Not Cutting or Unwinding, Trump is Refocusing Medicaid

Disinformation Democrats are loudly bemoaning Medicaid provisions in Trump's One Big Beautiful Bill Act (OBBBA): "Millions [will lose]...health insurance," it "could strip health care from 10 million," and it will be "devastating."

In fact, President Trump is taking small steps toward righting the Medicaid ship, which is foundering badly.

To "right" a ship, one must first know the ship's function. Submarines cannot launch aircraft, and aircraft carriers aren't designed for stealth. The Medicaid "ship" was never intended to provide universal health care or insurance. The 1965 Act was written "to provide a hospital insurance program...an expanded program of medical assistance, to increase benefits under the Old-Age, Survivors, and Disability Insurance System." It was designed as 50 state-run medical safety nets for medically vulnerable American citizens and legal visitors.

It is worth noting that, according to Section 1801 of the Medicaid Act, there was a strict "Prohibition against any federal interference" with the structure and operation of state Medicaid programs. Washington's involvement was limited to joint state-federal funding.

When Medicaid was enacted, it covered roughly 2 percent of the population and was projected to cost $1 billion, 1.0 percent of 1965 federal spending. Over the last sixty years, Washington has ignored Section 1801's prohibition, gradually taking control and expanding all state programs. In 2024, Medicaid/CHIP provided insurance to 78.8 million Americans and cost $817.7 billion (12 percent of the federal budget.). There are also 24 million Americans who receive insurance subsidies through the Affordable Care Act.

Thus, 107.8 million Americans, 31.7 percent of the population, are currently eligible for the federal medical safety net and may be impacted by the OBBBA. As a taxpayer-supported medical protection plan, Medicaid was intended for just two percent of the country.

President Trump is taking first steps toward refocusing the medical safety net to its original target population by reducing Medicaid's size and wasteful spending. Months before OBBBA was passed (Feb. 19, 2025), President Trump signed Executive Order 14218, "Ending Taxpayer Subsidization of Open Borders," which removed illegal residents from Medicaid. California and Oregon had made more than 1 million illegals eligible for Medicaid coverage, even though federal laws prohibit their enrollment. Not only was the program not intended for them, but their inclusion deprived medically vulnerable American citizens of needed resources.

OBBBA adds work requirements to Medicaid for healthy, childless adults. Democrats are decrying this injection of personal responsibility just as they did in 1996 when a Democrat president, Bill Clinton, signed the Personal Responsibility and Work Opportunity Reform Act (PRWORA) into law. Work requirements were added to TANF (Temporary Assistance for Needy Families) and SNAP (Supplemental Nutrition Assistance Program, formerly food stamps) over the strong objections of socialist Democrats claiming, "children will starve to death in the streets." Clinton reportedly wanted to include work requirements in Medicaid but found that it would hinder the passage of the legislation.

Work requirements for Medicaid enrollees is likely to be as salutary as it was following PRWORA. Childhood nutrition improved, and 60 percent of TANF enrollees found employment that enabled them to no longer need government welfare.

As President Trump constantly reminds us, Medicaid was intended for Americans who would be harmed or even die without a government medical safety net. It was never intended for healthy adults, those eligible for employer-supported health insurance, and particularly not for double-dippers.

The Centers for Medicare and Medicaid Services has identified about 2.8 million Americans who are either enrolled in Medicaid or the Children's Health Insurance Program (CHIP) in multiple states, or are simultaneously enrolled in both Medicaid/CHIP and a subsidized Affordable Care Act Exchange plan. These individuals divert funds from the medically vulnerable to insurance companies, who are being paid twice for the same service.

The Kaiser Family Foundation estimates as many as 17 million Americans might lose government-supported health insurance due to OBBBA. This is considered a terrible result, when in fact, it is a positive outcome.

Tens of millions of Americans lost their jobs and therefore lost employer-supported health insurance due to Biden-era COVID lockdowns. Between 2021 and 2024, twenty million mostly out-of-work healthy individuals were put on Medicaid. The Bureau of Labor Statistics suggests more than 60 percent have returned to work and regained eligibility for employer health care. Yet they remain on Medicaid rolls. Culling them would not harm these individuals, while it would help the medically vulnerable.

A recent article described the seesaw effect, where access to medical care goes down as Medicaid enrollment goes up. By disenrolling millions who don't belong — illegals, able-bodied, and double-dippers — Trump can increase access to care for those who truly need Medicaid. In other words, he is refocusing Medicaid where it is truly needed.

Opponents claim that OBBBA will cut funding for Medicaid. This is, however, false and misleading. The law actually increases funding to the program but reduces the rate of increase in spending on Medicaid over the next ten years.

To make Medicaid the best it can be, Washington should go further. Congress should adhere to its own Section 1801, provide unrestricted block grants to the states, and allow them to deliver optimal care to their residents by matching medical resources with the specific needs and unique local medical concerns of their residents.

Different challenges require different solutions. One size most definitely does not fit all. That is why when Congress enacted Medicaid, it wisely prohibited — per Section 1801 — the newly created Health Care Finance Administration (called Centers for Medicare and Medicaid Services since 2001) from any involvement in individual state Medicaid programs. If Washington had followed its own rules, healthcare today would be much more economical while providing care when needed. President Trump's OBBBA is one small step toward that enviable condition.

Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of Center for Healthcare Policy at Texas Public Policy Foundation; former Director of New Mexico Health Insurance Exchange; and author of 13 books, including the latest with Dr. Ginn, "Empower Patients–Two Doctors' Cure for Healthcare." Follow him on X.com @DrDeaneW or contact via www.deanewaldman.com.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting, host of the Let People Prosper Show, and previously chief economist of the first Trump White House's Office of Management and Budget. Follow him on X.com at @VanceGinn.

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