The Trump White House and the Republican Congress have many unresolved budget moves in 2025, but one two-part fiscal strategy seems for certain: seek hundreds of billions in Medicaid cuts and spare no contortion in describing them as “painless.” The House GOP’s new budget blueprint unveiled Wednesday makes clear Republican plans to cut hundreds of billions of dollars from Medicaid. The Republican budget plan tasks the committee overseeing Medicaid with finding $880 billion in cuts, with more conservative members insisting on going even deeper. Despite this, President Donald Trump recently claimed that any savings from Medicaid would affect only “abuse or waste,” while Speaker Mike Johnson’s insists that “Medicaid has never been on the chopping block.”
It is not too early for defenders of Medicaid to expose “big but painless cuts” as a sham. For tens of millions of Americans — from individuals with autism, to seniors requiring long-term care, hard-pressed workers, poor and middle-class children, and those relying on rural hospitals — there is no such thing as a painless Medicaid cut.
It doesn’t help that Republicans seem to believe that if you find yourself in a budget hole, keep digging.
Trump, Johnson and his allies have little choice but to market large Medicaid savings as only harmless belt-tightening and reducing waste. With only a few votes to spare, Republicans must create a reconciliation package that can satisfy a large block of the very conservative House Freedom Caucus demanding deep entitlement cuts without scaring off Republicans members in more moderate districts. This is no easy tightrope to walk.
It doesn’t help that Republicans seem to believe that if you find yourself in a budget hole, keep digging. Even as the party’s fiscal hawks decry existing deficits, they plan to significantly increase those deficits with over $4 trillion over 10 years to fully extend Trump’s 2017 Tax Cuts and Jobs Act, an expanded State and Local Tax deduction, increased defense and homeland security spending, and campaign promises like tax cuts on tips and overtime.
Key Republican members of the House and Senate are already planning to blur this harsh fiscal reality by framing the extension as just continuing “current policy” while resorting to what former President George H.W. Bush once called “voodoo economics” — the unsupported assumption that tax cuts generate enough revenues to substantially pay for themselves. But the Congressional Budget Office and other independent analyses will lay bare the high deficit path that all-GOP government is bringing.
House Freedom Caucus members see no way to moderate this fiscal bleeding other than demanding $2 trillion in mandatory spending cuts. With the Trump administration claiming that Social Security and Medicare will not be touched, Medicaid has become the No. 1 target for major cuts. But that creates another problem for House Republican leaders looking for 218 votes: Some Republicans from more vulnerable districts will rightly fear that their constituents will revolt if they are demanding close to $1 trillion in Medicaid cuts to help pay for over $2 trillion in tax relief for the wealthiest Americans.
To appease both factions, Republican leaders appear to feel that they have little choice but to go big on Medicaid cuts while trying to convince voters they will be harmless. The heart of this strategy will be to suggest that major GOP cuts will only trim “abuse or waste” and limit excessive growth in spending. Both premises are mistaken. Improper payment rate for Medicaid came down significantly under the Biden administration to around 5% — in line with similar costs in the private sector.
And according to the Centers for Medicare and Medicaid Services, more than three quarters of Medicaid’s improper payments describe situations in which “a state or provider missed an administrative step and do not necessarily indicate fraud or abuse.” As for spending growth, since 2014 when the ACA expanded Medicaid, the annual price growth of private insurance has been nearly double that of Medicaid. From 2008 to 2023, private health care costs per enrollee rose nearly three times as fast as Medicaid costs per enrollee.
Republicans’ “big but painless” cuts could take many shapes, but three policies are likely to stand out. The first and most likely part of this package is to push “work requirements” as a pretext to block Medicaid coverage for hundreds of thousands through a whole new web of red tape. All of us should want to crack down on fraud or anyone taking advantage of taxpayer dollars, but there is no evidence that many Americans are opting out of the workforce to get Medicaid.
Republicans may cynically suggest that harsh per capita caps are a Democratic idea. Don’t believe them.
When Arkansas added work requirements in 2018, the CBO reported that “neither employment nor the number of hours worked increased,” while thousands lost coverage. Georgia’s experiment with work requirements led to similarly poor results. The CBO estimates that the most recent version of Republicans’ plan for nationwide work requirements would lead 600,000 Americans to become uninsured. And as it would raise only $100 billion — less than one-twentieth of the cost of tax relief for Americans making over $400,000.
The second possible proposal for those seeking to portray major Medicaid cuts as harmless are the GOP’s “per capita caps,” which Freedom Caucus members have particularly pushed. Per capita caps limit Medicaid funding per beneficiary at levels that fail to keep pace with the projected costs of promised health care benefits. The upshot is arbitrary cuts to the program below what is needed to provide health care to the seniors, disabled Americans, workers and children it covers. This results in cuts that compound over time as federal funding falls further and further behind the cost of health care, forcing states to cut benefits and reduce coverage.
If these per capita caps had been in place over the last four years, an analysis of 41 states’ health-care costs by the Center on Budget and Policy Priorities found that 38 of those 41 states would have had to make cuts for people with disabilities and 29 of the 41 states would have faced cuts in health care for seniors. Pennsylvania, for example, would have been forced to cut spending by 12-16% for its 600,000 individuals with physical, intellectual and developmental disabilities who rely on Medicaid.
And the CBO concluded that under per capita caps, “states would reduce the size of their Medicaid programs by lowering payment rates to providers, cutting some optional services, and reducing enrollment” and that about half of people cut from Medicaid would lose health insurance altogether. “Cutting some optional services” may sound benign, but more than two thirds of Medicaid spending and 83% of spending on seniors is technically “optional” — including essential health benefits for older Americans and those with disabilities, prescription drug coverage and visiting nurses. Make no mistake: All these services would be on the chopping block under a per capita cap.
Republicans may cynically suggest that harsh per capita caps are a Democratic idea. Don’t believe them. Yes, when President Bill Clinton was fighting off an all-GOP effort to turn Medicaid into a pure block grant, he put a relatively toothless per capita cap in the mix — one that would now actually increase Medicaid spending — as a negotiation tactic to divide Republicans. This has nothing in common with the whopping $900 billion per capita cap cut circulated by Republican members of the House Ways and Means committee.
Republicans’ third possible proposal — with the benign name of “blended rates” — would take a large bite out of the Affordable Care Act while trying to hide that from the public. The Trump White House and Republicans learned the hard way in 2017 that repealing the ACA’s health coverage while providing tax cuts to the well-off is a political loser. This time around, congressional GOP leaders are seeking to obscure their partial ACA repeal. As in 2017, they are looking at reversing the ACA’s success in getting 41 states to expand health coverage through Medicaid by providing 90% of the costs to hard-strapped states. This policy has helped provide health care to more than 21 million Americans and brought uninsured rates to record lows.
The tactic is to renege on the ACA’s commitment to provide 90% of the costs of coverage expansion to hard-strapped states — while suggesting they are simply “blending rates” with other Medicaid populations. Nine states fearful of exactly this type of federal pull-back already have trigger provisions to drop the millions they now cover through Medicaid expansion if the federal government reneges on this deal. Experts at Georgetown University’s McCourt School of Public Policy believe that “it is very likely that most or all states would eventually drop their expansions,” putting up to 21 million Americans’ health care at risk.
Other possible Republican plans could include stopping states from using tax proceeds from health care providers to finance Medicaid or changing how the federal government measures poverty (and reducing the number of people who qualify for Medicaid). There are also the type of seemingly illegal administrative steps that we are seeing already from the so-called Department of Government Efficiency to reduce enrollment or force benefits to be slashed. Whatever the precise mix of cuts are, they fall guilty to the same misguided trade-off: ignoring fiscal constraints to help the most well-off while insisting on cutting health care for millions of American children, workers, those with disabilities, rural hospitals and seniors seeking long-term care. There is no free lunch. And there are no painless deep cuts to Medicaid.
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