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It might be hard to get super interested in the back and forth of the budget bills bouncing around Capitol Hill, but they could have huge consequences for Americans’ everyday lives.
House Republicans found a way to start the ball rolling Tuesday by convincing all but one Republican to buy into a budget bill, the first step in a process, exempt from the filibuster in the Senate, to extend trillions in expiring tax cuts originally passed during the first Trump administration.
But in order to offset those tax cuts, Republicans need to find cuts. One option being seriously considered is to squeeze up to $880 billion from federal programs over 10 years, including Medicaid. The House and Senate will come up with dueling proposals.
Democrats won’t be voting for Medicaid cuts any time soon and even Republicans talk about their support for the program, by which states use federal dollars to help offer health insurance to their low-income residents.
In Missouri, for instance, more than one-fifth of the population is on Medicaid, so conservative Sen. Josh Hawley, a Missouri Republican, doesn’t want to see cuts, at least not for people who are working.
“Anything that slashes into benefits for people who are working, I’m not going to be for, and I think that’s probably going to be true for a lot of my colleagues,” he told CNN’s Manu Raju on Wednesday.
President Donald Trump has also promised repeatedly not to cut Medicaid, Medicare or Social Security and he bristled when a reporter asked him about it during a Cabinet meeting at the White House on Wednesday.
“I have said it so many times you shouldn’t be asking me that question. Okay. This won’t be ‘read my lips,’” Trump said, referring to the infamous flip-flop that may have cost President George H.W. Bush reelection in 1992. He pledged – “read my lips” – that he wouldn’t raise taxes. But then, in order to address an untenable government spending situation, Bush went back on that promise.
Trump did leave himself major wiggle room.
“Now, we are going to look for fraud. I’m sure you’re okay with that,” he said.
I went to CNN’s Tami Luhby to get her expert input on what Medicaid is, how it’s funded, and what changes to the program would mean. Our conversation, conducted by email, is below.
Medicaid is a key component of the nation’s social safety net. It provides health insurance to low-income Americans who meet the eligibility criteria, and there is no cap on enrollment, unlike some other public assistance programs.
What portion of the country gets its health coverage from Medicaid and who, generally, are the people covered?
More than 72 million people have health insurance through Medicaid – that’s more than one in five Americans. It covers children, senior citizens, people with disabilities, parents and adults without dependents.
In addition, more than 7.2 million children are enrolled in the Children’s Health Insurance Program, because their families’ incomes are too high to qualify for Medicaid.
Medicaid provides health insurance for about two in five children and also covers about 40% of all births, according to KFF, a nonpartisan health policy research group. It also covers more than 60% of nursing home residents and nearly 30% of non-elderly adults with mental illness, as well as about one in three people with disabilities. Plus, it pays for substance abuse treatment.
Medicaid coverage varies widely by state, both in terms of benefits and eligibility criteria.
All states must cover certain benefits, but they can also add additional ones, such as prescription drugs, vision and dental services and home care. Some are also broadening their benefits to cover housing and certain food.
Income limits also differ by state. Forty states, plus the District of Columbia, have expanded Medicaid under the Affordable Care Act – allowing adults with incomes up to 138% of the federal poverty level to qualify. That’s about $21,600 for an individual or about $44,400 for a family of four in 2025.
In non-expansion states, the income caps can also vary. For instance, the limit for parents in a family of three ranges from 15% of the federal poverty level in Texas to 105% in Tennessee, according to KFF.
Medicare and Social Security have trust funds that are funded in part by taxes. How is Medicaid funded?
Medicaid is jointly funded by the federal government and states. The federal government provides a 90% match for enrollees in Medicaid expansion, while the match for traditional beneficiaries varies based on a state’s per capita income, with a minimum match of 50%.
Some states also charge enrollees nominal copays for certain services.
What’s the cost of Medicaid to taxpayers each year and why do Republicans think that’s the place to cut in order to pay for tax cuts?
Medicaid spending totaled $880 billion in fiscal year 2023, with the federal government picking up about 69% of the costs and states about 31%. It accounts for nearly one in five dollars spent on health care in the US.
Republicans have long sought to shrink Medicaid, particularly for the expansion population. In addition to thinking the program is rife with waste, fraud and abuse, many feel that able-bodied adults should work in exchange for receiving government assistance.
The House and Senate GOP bills differ greatly in terms of potential cuts to Medicaid, with the House looking at much, much deeper reductions.
We don’t have concrete proposals yet, but House Republicans floated a menu of options earlier this year that could cut a few trillion dollars from the program. Among the most consequential ideas are instituting work requirements, reducing the federal match for the expansion population and establishing a per capita cap for federal funding.
Though Trump and several GOP lawmakers have recently said they don’t want to cut Medicaid, the options the House is considering would deeply slash Medicaid spending and would most likely result in many people losing their health coverage.
Adding work requirements, which several states tried to do in the first Trump administration only to be blocked in federal court, could put as many as 36 million people at risk of losing their benefits, according to the left-leaning Center on Budget and Policy Priorities.
Reducing the 90% Medicaid expansion match to a state’s rate for its traditional Medicaid enrollees could prompt many states to drop out of the expansion program since they’d have to make up the difference. That could reduce Medicaid spending by $1.9 trillion over a decade, or nearly one-fifth. If all states ended their expansion coverage, up to 20 million people could lose their benefits, according to KFF.
And instituting a per capita cap, in which states would get a set amount of federal funding based on enrollment instead of an open-ended stream, could reduce federal expenditures by between $532 billion and $1 trillion over a decade and result in as many as 15 million people losing their coverage by 2034, KFF found. The growth in federal funding would be limited to the rate of medical inflation, which critics say would squeeze the program over time.
The Medicaid improper payment rate was nearly 5.1%, or just over $31 billion, for 2024, with the majority of improper payments resulting from insufficient documentation, according to the Centers for Medicare and Medicaid Services. That’s down from nearly 8.6% the prior year. These payments are not necessarily a result of fraud or abuse, the agency said.
However, the Government Accountability Office has said that Medicaid is susceptible to improper payments and potential mismanagement, as well as waste, fraud and abuse. The program accounted for more than 21% of the federal government’s improper payments in 2023 and is on the GAO’s high-risk list.
More than three quarters of Americans have a favorable view of Medicaid, according to KFF’s tracking poll from January. That includes 63% of Republicans, 81% of independents and 87% of Democrats.
As part of their effort to repeal and replace the Affordable Care Act in 2017, congressional Republicans tried to make changes to and cut federal spending on Medicaid. Their efforts were among the top reasons why the party lost control of the House in the midterm elections the following year.
