What Medicaid Cuts Mean For Americans

0:07Over 11 million Americans could become uninsured by 2034 because of the health care cuts in President Trump's signature legislation. One of the biggest health care changes is to Medicaid, the federal program that provides health insurance to more than 70 million low-income Americans and people with disabilities. The Congressional Budget Office estimates this program would lose $1 trillion over the next 10 years. Republicans, like the head of the Centers for Medicare and Medicaid Services, say these changes address fraud and waste in the Medicaid program. When the program was created 60 years ago, it never dawned on anyone that you would take able-bodied individuals who could work and put them on Medicaid.

0:46Today, the average able-bodied person on Medicaid doesn't work. They watch 6.1 hours of television or just hang out. That's not fair. No, go out and try to get a job. That's Dr. Mehmet Oz. Since April, he's led the Centers for Medicare and Medicaid Services. Some rural hospitals and states warn Medicaid cuts could have devastating effects for their communities. I suspect we'll see rural clinics, safety net clinics, rural hospitals will probably shut their doors because they won't be able to sustain financially. That's Dr. Shannon Dowler, a family physician in western North Carolina, speaking to the New York Times.

1:24She's the former chief medical officer of North Carolina Medicaid. Some of the biggest Medicaid changes won't take effect until after the midterm elections in 2026, but rural hospitals that rely heavily on Medicaid are already scrambling to plan for the cuts in funding. Recently, Republican Senator Josh Hawley of Missouri introduced legislation to block some of the major Medicaid rollbacks. I'm Jen White. You're listening to the 1A Podcast. We'll break down what this all means for you right after this.

1:56Here to help us better understand these Medicaid changes is Julie Rovner. She joins us in studio. She's Chief Washington Correspondent for KFF Health News. She also hosts the weekly Health Policy News Podcast, What the Health? Julie, it's great to have you back. Always happy to be here. And I want to mention we reached out to six Republican lawmakers who expressed concern about cutting Medicaid in their states, but ultimately voted yes. That includes Representative Don Bacon of Nebraska, Representative Jeff Van Drew of New Jersey, and Representative Jen Kiggins of Virginia. None of them responded.

2:29Julie, let's just take a back, let's back up a little first. Medicaid provides health insurance to over 70 million people, according to KFF. How does the system currently work? Well, the system currently works is that it's a shared program between the states and the federal government. It always has been from the beginning. Medicaid actually turned 60 at the end of this month. And there's been, you know, back and forth over the years about how much states should provide, how much the federal government should provide. When Congress passed the Affordable Care Act in 2010, they expanded Medicaid to cover people who, as Dr.

3:03Oz was saying, were able-bodied, didn't necessarily get cash welfare, which is what Medicaid used to be tied to. because so many of these people did have jobs that didn't provide health insurance. And rather than have the employer requirement, which is what sort of the in thing was at the time, or rather than have it for all employers, they decided we will put people who are in those sort of low-wage jobs on Medicaid. It went to the Supreme Court. The Supreme Court said it had to be voluntary. So at this point, we have 40 states that have opted in. The federal government pays 90 percent of that cost.

3:40So that's much more than they pay for most Medicaid. Medicaid is otherwise shared 50-50 in wealthier states and in less wealthy states, particularly some of those in the South. Federal government will pay 75 or 80 percent and the states will pay 20 percent. So that's how it has been. And that's where we ended up with 70 million people on Medicaid more than on Medicare. Now, GOP's mega bill that was signed into launch a live fourth will change some of this. Walk us through some of the reforms. Right. It will. It seeks to cut Medicaid spending by about 15 percent. And I know that Republicans say that it's not a cut because Medicaid spending will continue to go up.

4:19And that's true. But if you lose your coverage, you're going to see it as a cut. Or if you're a rural hospital that has suddenly half of your patients uninsured, you're going to see that as a cut. So it takes about, as you said, almost a trillion dollars out of Medicaid. One of the largest ways the bill would do that is by imposing what are called community participation requirements in Medicaid. These are basically the work requirements. It's important to say that you can't live on Medicaid. It's not a cash welfare program. You're not collecting a Medicaid check. Medicaid is health insurance.

4:55It means that if you go to the doctor or the hospital that your care gets paid for. but you never see that money. So it's not like people are, you know, in their parents' basement playing video games and living off of their Medicaid. Well, what does the data tell us about how many people on Medicaid are already working? And what the data do tell us, my next breath, is that most of the people on Medicaid actually do work. They either have a job, they work part-time or full-time, they sometimes are caretakers for people who can't work, or there's another sort of fairly large group of people who are disabled, who cannot work, but who do not qualify for disability because this is a whole other show.

5:32It's really hard to qualify for disability payments. So there are a lot of people who can't work and do get Medicaid for their chronic health condition. Well, and just to put some numbers to that, the Center on Budget and Policy Priorities, it's a nonpartisan research and policy institute, analyzed census data and found that 64 % of adults with Medicaid already work full or part-time. Another 32 percent are caretakers or are ill or disabled, attend school, or are retired. Well, Julie, we've heard a lot of criticism of the CBO, people on the right who support this legislation saying that their numbers don't add up, that that's not how it's going to play out.

6:12How well has the CBO performed? It varies. Obviously, the CBO is doing its best job making an educated guess. And, you know, a lot of people point to the Affordable Care Act and the CBO numbers that were way off, although eventually they turned out to be pretty accurate. I mean, the bottom line is when Congress passed the Affordable Care Act, there wasn't that much for CBO to base their estimates on. In this case, the work requirements, we've seen how the work requirements work. We've seen them in Arkansas when we had 18 ,000 people who were still eligible losing their coverage. We've seen them in Georgia, which had estimated, you know, a large number of people to take advantage of this not be able to.

6:52And we've seen stories about people in Georgia, which is the one state that currently has a limited work requirement, people who got on and then got kicked off for bureaucratic reasons, even though they were still eligible. So the CBO, I think, has a little bit better, you know, they're able to look at a better body of work in order to make these estimates. Are they correct? No one ever knows if they're going to be correct. They are the scorekeeper. They get to make these judgments. Well, as we mentioned, Republican Senator Josh Hawley of Missouri introduced new legislation on Tuesday, and it would block some of these Medicaid rollbacks.

7:26Now, Hawley is one of the Republicans who weren't happy with these provisions, and here he is talking on NBC News last week. The provider cuts that are now not going to affect Missouri until the 2030s, my goal is to make sure those never take effect, I'll be honest with you. How? By legislation. I mean, listen, they don't affect Missouri until 2030. Between now and then, Missouri gets a billion dollars in increased rural hospital funds. That's great for our state. But the truth of the matter is we shouldn't be cutting rural hospitals. I'm completely opposed to cutting rural hospitals, period. I haven't changed my view on that one iota.

7:57Now, we should note that Hawley did vote to pass the legislation that included these changes to Medicaid. So what is he proposing now? He's proposing now to roll back some of the changes that he just voted for, basically. Missouri is one of three states that, as I mentioned, the expansion of Medicaid was voluntary for states. Well, three states passed it by constitutional amendment. So we have a number of states that if Congress were to cut back how much it provides to the states to pay for this expansion population, they would automatically stop the expansion. Missouri and a couple other states would have to actually go back and amend their constitution to do that.

8:33So Missouri would really be in a tough place if these cuts go into effect. And I think that's why Hawley was out in front early on saying, I won't vote for this. I won't vote for this. I won't vote for this. And then, of course, as you say, he voted for it. Now, there's also some changes to the Affordable Care Act. And that's the 15-year-old bill signed by President Obama that expanded access to health insurance. What's happening there? Basically, they're going to make it much like Medicaid. This bill will make it harder for people to get on Affordable Care Act plans, particularly with tax help with these tax credits, make it harder for them to renew their plans.

9:08I mean, basically, they create a lot of bureaucratic barriers. You know, they say it's to keep people who are ineligible from getting tax credits, and that is true. But as we were talking about with the work requirements, when you increase these bureaucratic barriers, it also blocks people who are eligible. So, yes, you're going to get the ineligible people off, but you're also going to get more people off. And briefly, Julie, how could these changes to Medicaid also affect state budgets? Well, in a huge way. I mean, Medicaid is one of the biggest parts of what states pay for. You know, they basically pay for health care, education, prisons.

9:44Those are sort of the three big pieces of every single state's budget. So, you know, when Medicaid changes, when Medicaid, when what states are asked to pay for Medicaid changes, that has a huge impact. Unlike the federal government, most states cannot run a deficit. So if something happens with Medicaid, they're going to have to cut somewhere else. Coming up, a health policy advisor from the first Trump administration joins us, along with the CEO of a rural hospital in Kansas. That's right after this.

10:16Let's get back into the conversation and add two new voices. Benjamin Anderson is the CEO of Hutchinson Regional Healthcare System in Kansas. He oversees a 180-bed hospital that serves around 100 ,000 people in central Kansas. Benjamin, welcome. Thank you for having me. And Brian Blaze, the president and founder of Paragon Health Institute. That's a think tank that looks at healthcare through a free market lens. He was a health policy advisor to President Trump in his first term. Brian, welcome to the program. Yeah, thanks for having me on. And we're also hearing from you. Here's Christopher in Virginia.

10:50I'm on Medicaid because I'm on disability with two aggressive forms of cancer and six other additional maladies that are also each individually life endangering. So it's amazing that I was diagnosed in 2015. The prognosis was dead by 2018, and yet I'm here 10 years, more than three times longer, and that's because I discovered peer-reviewed science that shows the casein protein in dairy is a rocket fuel for cancer. So by eliminating dairy, I slowed the cancer quite a lot, but I still need Medicaid. Does it mean I have to go to another country to survive? Is that what we have to do? Christopher, thanks for that message.

11:26We also heard from Judith who emails, we lost our rural hospital in Tennessee to Hurricane Helene. Ballot Health pledged to rebuild it until the passage of President Trump's mega bill. As a result of the cuts to Medicaid, Ballot Health says it is now pausing plans to rebuild the hospital after all. Brian, you advocated for a lot of the Medicaid changes that made it into this bill. Just give us a brief rundown of the specific changes you pushed for. Yeah, I mean, I think the main problems, there's been an explosion of what we refer to as Medicaid money laundering. which has shifted significant costs from states to the federal government.

12:07And these tactics involve states and hospital systems developing creative financing schemes that give the appearance of the state making an expenditure on the hospital. But it's just an illusion. But the federal government then transfers large funds to the state that the state then uses to make significant payoffs to the hospital systems. So that corporate welfare really ratcheted up during the Biden administration and Medicaid payments in many states for many hospital systems are now well in excess of Medicare rates. So the main reforms that I'd say we focused on were reducing these state financing gimmicks and really addressing the corporate welfare and have a bipartisan history.

13:01So the reforms that Paragon were advocating were actually identical reforms to what President Obama proposed in 2012 and 2013 to phase down, to limit state's ability to use these financing gimmicks and then limit the payoffs to the providers to no more than Medicare rates. We don't think that the Medicaid program should be paying more for able-bodied working age adults than the Medicare program pays for seniors. Under the status quo financing arrangement, you would see the health system reorient away from providing services to seniors threatening their access. So I think my favorite personal provisions are the ones that reduced and limited the Medicaid money laundering apparatus.

13:55I think the other reforms, I mean, Julie talked about them. Let's pause and just take these one at a time. Julie, how does that align with what you found and how Medicaid is operating with hospitals and with states? So this fight over who pays what and how states raise their share of the money dates back to the late 1980s. And Brian is right. It's been bipartisan. Democrats have tried to slow it down. Republicans have tried to slow it down. I don't think anybody objects to the idea that, you know, that states should pay their share and should find a way to pay their share. But, you know, basically every state has done this, I think, except Alaska.

14:33So it is definitely baked in. And I think the question was, do you want to freeze it? Do you want to, you know, how do you want to roll it back. In the end, a lot of people, you know, what it means is that states aren't going to be able to come up with their share if they can't do it this way, and they're going to end up cutting back. Those are the only options, you know, unless states are going to raise taxes across the board for their citizens. Benjamin, your hospital serves as the only hospital for many residents in rural South Central Kansas. How much does Medicaid account for your budget right now?

15:07About 10 % of our budget comes from Medicaid. And so what kind of budgetary impact are you preparing for due to these changes? What will it mean for the healthcare you provide for your workers, your staff? Yeah, the short answer is we're unsure how much this bill will hurt us, but we do know that we'll be expected to do more with less, and so we're preparing for that. And how are you preparing? We've frozen wage increases until we learn more. We have a very tightly managed position to control committee where we're not filling even essential positions, really counting on our existing team to do more with less as positions naturally turn over.

15:49We are deferring maintenance on key equipment and the replacement of key equipment. These are things that we eventually end up having to pay the piper for down the way, but we're preparing in the short run because we will know in the coming weeks just how bad this is going to hurt us. Well, and we heard Brian there say that part of the problem with Medicaid that he's pushing to address is hospitals inflating what they're charging the federal government for in regards to health care. Your response to that? A profit margin is 0.5 % in the fiscal year ending June 30. And we have recovered or are recovering from COVID.

16:29but I would say that we're a safety net provider that requires really all forms of payment to ensure that we can continue to care for all payers and those who can't pay. And so when we cut a significant portion of our reimbursement structure or payer mix, as we would call it, that puts all healthcare at risk because then we start evaluating which services we can keep or not keep. So Brian, 0.5 % profit margin. Money laundering? I would say rural hospitals are not the problem. The large abuses are from large hospital systems that have lots of political power. They're big insurance companies where this money gets funneled through.

17:16And the schemes have significantly increased. These payments, they're called state-directed payments, and there are additional payments that are made to hospital systems quadrupled during the Biden administration. And the reality is states are doing this increased corporate welfare because it's all federal money. And I think that what states need to do, so states historically paid about 60 percent, I'm sorry, states paid about 40 percent of Medicaid costs. They now pay about 25 percent of Medicaid costs. There's been a massive growth in the program, but the entire increase has been borne by the federal government.

18:02The state-federal partnership that underpins the program has become broken. has states respond to these incentives just to fleece the federal taxpayer. And it is correct for the federal government to reduce the extent that states can engage in these games and inflate payments and just load the system with corporate welfare. Benjamin, what sorts of services are you considering cutting back on right now as you think about the possible loss in federal funding? Well, our vulnerable services, as you've mentioned earlier, maternal health and pediatrics, We reopened an inpatient pediatric ward a year ago, planning on, really even it was just six, seven months ago, planning on the need to grow our maternity services and care for newborns.

18:47And so we had some significant philanthropic help to get us to reopen that unit. It was closed during COVID and bringing that back. Those are a few of them. And I say in general, when we're looking at these cuts, it's the old, it's the poor, it's the youngest among us, and it's moms that are most affected. And those are the services that we have to figure out how to sustain through philanthropy or otherwise when we see these cuts coming because they are high cost, low reimbursement services, but they're crucial for our communities. We say in Spanish in parts of rural Kansas, las madres tienen las llaves del reino, which means the mothers hold the keys to the kingdom and moms manage the health of everyone else.

19:26And so if we're not adequately caring for mothers here, the entire families and entire communities are at risk. So those are the ones that we're focused on sustaining in creative ways as we expect these cuts to get worse. Let's go back to our inbox. This is Phoebe in Florida. Trump claims that the reason they're making the cuts is to prevent so much fraud and waste. And in fact, the patients whose money he is cutting rarely commit any fraud. And the vast majority of fraud is done by the providers. the doctors and facilities, labs, hospitals, whatever. Millions and millions and millions of dollars in fraud by those people.

20:09And instead of cutting the benefits, they need to provide a little more money for enforcement with the providers. Thanks for that message, Phoebe. Julie, what do we know about how much fraud is actually happening in Medicaid? Well, there's fraud in the health care system because there's so much money in the health care system. But as Phoebe mentions, most of the fraud is committed by providers, not by patients. Because as I pointed out, patients don't get the money from Medicaid. Providers get the money from Medicaid. And yes, there have been, again, bipartisan efforts over the years to go after fraud.

20:43Every state's required to have a fraud unit. I mean, there's been a lot of work. But as I say, there's a lot of money. And it's not that hard to defraud federal health care programs. It's not that hard to defraud private health care programs either. Health care fraud is a huge issue, but that's not really what this bill takes aim at. We heard from Janelle in Ohio who emails, I'm trying to restore my Medicaid, but the political issues surrounding it have made it a difficult process. I'm 60 years old with health issues. I do work part-time and am a caregiver for elderly relatives. My observations have shown me that the majority of fraud and abuse within the Medicaid system is coming from businesses, insurance providers, and shady medical practices, not from the recipients, yet people like myself are the ones being hurt.

21:26And Stacey emails, I live in Arkansas, which was the model for work requirements. This has created serious hurdles for those in Arkansas who would otherwise qualify for Medicaid services. How are we going to ensure people don't fall through the cracks? Brian? Yeah, I mean, I think in terms of, you could think about it in two problems. You have people enrolled in programs who aren't eligible, and some of them don't know that they're enrolled. And then you have the issue of people who are trying to get signed up for a program, are eligible for the program, and are not able to. And I would say the former problem is at least 10 times bigger than the latter problem.

22:06There are huge incentives for brokers, for insurers, for providers to maximize enrollment in these programs. So we have between the ACA exchanges and Medicaid expansion, we estimate 12 million people improperly enrolled. Now, the big problem there is that the Biden administration pursued a policy agenda of enrollment, maximizing enrollment, regardless of whether people were eligible for the programs or not. And one of the features of the One Big Beautiful Bill with both the exchanges and with Medicaid expansion is to ensure that people are eligible for the programs in which they're enrolled so that the resources, there's more resources available to the individuals that truly need the program and are eligible for the program.

22:52Julie, talk about this enrollment question and what you found in your reporting. There's a decades-long body of research that says when you increase the barriers to enrollment, yes, you keep out people who are ineligible, but you also keep out people who are eligible. For years and years and years, one of the ways that states controlled their Medicaid expenditures – remember, Medicaid is a huge piece of every state's budget – was by just increasing the length of the application for Medicaid. If you had a two-page application, you would end up with a lot more people on the program than if you had a 20-page application.

23:26A lot of people don't make it through that 20-page application. You know, again, yes, you're catching people who are ineligible, but you are also preventing people who are eligible. And we have seen that over and over and over again. Benjamin, before we let you go, there's a$50 billion rural hospital fund within Trump's tax and spending bill called the Rural Health Transformation Program. and it aims to address access, improve training and health outcomes. There are other objectives as well. How much will this help make up for the loss in Medicaid funding for a hospital like yours? Well, the bill was passed to save money on or to spend less on Medicaid.

24:01And so it does not make up the whole amount. I anticipate that we would get something from that. We don't know. Again, we don't know exactly how much that's going to be at this point. But I do anticipate we're not going to be made whole for what we're currently being reimbursed or paid for Medicaid. We're scrappy, though. We're hardworking. We're going to figure this out. We're going to innovate our way through it. But it's a new challenge. In a moment, more on what Medicaid cuts will mean for states. We hear from the executive director of Colorado's Medicaid program. That's just ahead.

24:40Back to our conversation on the biggest Medicaid cuts in the program's history and what it means for you. Now let's bring in Kim Demstaffer. She's the Executive Director of the Colorado Department of Healthcare Policy and Financing and oversees the state's Medicaid program. Kim, welcome. It's nice to be here. Thank you for having me. So first, we should note that about 20 % of Colorado's population relies on Medicaid, and that percentage doubles to around 40 % when you look at how Medicaid is used for children and births in the state. Under the new law, adults need to work, volunteer, or do another community activity for at least 80 hours per month.

25:15What could those requirements mean for Colorado residents? So whenever you have increased eligibility administration obligations and mandates, it will have a detrimental impact to the number of people that we are able to cover because they aren't able to get through those new administrative barriers. So we're very concerned about the work requirements. You think work, you think one thing. Are they working? Maybe people think that's an easy thing to determine. But how many millions of employers do we have in the nation? And how many employers employ people in Colorado, but they're actually not here?