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One of the top priorities of the incoming Trump administration will be extending the 2017 tax cuts, which expire this year. Many Republican politicians have discussed plans to cut spending to offset the lost revenue – and that often comes down to cutting vital safety net programs like Medicaid. As one conservative think tank researcher told the New York Times, Medicaid “is going to be where the action is.”

Medicaid provides health coverage for low-income people, children, and people with disabilities. Tens of millions are covered by Medicaid, including almost half of all children in the country. Medicaid was expanded under the Affordable Care Act (ACA), with the vast majority of the costs borne by the federal government. Currently, the federal government contributes on average 71 percent of spending per enrollee, guaranteeing access to health insurance for everyone who meets eligibility requirements. States with lower per capita income get higher payments from the federal government. Medicaid rolls can grow during recessions or pandemics to accommodate newly unemployed adults; this was extremely important during the COVID-19 pandemic, when millions lost employer-sponsored health insurance.

There is strong research showing that Medicaid has narrowed racial disparities in health care access, and that Medicaid expansion has been an important anti-poverty policy.

Proposing to cut Medicaid spending is not new; Trump and other Republicans have tried various means to do so already. In his second term, there are several avenues they might pursue to achieve this goal.

Work Requirements

One of the most common proposals is to institute ‘work requirements’ on beneficiaries – even though most people enrolled in Medicaid, it should be noted, already work full or part time. Work requirements were part of the Heritage Foundation’s Project 2025 roadmap, passed by House Republicans in 2023, and were something that Trump attempted in his first term, giving 13 states a waiver to add work requirements for Medicaid eligibility. That effort was thwarted by legal challenges and eventually scrapped by the Biden administration after the 2020 election. A program in Arkansas lasted several months, and thousands of people there lost coverage.

The only state with a current Medicaid work requirement is Georgia, so in a sense it represents a case study of the effects of this policy. The state created a program called Georgia Pathways to Coverage in 2023. It was projected to cover 100,000 people, but has only enrolled a little over 5,000. Costs are significantly higher than predicted, with much of the money going to outside consultants and administrative costs. The state’s Democratic senators, Raphael Warnock and Jon Ossoff, have called for a federal investigation of the program.

Overall, the lesson one can draw from these work requirement policies is pretty clear. When the Congressional Budget Office evaluated a bill that would have instituted a Medicaid work requirement, it found that “federal costs would decrease, the number of people without health insurance would increase, the employment status of and hours worked by Medicaid recipients would be unchanged, and state costs would increase.” Thus, Medicaid work requirements create the type of government Republicans often decry: a bloated, inefficient bureaucracy that fails to adequately help Americans.

Cutting Money to States

Another way to cut Medicaid costs is to reduce the federal funding that goes to states to support the expansion of the program via the Affordable Care Act. This would shift costs to state governments, some of which might choose to curtail their participation in Medicaid.

There are nine states with laws that call for an end to their participation in Medicaid expansion if the federal government’s financial contribution drops below current levels. In theory, these states could maintain current levels of participation in Medicaid – but they would be on the hook for paying for it.

There have also been proposals to change federal Medicaid funding into a block grant or some other form of a spending cap, again with the goal of reducing spending. As Georgetown University’s Edwin Park observed,

“To compensate for the severe federal funding cuts resulting from block grants and/or per capita caps… states will either have to dramatically raise taxes and drastically cut other parts of their budget including K-12 education or, as is far more likely, institute deep, damaging cuts to Medicaid eligibility, benefits and provider and plan payment rates.  That includes not just dropping the Medicaid expansion, which covers nearly 20 million newly eligible parents and other adults, but gutting the rest of state Medicaid programs that serve tens of millions of low-income children, parents, people with disabilities and seniors.”

In short, policies to curtail Medicaid spending come at an enormous cost to those who rely on the program.