Americans want Medicaid. The waiting list to receive home- and community-based services through the state-federal health program has hovered around 700,000 people in recent years. A line that long would stretch from Cleveland to Chicago.
The queue may get longer.
Incoming President Donald Trump has pledged to extend individual tax cuts and lower corporate tax rates even more while keeping Medicare and Social Security intact. To pay for these and other priorities, Republicans are eyeing deep cuts to Medicaid, which a majority of Americans want to continue as is. Medicaid represents over half of all federal funds to states — about $590 billion annually — according to a recent National Association of State Budget Offices report.
In recent years, the federal government has picked up nearly 70% of the tab of providing this low-cost or free health care coverage for people below a certain income threshold. Any federal pullback leaves states with only bad options: enrolling fewer people, cutting back on what’s covered, or reducing how much they pay the providers who care for this population.
“This is not about flexibility so they can manage the dollars better,” said Joan Alker, executive director of the Georgetown University Center for Children and Families. “There’s no way to manage your way out of massive cuts. People’s needs won’t go away. States will be left in a completely untenable position. Even the richest states can’t raise taxes enough to make up for these devastating levels of cuts.”
While Republican lawmakers have not released detailed plans for cutting the program, they have mentioned work requirements, block grants, per capita caps or spending caps for enrollees, and changing provider reimbursement rates. Medicaid policy experts say implementing these changes could effectively end the federal government’s role as a financial backstop to guarantee an individual’s health coverage. Conservatives suggest that cuts or Medicaid reforms that force states to pony up more are necessary to avoid a federal debt spiral.
“States are abusing federal Medicaid policy,” said Brian Blase, a former Trump advisor and president of Paragon Health Institute, a small conservative policy advocacy group reportedly shaping the incoming administration’s views on health policy. “There is an enormous amount of waste, fraud and abuse in the program.”
The changes would dramatically alter states’ budgets and could curtail or end care for millions of people with disabilities. Two expensive programs in particular could be in the crosshairs: long-term care and home- and community-based services. This would be a crisis as these programs cater to the sickest Americans who would have dizzying out-of-pocket costs, said Katy Neas, CEO of The Arc, a nonprofit that advocates for people with intellectual and developmental disabilities.
“Medicaid is probably the one thing that helps people with disabilities or can help people with disabilities at every stage of their life,” she said. “It is the one place that pays for things that nobody else pays for.”
Disability advocates are particularly worried about work requirements, which they believe will be some of the first changes. While some work requirement proposals in the past have excluded people receiving Medicaid for disabilities, advocates say that ignores the wide umbrella that is disability. In recent years, Medicaid expansion has aided people who did not fit into the program’s earlier definition of disability. A work requirement could inadvertently target them.
“Disability isn’t static,” said Jennifer Lav, senior attorney at the advocacy group National Health Law Program. “Somebody might have a disability that really affects their ability to work one month versus another month, it just depends on the disability.”
Income, rather than employment, typically governs Medicaid eligibility, though not for all populations. Work requirements would slash federal spending by around $135 billion and push as many as 2.2 million people off of Medicaid coverage over the next decade, according to a Congressional Budget Office estimate. Many people spend years on a waiting list to receive certain Medicaid benefits. The unmet need is “so profound” that making the need greater is sending the country in the “absolute wrong direction,” said Neas.
Prior work requirement proposals failed in Congress and Trump’s approvals of Medicaid work requirements were struck down by several courts. Although 85% of Medicaid enrollees work or can’t work due to disability or caregiving responsibilities, Republicans have continually pushed for work requirements in recent years, including the attempt to repeal the Affordable Care Act in 2017. A two-year experiment in Arkansas found that a statewide Medicaid work requirement left people worse off financially and did not increase employment.
“Work requirements are Medicaid cuts by another name. We know that work requirements keep people from getting health care, and they don’t actually help people work,” said Lav.
Nevertheless, Republicans have mentioned work requirements and other changes to the federal health safety net. Block grants mean states would only receive a lump sum of money. Per capita caps would limit the amount of federal dollars states receive per Medicaid enrollees. And changing the program’s already-low reimbursement rates for health care providers will further hinder an individual’s access to care. In every case, the Medicaid partnership pendulum between states and the federal government would shift towards states.
One of the Medicaid block grant plans proposed by Republicans in 2017 would have reduced federal Medicaid funding by more than 30% over 20 years. If states are getting less money, health officials will have to change their own calculus and how they disperse funds. We could be looking at a chaotic “food fight” in every state, said Matt Salo, health care consultant and the founder of the National Association of Medicaid Directors.
He remembers that when Republicans proposed block grants and capping Medicaid in 2017, “all of the various interest groups — whether it was nursing homes or children’s hospitals or whoever — their immediate reaction was ‘don’t do that to us, do it for everybody else,’” said Salo.
When the pandemonium begins, Salo worries that states will quickly curtail or end services for people with disabilities, especially home- and community-based services. States don’t have to provide this care, as it is optional for receiving money, but those services help older people and people with disabilities with daily activities, including eating, showering, and managing their medications. Nationally, three million people use community care, which is less expensive than institutional care. In recent years, Medicaid’s funding priorities have reflected the broader societal shift and prioritization of community care over institutional care such as nursing homes.
While states do not have to provide home and community care, other parts of Medicaid are not optional. The federal government promises to fund the health needs of beneficiaries who receive long-term services and supports, now and decades into the future. More than 8 million people currently use these services, which cost the U.S. over $400 billion in 2022. People with disabilities comprise the bulk of this population.
This could change with per capita caps. The current chair of the Health Subcommittee of the House Energy and Commerce Committee Rep. Brett Guthrie (R-Ky.) told Axios he wants to cap the federal Medicaid funds that states receive for each enrollee, reviving a failed proposal from 2017. If an individual incurs health care costs that exceed that limit, states would have to figure out how to fund that care. That would be a worst-case scenario for Medicaid, according to Alker.
“Capping Medicaid would end the guarantee of coverage that people with disabilities currently have, and that states have for a full federal financing partner in the federal government,” said Alker. “It would fundamentally change that guarantee of coverage that exists today.”
The structure of Medicaid might not be the only impending change. The program’s optics could shift, too, said Salo. Experts suggest Trump and Republicans are targeting Medicaid instead of other cash cows like Medicare and Social Security due to their voting bloc. But there could be unexpected ramifications to Medicaid cuts now that a quarter of Americans use it.
“If you kind of look at the demographics of Trump voters in the most recent election, a pretty sizable portion are on Medicaid and appreciate what it does,” he said. “Is there going to be a counter pressure to the historical, let’s just hack Medicaid because it’s easy money — does the calculus of that shift? Does the Trump administration say, ‘well, wait a minute, this might really hurt my voters?’”
Whether or not Medicaid cuts hurt Trump voters, they will undeniably hurt people with disabilities, a population that can least afford to lose health care. If Republicans successfully slash the program, it’s a matter of when, not if, said Salo.
“It’s not like they’re going to say, ‘Oh, we’re shutting down this nursing home tomorrow and kicking all these old people out onto the streets,’ he said. “That’s not gonna happen. It’ll be slower — but just as painful in the long run.”