- White House officials and Republican congressional leaders are reportedly looking at plans to significantly reduce Medicaid funding.
- Medicaid cuts could impact people who rely on federally funded health insurance, including lower-income households, older adults, pregnant people, children, and people with mental illness.
- Larger financial burdens could fall on individual states, which could reduce the number of people eligible for Medicaid and lead to additional cuts to services.
Medicaid is on the chopping block for Republicans in Washington, D.C., who want to reduce federal spending.
The federal health insurance program for low-income households, children, pregnant people, older adults, and people with disabilities was in the glare of a news cycle spotlight this week when the White House issued a memorandum ordering a freeze on federal loans and grants.
White House officials said the freeze was implemented so they could determine whether programs met the Trump administration’s goals on issues such as climate change and diversity, equity, and inclusion initiatives.
The White House then updated its announcement by saying programs such as Medicaid that provide direct payments weren’t part of the freeze. The following day, the White House rescinded the memorandum.
However, Trump administration officials said the freeze of federal programs remains in place as they look to reduce federal spending while cutting taxes.
Whether Medicaid falls under that review or not, Republican leaders are reportedly eyeing Medicaid as a major target in their plan to cut more than $5 trillion in federal spending over the next 10 years.
According to a document obtained by Politico, Republican congressional leaders are looking at reducing Medicaid spending by $2.3 trillion during that time period. As of 2022, Medicaid’s annual budget was around $600 billion.
Experts say a large cut in federal funding would seriously impact people who rely on Medicaid programs and medical facilities that provide those services.
“It could have massive negative implications across the entire healthcare system,” said Kanwar Kelley, MD, an otolaryngologist and the co-founder and chief executive officer of Side Health. “It impacts patients who have nowhere else to turn,” Kelly told Healthline.
How does Medicaid work?
The Medicaid program was approved by Congress in 1965.
Medicaid now covers about 90 million people in the United States. That includes about 50% of adults and 80% of children who live in poverty, as well as 43% of non-elderly, non-institutionalized adults with disabilities and 23% of non-elderly adults with mental illness.
In addition, Medicaid covers 5 in 8 people in nursing homes and about 40% of all births in the U.S.
Black, Hispanic, American Indian, and Alaska Native households tend to utilize Medicaid more than other households.
Medicaid is the principal source of health insurance for lower-income households. People covered by Medicaid do not pay premiums or deductibles.
The program reimburses hospitals, community health centers, physicians, nursing homes, and other medical facilities.
Medicaid is not a mandated program. States choose whether to participate. Right now, all 50 states as well as Washington, D.C., have opted to be part of the system.
Medicaid programs are administered by each individual state. The states are allowed to craft their own Medicaid system, although they must follow basic federal guidelines.
About 70% of Medicaid fundings comes from the federal government. The states pick up the rest of the cost.
Medicaid is an entitlement program, which means anybody who meets eligibility requirements is guaranteed coverage.
What happens if Medicaid is cut?
Officials at the Modern Medicaid Alliance, an organization comprised of 90 organizations committed to protecting Medicaid, say federal funding cuts would hurt people all across the U.S.
“Medicaid provides millions of Americans with high-quality, affordable health care, including children, older adults, people with disabilities, and nearly 2 million veterans,” a spokesperson for the alliance told Healthline.
“It covers a range of essential services, including preventive care, primary care, hospital stays, and prescription drugs, for those who might not otherwise be able to afford them. As the single largest payer for mental health services in the country, Medicaid covers services to treat substance use disorder, including peer support services and other programs,” the spokesperson added.
Experts note that a significant cut in Medicaid funding could compel states to consider whether they want to continue in the program.
If they kept their Medicaid programs, states might be forced to change eligibility requirements to reduce the number of people covered. They might also cut the health services provided or lower the reimbursements paid to medical facilities.
“The proposals currently being discussed to cut or restrict federal Medicaid funding would result in greater costs being shifted to states,” said the Modern Medicaid Alliance spokesperson. “These cuts could also undermine investments in other vital programs, such as education, infrastructure, and public safety, which are critical to economic stability and growth.”
Kelley added that the financial crunch could be so severe that hospitals and other facilities might face major budget crises and have to change course or shut down. He said nursing homes, county hospitals, and medical complexes in rural areas could be among the facilities hardest hit.
“Beyond impacting those reliant on Medicaid, it would significantly impact the health agencies serving these populations,” said Sharma. “Already stretched thin, these agencies might have to scale back services, close locations, or be forced to deliver care with fewer resources. All of these factors combined would greatly impact the people who need help most, worsening the strain on America’s already fragile healthcare system.”
Sharma said she is particularly concerned about pregnant people getting proper maternity care, since many new mothers rely on Medicaid for access to essential prenatal and postpartum care.
“Pregnancy and the transition to motherhood are already vulnerable times, and for those dependent on public health programs, cuts would only deepen existing disparities,” she said.
Kelley noted that people who lose Medicaid coverage might skip preventive medicine treatments as well as forgo regular check-ups.
This means if they were to become ill, they may end up in the emergency room, where they would receive care without paying for it.
The Emergency Medical Treatment and Labor Act (EMTALA) is a law that helps prevent U.S. hospital emergency departments receiving Medicare funds from refusing to treat patients.
Kelley said those medical facilities would need to recoup those costs by asking the state for money or raising their rates. That could prompt insurance companies to increase premiums.
“That money has to come from somewhere,” he said.
Medicaid crucial to addressing healthcare disparities
Kelley said the bottom line is that Medicaid provides an essential service to people who can’t otherwise afford adequate healthcare. “It keeps Americans healthier,” he said.
“Funding reductions would exacerbate the already significant barriers faced by the millions who rely on public health programs,” noted Anu Sharma, the founder and chief executive officer of Millie, a medical provider that focuses on holistic maternity care.
“Many of these individuals are already living in healthcare deserts, where access to medical facilities and providers is limited,” Sharma told Healthline.
“For them, cuts would mean fewer resources to access care, longer wait times, and potentially even the loss of services altogether. For those working multiple jobs, lacking reliable childcare, or facing transportation issues, these cuts would make it even harder to navigate the system. Reduced funding could also lead to higher out-of-pocket costs or eligibility restrictions, increasing the likelihood that many will forgo necessary care,” she continued.
“Medicaid services are crucial in addressing health disparities. From hospital care to transportation and home health, these services are vital for vulnerable populations who rely on them to manage their health and access to necessary care,” Sharma explained.
Officials at the Modern Medicaid Alliance agreed.
“Medicaid programs are an essential provider for long-term services and supports, including home and community-based services, that enable aging Americans and people with disabilities to live healthier, independent lives,” the alliance spokesperson said.
“Every service Medicaid covers plays a vital role in ensuring individuals and families receive the care they need to stay healthy and thrive.”
Takeaway
Medicaid programs came under the spotlight this week as White House officials discussed plans to evaluate whether federally funded programs meet the goals of the Trump administration.
Republican leaders are reportedly considering a plan to cut $2.3 trillion from Medicaid over the next 10 years.
Experts say drastic cuts in funding for Medicaid would have a major impact on lower-income households as well as the older adults, pregnant women, children, and people with disabilities and mental health issues the federal program serves.
They add that states might have to bear a higher burden of these healthcare costs, compelling them to reduce the number of people eligible for Medicaid or cutting services.
Fate of Medicaid Uncertain During Trump's Freeze on Federal Grants
Source: Pinoy Lang Sakalam
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