GOP lawmakers commit to big spending cuts, putting Medicaid under a spotlight – but trimming the low-income health insurance program would be hard

Speaker of the House Mike Johnson addresses the media on Feb. 25, 2025, after the House narrowly passed his budget resolution calling for big spending cuts. Kayla Bartkowski/Getty Images

Efforts by Republicans in Congress to make steep spending cuts have stirred widespread concerns that the federal government may trim expenditures on Medicaid even though President Donald Trump has previously indicated that he's unwilling to do that. This public health insurance program covers around 72 million people – about 1 in 5 Americans.

The Conversation U.S. asked Paul Shafer and Nicole Huberfeld, Boston University health policy and law professors, to explain why cutting Medicaid spending would be difficult and what the consequences might be.

What is Medicaid's role in the health care system?

Created in 1965 along with Medicare, the public health insurance program for older Americans, Medicaid pays for the health care needs of low-income adults and children, including more than 1 in 3 people with disabilities. It also covers more than 12 million who qualify for both Medicare and Medicaid because they are both poor and over 65.

In addition, this safety net program pays the health care costs of more than 2 in 5 U.S. births. Medicaid is a joint federal/state program, driven by federal funding and rules, with the states administering it.

The Affordable Care Act was supposed to make nearly all U.S. adults under age 65 without children who earn up to 138% of the federal poverty level eligible for Medicaid. Prior to the 2010 landmark health care reform law, adults without children in most states could not get Medicaid coverage. The Supreme Court, however, made this change optional for states.

So far, 40 states – as well as Washington, D.C. – have participated in Medicaid expansion. The program's growth has reduced the number of Americans without health insurance and narrowed coverage gaps for people of color and those with low-wage jobs who typically do not get employer-sponsored coverage.

Hundreds of studies have found that Medicaid expansion has improved access to care and the health of the people who gained coverage, while reducing mortality and bolstering state economies, among other positive outcomes.

Ten states haven't expanded Medicaid yet. Two of them, Georgia and Mississippi, have seriously considered doing so.

Bishop Ronnie Crudup Sr., center, seen in May 2024, has called for the Mississippi Legislature to expand Medicaid in the state. AP Photo/Rogelio V. Solis

Why are you concerned about Medicaid's funding?

A memo circulated among House Republicans in January 2025 included a menu of up to US$2.3 trillion in Medicaid cuts over 10 years. A House budget blueprint, approved in a 217-215 vote on Feb. 25, which fell largely along party lines, indicated that the Republican majority was instead aiming to reduce Medicaid spending by $880 billion over a decade.

To be clear, GOP lawmakers didn't say they planned to do that.

Instead, they told the committee that oversees Medicaid and Medicare to identify cuts of that magnitude. Experts agree that slashing Medicare spending would be harder to pull off because Trump has made it clear he considers it off-limits, but at times he has suggested he might be open to trimming Medicaid. Trump says he supports the budget plan the House approved.

In an interesting coincidence, Medicaid itself costs around $880 billion a year between federal and state government spending. That suggests Republicans are aiming for an approximately 10% cut.

How does the program work?

If you're eligible for Medicaid, by law you can enroll in the program at any time and get health insurance coverage.

If you require treatment for a condition Medicaid covers, whether it's breast cancer or the flu, that happens with no – or low – out-of-pocket costs. Being enrolled in Medicaid means your medical treatment is covered and cannot be denied for budgetary reasons. The federal government contributes a share of what states pay for the health care of residents who enroll, but it can't decide how much to spend on Medicaid – states do.

The federal match rate is linked to the per capita income of each state. That means a state with lower per capita income gets a higher federal match, with all states getting at least 50%. For states that participate in the Medicaid expansion, the federal match is 90% across the board for that population.

A dozen states have so-called trigger laws on their books that could automatically revoke Medicaid expansion if this enhanced match rate is lowered.

How can the federal government reduce its Medicaid spending?

The federal government could simply adjust the match rate, shifting more of the cost of Medicaid to states. But prior proposals have suggested a larger change, either through per capita caps or block grants.

Per capita caps would place a per-person cap on federal funding, while block grants would place a total limit on how much the federal government would contribute to a state's costs for Medicaid each year. In turn, the states would likely cover fewer people, reduce their benefits, pay less for care, or some combination of such cost-cutting measures.

Either per capita caps or block grants would require a massive transformation in how Medicaid operates.

The program has always provided open-ended funding to states, and both states and beneficiaries rely on the stability of federal funds to make the program work. Imposing caps or block grants would force states to contribute significantly more money to the program or cut enrollment drastically. Assuming a substantial cut in federal funding for Medicaid, millions could lose health insurance coverage they cannot afford to get elsewhere.

Speaker Mike Johnson said that per capita caps and changing the federal match rates are not on the table, but they were included in the earlier House Republican memo detailing potential cuts.

House Minority Leader Hakeem Jeffries, a New York Democrat, flanked by his fellow House Democrats, criticizes the House Republicans' budget bill at the U.S. Capitol on Feb. 25, 2025. Saul Loeb/AFP via Getty Images

What else could happen?

Another idea many Republicans say they support is to add what are known as "work requirements." The first Trump administration approved state proposals for Medicaid beneficiaries to complete a minimum number of hours of "community engagement" in activities like work, job training, education or community service to enroll and maintain Medicaid eligibility. This is despite the fact that the majority of Medicaid enrollees already work, are disabled, are caregivers for a loved one, or are in school.

Some politicians argue that making people work to receive Medicaid benefits would help them transition to employer-based coverage, so adding that restriction may sound like common sense. However, the paperwork this requires can lead to lots of working people getting kicked out of the program and is very costly to implement. Also, job training programs, volunteering and education, unless in a degree program, generally don't come with health insurance coverage, making this reasoning faulty.

When Arkansas implemented Medicaid work requirements in 2018, despite the majority of enrollees already working, about 18,000 people lost coverage. The policy was poorly understood, and enrollees had trouble reporting their work activity. What's more, the employment of low-income adults didn't grow.

Is Medicaid vulnerable to waste or fraud?

Medicaid already spends less than Medicare or private health insurance per beneficiary. That includes spending on doctors, hospitals, medications and tests.

The Government Accountability Office – an independent, nonpartisan government agency – has estimated that preventing payments which shouldn't be made, or overpayments, could lead to $50 billion in federal savings per year. The GAO cautions that "not all improper payments are the result of fraud." This significant sum is still nowhere near the scale of the cuts Republicans apparently want to make.

Would Medicaid spending cuts be popular?

That's very unlikely.

Polling and focus groups show that Medicaid is quite popular.

More than half of Americans say that the government spends too little on Medicaid, and only 15% say spending is too high.

We believe if Medicaid cuts were to be openly debated that members of Congress would be inundated with calls from constituents urging their lawmakers to oppose them. That is what happened in 2017, when the first Trump administration tried and failed to repeal the Affordable Care Act.

Should Medicaid be cut by anything close to $880 billion over the next decade, we'd expect to see millions of America's poorest and most vulnerable people kicked out of the program and wind up uninsured. But that would only be the beginning of their problems. Uninsured people are more likely to wait too long before seeing a doctor when they get sick or injured, leading to worse health outcomes and widening the gaps in health between haves and have-nots.

Paul Shafer receives research funding from the National Institutes of Health, Agency for Healthcare Research and Quality, and Department of Veterans Affairs. The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of these agencies or the United States government.

Nicole Huberfeld does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.