out, seniors and people with disabilities account for about 23% of enrollees but just over half overall Medicaid spending. These groups require more care, including some that can’t be accessed through other insurance. About 40% of kids in the U.S. are covered by Medicaid, yet they account for less than 15% of the program’s overall budget, meaning even minor cuts would disproportionately impact them.

"There isn’t a ton of fat to be trimmed in the Medicaid program, so when you go looking for it, you end up hurting people," says Adrianna McIntyre, a health policy expert at the Harvard T.H. Chan School of Public Health. "If there was a magic way to extricate funding, we would have done it already."

States would have to figure out how to make up the difference. Wealthier ones might bear the cost, while others would have to make tough choices like raising taxes or decreasing funding to other programs.

One way states could cut costs is by limiting enrollment by lowering the income threshold for eligibility. Another is to create so much red tape to apply for or renew coverage that people miss deadlines and fall off the plan. (That tactic was deployed to stunning effect last year when millions of eligible children lost coverage after the expiration of pandemic-era rules that had helped people stay on Medicaid.)

States also could lower the already-meager rates that doctors are paid by the program, thus prompting some providers to opt out. And plans could also limit the types of care they cover while raising costs for services. Under any scenario, the result would be compromised care. The already hard-to-get appointments with pediatric specialists and behavioral health providers would be further out of reach. Families might forgo care due to higher out-of-pocket costs — whether through co-pays for currently free services or to pay for services that are no longer covered.

Of course, the gravest consequences will be for those who lose coverage altogether. And while politicians’ focus is on low-income adults — who need and deserve health care, too — it’s kids who stand to lose the most. That’s especially true in the 10 states that have not expanded Medicaid, where children tend to comprise a larger share of overall enrollment (in other words, there are fewer adults to look to for cuts).

In the near term, that means more children will miss out on routine care, like staying up to date on vaccinations and receiving preventive care for conditions like asthma. The health research organization KFF found that in 2022, 25% of uninsured children had not seen a doctor in the last year, whereas just 4.3% and 5.7% of kids with public or private insurance had gone without care.

Conversely, a robust body of data highlights the long-term health and economic benefits of continuous insurance coverage for children. The most recent evidence came from an analysis by the Congressional Budget Office, which found that Medicaid coverage during childhood led to greater earnings as an adult (and more taxes paid to the government).

Targeting Medicaid for cuts is politically unpopular for a reason. It hits the most vulnerable and exacts an immediate and long-lasting toll on their health. Cuts might be packaged in ways that make them sound reasonable, but know their impact will be profound — and this critical funding must be preserved.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Lisa Jarvis is a Bloomberg Opinion columnist covering biotech, health care and the pharmaceutical industry. Previously, she was executive editor of Chemical & Engineering News.