Medicaid May Face Big Cuts and Work Requirements

With Republicans set to control Washington, conservative lawmakers and policy experts who could advise the next Trump administration are discussing long-sought cuts to Medicaid, the government health program that covers roughly a fifth of all Americans and makes up about 10 percent of the federal budget.

Some of the changes are being proposed as a way to pay for a law that would extend the tax cuts from the first Trump administration, most of which benefited corporations and wealthier Americans. The policies might slash funding for Obamacare’s Medicaid expansion — which added roughly 23 million people to the program — or require that many enrollees work in order to receive benefits.

Representative Jodey Arrington of Texas, a Republican who leads the House Budget Committee, told reporters last week that he favored a “responsible and reasonable work requirement” for Medicaid.

And Senator John Cornyn, another Republican from Texas, said of Medicaid, “We ought to look at whether we’re doing it the right way.” He said he supported “block grants,” in which states get lump sums, regardless of how many people sign up for the program.

These ideas resurrect conservative proposals going back years, and have appeared in recent House Republican budget proposals and in the high-profile policy agenda known as Project 2025. Work requirements, which struggled to get off the ground in the first Trump administration, would cut federal spending by at least $100 billion over the next decade and cause 600,000 people to lose coverage, according to estimates from the Congressional Budget Office.

“If you want to avoid a debt spiral there have got to be reforms made to federal health programs,” said Brian Blase, a former Trump health policy adviser who now runs Paragon Health Institute, a conservative think tank. Mr. Blase has discussed Medicaid reform in recent years with conservative lawmakers and aides.

Medicaid has become deeply embedded in American life, covering nearly half of all children in the United States. It also pays for a significant portion of the nation’s nursing home care and mental health treatment. States and the federal government share the program’s costs, which totaled $880 billion in 2023.

Medicaid enrollment swelled to 87 million people under President Biden, with emergency pandemic legislation that required states to keep people on the program longer than normal. Some longtime holdout states also opted into the Affordable Care Act’s Medicaid expansion, which offered the coverage to adults with family earnings up to $43,000 a year for a family of four.

That rapid growth has made the program a top target for a Republican-controlled Congress.

“It could be the most consequential year in Medicaid’s life,” said Joan Alker, a Medicaid expert who leads the Center for Children and Families at Georgetown University. Medicaid, said Chris Pope, a senior fellow at the conservative Manhattan Institute, “is going to be where the action is.”

On Tuesday, President-elect Donald J. Trump chose Dr. Mehmet Oz, a celebrity doctor who regularly promotes dietary supplements and other alternative health products, to lead the Centers for Medicare and Medicaid Services. Dr. Oz will “cut waste and fraud within our country’s most expensive government agency,” Mr. Trump said in a statement.

Still, Republicans could face political resistance in efforts to cut Medicaid, especially because it has so many enrollees — millions more than Medicare, the public insurance program for people over 65, has. In 2017, Republicans faced a major backlash for trying to roll back the Obamacare Medicaid expansion.

More than 70 percent of adults want Medicaid to stay largely as it is, according to a survey conducted this year by KFF, a nonprofit research group.

“If they go in and say we’re going to make big cuts and do massive policy, that will start the holy wars we saw in 2017,” said Rodney Whitlock, a vice president at McDermott+ and a former Republican Senate health aide.

Many conservatives have homed in on policies that would reduce federal funding for adults who enrolled through the Obamacare Medicaid expansion. Before that, Medicaid was largely restricted to children, mothers and people with disabilities.

The federal government pays states 90 percent of the costs for Obamacare expansion enrollees. But over the summer, Mr. Blase published a detailed proposal for slashing that figure to as low as 40 percent, which could save hundreds of billions of dollars over a decade.

Faced with such a large funding reduction, some states may stop participating in the Medicaid expansion, experts said.

A Medicaid work requirement would also target adults who were added in the expansion (although most of them are already working). Congressional Republicans have repeatedly introduced laws with Medicaid work requirements but struggled to get them passed. Last spring, for example, Republicans tried attaching the policy to debt ceiling legislation, but the provision ultimately fell out after pushback from the Biden administration.

During the first Trump administration, some states received federal permission to impose work requirements but were stymied by legal challenges. Arkansas was the first state to enact the change, and a messy implementation led thousands of recipients to lose coverage. The program was later struck down in court. Only one state, Georgia, has implemented the program, after prevailing over a challenge from the Biden administration.

Matt Salo, a health care consultant who previously ran the National Association of Medicaid Directors, said he had spoken with several Medicaid directors who were “dusting off their playbook” on work requirements.

Some Republican legislators are interested in even more sweeping changes, such as turning Medicaid into a block grant program, which would keep federal costs fixed even if more people sign up for coverage. In 2020, Mr. Trump’s health department encouraged that strategy, arguing that it would make the program more financially sustainable in the long term.

But critics have said such cuts would put only more financial pressure on states, forcing them to increase their own spending or make substantial cuts. “States are left holding the bag,” said Ms. Alker, the Georgetown expert.

State Medicaid officials are already feeling a financial squeeze as tax revenues have declined and federal pandemic relief has lapsed. The Congressional Budget Office has projected that in the fiscal year 2024 states are set to receive almost $60 billion less in federal Medicaid funds than they did in 2023.

Medicaid has shed millions of recipients since last year, as states unwound a pandemic-era rule that gave them additional funding. The declines in coverage have worried Medicaid supporters, who say some Americans are losing coverage despite being eligible because of technical glitches or not returning paperwork.

“Without Medicaid coverage, you’ve got folks choosing between how to put food on the table or pay for their kids’ health care,” said Daniel Tsai, who oversees Medicaid in the Biden administration.

Crystal Harp, a 27-year-old mother of three from White Bluff, Tenn., said that Medicaid had kept her family afloat for years as her daughter Avalynn, 8, was diagnosed with a rare form of epilepsy that often put her in the hospital. When picking up a medication from a pharmacy one day in 2018, Ms. Harp found out Avalynn had been kicked out of Medicaid because of a paperwork error, leaving her to borrow almost $400 from family and friends to cover the costs. She re-enrolled her daughter, but they lost coverage again in 2019 for the same reason.

“It’s unbearable to think about the medical debt we would be in if we did not have Medicaid,” Ms. Harp said.

Some experts said that even if no new laws were passed, Trump appointees were likely to make significant changes to the regulatory rules that govern Medicaid. For example, they could target a rule that simplifies how people qualify for and stay in the program. Or they could go after rules that set minimum staffing levels at nursing homes with Medicaid recipients or that shorten appointment wait times for certain recipients.

These changes wouldn’t happen overnight. “They’d need to go through new rule-making processes, which does take a long time,” said Robin Rudowitz, a Medicaid expert at KFF. But the complex nature of the rules, she said, with staggered implementation dates, could allow the administration to delay or refuse to enforce the regulations.

Casey Mulligan, who served as the chief economist on the Council of Economic Advisers in the first Trump administration and supports broad Medicaid changes, agreed that Trump’s second administration would face challenges making sweeping revisions on a short timeline.

“The wheels of government turn slowly,” Dr. Mulligan said. “You don’t want the ship making sharp turns and making everybody seasick.”