Trump could make Medicaid spending a target for cuts

With former President Trump back in the White House, the US Medicaid program, which covers health care for low-income people, could face cuts.

But turning Medicaid into a program run mostly by private insurers adds powerful industry to its list of trustees, along with rural hospitals that rely on the program to balance their budgets.

The threat to Medicaid comes, in part, from simple math. Republicans are likely to look for major spending cuts to help finance a plan to extend Trump’s 2017 tax cuts, which expire next year. When the Republicans passed the tax cut law, The Congressional Budget Office estimates that the tax cuts will add $1.8 trillion to the deficit over ten years.

Trump has already promised not to touch Medicare or Social Security and called for an increase in the defense budget. Medicaid is about the only major government program left, and Trump has made no similar promises to preserve it.

“Trump’s silence on Medicaid is in some ways the best indication that Medicaid will have a target on its back,” said Larry Levitt, KFF’s executive vice president for health policy.

Caroline Levitt, a national spokeswoman for Trump’s campaign, declined to say whether Trump would cut Medicaid spending. Instead, she said Trump’s plan to deport undocumented immigrants would reduce spending on health care programs.

Medicaid will be particularly vulnerable if Republicans control both the Senate and the House, because that would allow them to avoid Senate aggression by using a budget process that requires only a simple majority. republicans will be controlled by the Senate. They have already won 52 places, with six more races yet to be scheduled. It is still not clear which party will control the chamber.

Veda Partners said it was unclear whether Republicans would be able to significantly cut Medicaid spending, but the independent research firm said it would be easier for Republicans to win more seats.

“(I)f their majority in the Senate is 55-45, the votes may exist to include substantial, conservative Medicaid reforms in the reconciliation bill and enact such reforms,” ​​the firm wrote in an analysis of the election results, citing the budget reconciliation process .

The federal government will spend $848 billion on Medicare in 2023, according to the White House Office of Management and Budget. Social Security accounted for $1.354 trillion in federal spending.

The federal cost of Medicaid and the related CHIP children’s health insurance program was $616 billion, excluding state funding for these programs. The Affordable Care Act expanded Medicaid to more adults under the age of 65, and the program now covers nearly 80 million Americans. More than half of the children are covered by Medicaid, and the program pays for more than 40% of births. Medicaid covers more than any other insurance company for behavioral health and substance abuse treatment, and is the primary payer for long-term care.

Despite its importance, it is not unusual for Medicaid to receive little attention during presidential campaigns. Medicare beneficiaries are much more likely to vote than those on Medicaid. Legislators view Medicare and Social Security as programs that seniors have contributed to and are owed. Medicaid, especially among Republicans, is often thought of as welfare.

But some powerful industries are also Medicaid constituents.

According to Edwin Park, a research professor at Georgetown University’s Center for Children and Families, many people who use Medicaid live mostly in rural areas and small towns. Hospitals and medical centers in these areas have lower profit margins than those in cities, where a large percentage of patients are covered by private insurance that pays more than public health insurance. Rural hospitals rely heavily on Medicaid to keep their doors open.

Policyholders are another group of Medicaid participants. A steady, growing stream of states is turning to private insurance companies to run their Medicaid programs. According to KFF, 41 states and Washington, D.C., contract with private managed care insurance companies to provide Medicaid to residents.

“One of the side effects of the fact that Medicaid is now largely provided through private managed care plans is that insurance companies have a large stake in Medicaid,” Levitt said.

The national debt has risen during Trump’s first term, and some of his tax and spending proposals will continue to increase it. Trump, on the other hand, said he would bring in billionaire Elon Musk to help make the government more efficient. Musk recently said he wants to cut government spending by $2 trillion.

While Trump did not say he planned to cut Medicaid spending during his campaign, Republicans have floated proposals to cut Medicaid spending. The Project 2025, Republican Commission on Budget Issues for 2025who represents conservative Republicans, and House Republican Budget Resolution for 2025 all propose major Medicaid reforms.

These proposals focus on per-person spending caps and block grants, which give states a fixed amount of federal Medicaid funding regardless of their actual spending. They all also call for limits on federal funding for state Medicaid programs. The House budget resolution would cut $2.2 trillion from Medicaid over ten years.

Project 2025 and conservative members of the House Republican Research Committee also propose limiting eligibility and eliminating taxes that states charge health care providers to obtain Medicaid funding. The 2025 project plan does not include savings estimates. But estimates in a report by the Republican Research Committee suggest that their proposals, combined with market-subsidy block grants under the Affordable Care Act, could double the federal savings compared to the House budget resolution.

Paragon Health Institute, which includes some of Trump’s inner circle from his past administration, proposed reducing federal funding for adults added to Medicaid by the Affordable Care Act and further cuts funding to wealthy states. Paragon estimates that the two proposals would reduce federal spending by $592.4 billion from 2026 to 2034.

When Republicans last tried to repeal the Affordable Care Act in 2017, that law also included a block on Medicaid. And during Trump’s first term, his administration laid out how states could impose work requirements on Medicaid plans and 13 refusals were approved to deploy them. Those work requirements haven’t gone into effect, but the Supreme Court hasn’t ruled on whether they’re allowed, and Trump could reopen the issue.

“I think all of this contributes to Medicaid being a prime target for really deep, really damaging cuts,” Park said.