Medicaid on the Chopping Block by House GOP and President Trump to Pay for Trump Tax Cuts for the Wealthy
Medicaid is the joint federal-state program for low-income Americans. In combination with the Child Health Insurance program, it covers nearly 80 million Americans. https://www.kff.org/report-section/medicaid-enrollment-and-unwinding-tracker-enrollment-data/ In 2023, the program cost about $880 billion, shared on average by the federal government 69% and the states 31% (varies by state). https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/ Over the course of a year, it paid for care for over 91 million Americans. https://www.macpac.gov/medicaid-101/#:~:text=Medicaid%20is%20a%20joint%20federal,fiscal%20year%20(FY)%202022.
It is the workhorse of all health programs. It covers over 60% of nursing home patients; it covers over 50% of all children; it covers 40% of all births. It is the essential program for individuals with mental illness, with substance abuse, with disabilities, with chronic disease. It is the program for people who cannot afford private insurance, who cannot otherwise see a doctor, get treated for their illnesses. It is there for people when they get laid off or fired, when they get a new job but their coverage doesn’t start for a month or more, when they are students, when they are too old for their parents’ coverage but don’t yet earn enough to pay for their own. It’s often the only coverage realistically available and affordable for part timers, for seasonal workers, for minimum wage workers, for those starting a new business, for the disabled during the long period it takes to determine your disability.
The House GOP wants to cut the programs by $880 billion over the next ten years. https://www.politico.com/newsletters/politico-pulse/2025/04/11/republicans-tee-up-medicaid-cuts-00284541 There are as yet no specifics as to how they would achieve that. It is expected that on May 7, they will unveil their plans in the House Energy and Commerce Committee. You might want to write to your Congressperson or your Senator and urge them not to cut this vital program.
Here’s a brief description of the program and how it works right now, and the targets for the program cutters in the House GOP to pay for President Trump’s desired tax cuts for the very rich.
Financing: the federal government pays a matching rate to states for the states’ Medicaid program’s expenditures. The matching rates vary based on the eligibility category, the service covered, and the state’s per capita income. A state with a low per capita income like Mississippi receives a basic federal match of 77%. In West Virginia, it’s a little over 74%. In wealthier states like New York, New Jersey and Massachusetts, the basic federal match is 50%. Most services are financed at the basic federal match, but services of particularly high value, such as family planning have a 90/10 match and services at Indian Health Services facilities are matched at 100%. The matching rates vary by eligibility categories as well; those newly eligible due to the Medicaid expansion component of the Affordable Care Act have a federal match of 90/10. Children eligible as part of the Child Health Insurance Program have a minimum federal match of 2/1 and even higher in states with low per capita incomes and high poverty rates.
Eligibility: There are federal maximums and minimums in Medicaid program eligibility; otherwise, states can decide who to cover and at what income level within those parameters.
The minimum is a state must cover individuals receiving SSI (Supplemental Security Income) cash grants or AFDC/TANF (the cash grant program for low-income single parents and their dependent children) and low-income children and pregnant women (below 138% of the federal poverty level). At the minimum, the program does not cover two parent families, does not cover the working poor, does not cover parents after their children have grown up, and does not cover lots of otherwise poor and needy individuals. Some states, mostly in the deep South, do the minimum.
The Affordable Care Act (Obamacare) extended Medicaid coverage to all uninsured Americans with incomes less than 138% of FPL. The Supreme Court decided that this expanded coverage was at the state’s option. National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012), Due in part to the ACA’s 90/10 match, 40 states plus Washington DC have expanded coverage as offered by and financed through the ACA. https://www.kff.org/status-of-state-medicaid-expansion-decisions/
Ten states like Florida, Texas, or Mississippi mostly in the Deep South still only cover the bare minimum. https://www.kff.org/status-of-state-medicaid-expansion-decisions/ As a result the Medicaid eligibility level for a Texas parent is 12% of the Federal Poverty Level, while in neighboring Louisiana, Arkansas, Oklahoma and New Mexico, the Medicaid eligibility threshold is 138% of FPL ($21,597 annually for an individual). https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-childrens-health-insurance-program-basic-health-program-eligibility-levels
In the ten states like Texas, American adult citizens without minor children living at home are ineligible for Medicaid unless they are disabled or over 65; whereas in the other 40 states they are eligible. https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-childrens-health-insurance-program-basic-health-program-eligibility-levels
Project 2025 wants to reduce the federal matching rates for Medicaid expansion eligibles, and pare the program back towards the original program eligibility categories. . https://static.project2025.org/2025_MandateForLeadership_CHAPTER-14.pdf Many in the House GOP want to eliminate the Medicaid Expansion or reduce the federal matching rates for expansion eligibles. This would create havoc in reliably red states and state budgets from Ohio and Kentucky to Louisiana and Arkansas, from Oklahoma and Missouri to the Dakotas. Several members of the House GOP caucus have warned that they will not vote for large scale cuts to the Medicaid program. https://punchbowl.news/article/house/house-gop-no-to-big-medicaid-cuts/ They will be under enormous pressure from the President and the Congressional leadership to fall in line.
Services: There are a few basic mandatory Medicaid services, and all other medical and health services are optional. The mandatory Medicaid services include hospitals, doctors, skilled nursing facilities, labs and x-rays, EPSDT and family planning. https://www.medicaid.gov/medicaid/benefits/mandatory-optional-medicaid-benefits The “optional” services include: prescription drugs, dental care, vision care, wheelchairs and other durable medical equipment, mental health care, and many others. https://www.medicaid.gov/medicaid/benefits/mandatory-optional-medicaid-benefits The variations in state coverage of optional benefits are available here. https://www.kff.org/medicaid/state-indicator/personal-care-services/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D Project 2025 wants the President and GOP to make changes in coverage of Medicaid services, mostly restricting abortion services, family planning, Planned Parenthood participation in the program, abortion pills, and travel for abortion services, https://static.project2025.org/2025_MandateForLeadership_CHAPTER-14.pdf
Reimbursement rates for providers: The federal maximum is the same amount as Medicare would pay for the services. The federal minimum is an amount sufficient to attract enough providers to assure access comparable to the general population. https://www.kff.org/report-section/50-state-medicaid-budget-survey-fy-2024-2025-provider-rates-and-taxes/
Many providers complain that Medicaid rates are so low they cannot stay in business providing health care to the poor. A number of states have adopted provider taxes or health plan taxes and special add ons such as the Disproportionate Share Provider program to help increase the payment rates in struggling hospitals. https://www.kff.org/report-section/50-state-medicaid-budget-survey-fy-2024-2025-provider-rates-and-taxes/ Provider and plan taxes and the special hospital rate add ons are one of the potential targets in the crosshairs of the House GOP and Project 2025. https://static.project2025.org/2025_MandateForLeadership_CHAPTER-14.pdf Rural hospitals have been particularly damaged by the failures of GOP leaders in the 10 states still holding out in opposition to program expansion. See https://ruralhospitals.chqpr.org/Overview.html
Interface with other programs
Medicaid interfaces with other health programs, such as Medicare, private insurance, and the state and federal Exchanges (Covered California in our state). Let me give you just a few examples. Medicare does not pay for most nursing home care and most home health care. So seniors and the disabled requiring long term care often end up on Medicaid after a process known as “spending down” (exhausting) their incomes and assets to poverty levels. Likewise, traditional Medicare has lots of copays, deductibles, and other program exclusions, which Medicaid does not. Low and moderate income seniors and the disabled may apply for and qualify for Medicaid; they are known as Medi-Medis or dual eligibles, and do not experience the unaffordable out of pocket costs of traditional Medicare or the unaffordable premiums of Medicare Supp policies. Project 2025 recommends repealing (and it is as yet unclear what the House GOP and the Trump Administration will seek to do with) the improvements in affordability of prescription drugs enacted and implemented during the Biden Administration.
Eligibility for the federal and state Exchanges, like Covered California, begins where Medicaid eligibility ends – 138% of FPL. The Exchanges provide premium and cost sharing assistance to moderate- and middle-income Americans who don’t otherwise have private coverage through their jobs. So as individual and family incomes and job situations fluctuate, they may qualify for Medicaid, and as their incomes increase, they lose Medicaid and qualify for assistance and coverage in the Exchanges, and then when they find a job that offers employment-based health coverage, they transition to that coverage. Project 2025 and the House Republicans plan to let the very important program improvements in affordability of Exchange coverage enacted during the Biden era expire at the end of 2025. The Exchanges are in place and very popular in terms of program participation even in the 10 states that have refused to expand Medicaid; in those states, eligibility for the Exchanges begins at 100% of FPL. The House GOP could do a big favor for their low income constituencies in the 10 hold out states by allowing those with incomes less than 100% of FPL to enroll in the Exchanges and encouraging those 10 states to adopt the Medicaid expansion. https://www.kff.org/medicaid/issue-brief/how-many-uninsured-are-in-the-coverage-gap-and-how-many-could-be-eligible-if-all-states-adopted-the-medicaid-expansion/ They have shown no interest to date in coverage for their lowest income uninsured citizens.
Increasingly, state Medicaid programs are using select private managed care insurers to run their public programs. So, for a Medicaid (MediCal) individual or family living in Los Angeles, they have a choice between the Health Net and LA Care Health Plans. In Orange County, there is only one choice, the local CalOptima Health Plan. In San Diego, there are five health plan choices for MediCal patients: Health Net, Molina, Blue Shield, Community Health Group and Sharp. Most MediCal patients are enrolled in their choice of a public or private managed care plan.