States would face ugly choices: dropping people, slashing benefits or cutting other spending.
None of which House Republicans are willing to acknowledge. “The word ‘Medicaid’ is not even in this bill,” Majority Leader Steve Scalise (Louisiana) insists. “There are no Medicaid cuts in this bill.”
Which, technically speaking, is true. What the budget resolution does is direct the House Energy and Commerce Committee to cut spending in its jurisdiction by $880 billion over the next decade.
Looking at the programs within the committee’s purview, anyone can see it is impossible to come even close to that figure without taking a big whack out of Medicaid, which accounts for nearly $1 out of every $5 spent on health care in this country.
Without massive reductions to spending on Medicaid, “the math just doesn’t add up,” says Pete Aguilar (California), who chairs the House Democratic Caucus. “This vote doesn’t just open the door for Medicaid cuts. It guarantees them.”
Medicaid, which provides health coverage for poor and disabled people, pays for 41 percent of all births in this country and the bills for more than half of Americans in nursing homes. It also makes payments that help keep afloat hospitals that see large numbers of poor and uninsured patients.
The program is a joint endeavor. Washington reimburses states for at least half of what they spend on Medicaid, and up to three-quarters for those with the lowest per capita incomes. States pay the rest, and administer the program, determining benefits and eligibility within broad federal rules.
More recently, the 40 states plus the District of Columbia that expanded their Medicaid programs under the Affordable Care Act did so on the promise that the feds would pick up 90 percent of the cost for those additional beneficiaries, whose incomes go up to 138 percent of the federal poverty line, which translates to $21,597 annually for an individual and $36,777 for a family of three.
The budget resolution, which the House passed on a narrow, party-line vote, just gets the ball rolling on a key part of President Donald Trump’s agenda: coming up with a way to extend $4 trillion in tax cuts that were passed during his first term and are set to expire at the end of this year and fulfilling his campaign promises to eliminate taxes on tips, overtime pay and Social Security benefits.
Before the vote, Speaker Mike Johnson (Louisiana) described it as “sort of the kickoff in what will be a four-quarter game, and that very important, very consequential game begins as soon as we get this thing passed.”
The budget resolution sets spending and tax targets, and directs various congressional committees to come up with ways of reaching them. Ultimately, both houses of Congress would have to agree on a single plan and its implementation, which would be no small challenge. The Senate has passed a budget resolution far narrower in scope, focused on border enforcement and defense, and plans a broader bill to deal with tax policy later this year.
House Republicans are whistling a familiar tune when it comes to finding the needed savings in Medicaid. There is “a lot of waste, fraud and abuse,” Johnson says.
But the truth is, it’s hard to see any way around rewriting the basic bargain that the federal government has with the states regarding Medicaid.
One possibility under discussion: reducing the 90 percent match for those that expanded their programs under the Affordable Care Act, potentially saving as much as $560 billion over nine years.
And where would that leave the states? They could renege on the expansion of Medicaid they put in place under the Affordable Care Act, through which more than 20 million people have gained coverage. A dozen states have “trigger” laws automatically ending the expansion if the federal match drops below 90 percent. But that would create additional burdens on providers to offer care without compensation, and further harm what health care is available in rural (that is, red-state) America.
Or the states could try to shoulder the costs themselves. A new study by the Urban Institute estimates that losing the 90 percent match they get from the federal government would require expansion states to come up with $44.3 billion in cuts or additional revenue in 2026 alone. That would increase what they spend on Medicaid for the non-elderly by an average of more than 25 percent.