As Congress considers cuts to Medicaid, advocates warn that proposals will hike state costs or reduce services for people with no other resources. (Getty Images)
Of the laundry list of proposed Medicaid cuts circulating on Capitol Hill, policy watchers say some stand out as the most likely to be implemented because they’ve either been tried before, frequently embraced, or both.
Advocates argue that none of the ideas will actually help the program do a better job of its central mission: make it possible for poor and low-income people to get either primary or long-term health care. Instead, they contend, the outcome would be to transfer the costs to states unwilling to cut services or kick people off the rolls who have no other health care resources.
Broad outlines of the proposed Medicaid wish list for Congressional Republicans were outlined in a U.S. House memo that Politico published in mid-January, along with 50 pages of details. The memo is the basis for a summary of those proposed cuts from policy analysts and advocates at the Georgetown University Center for Children and Families.
Among the proposals that have garnered the most attention and concern are:
- Instituting work requirements for Medicaid recipients.
- Capping the current federal contribution to a state’s Medicaid budget, also known as turning Medicaid funds into a state block grant.
- Lowering the federal government’s minimum share of the cost of Medicaid, currently 50%.
- Ending the increased federal government match for states that have adopted Medicaid expansion under the Affordable Care Act (ACA)
Additional proposals would make other changes to how the federal matching rate is calculated or applied and reverse several Biden administration rules that made Medicaid enrollment easier and broadened access to benefits, according to the Georgetown summary.
Medicaid is funded by a combination of federal and state money. Proposals that lower the federal share would require states to pick up a larger share of the cost to avoid reducing coverage.
“The scale of the cuts Congress is contemplating is so large it really will cause fiscal peril for the state,” says Tamara Jackson of the Wisconsin Board for People with Developmental Disabilities.
Medicaid work requirements
The congressional proposals include imposing work requirements for “able-bodied” people as a condition of receiving Medicaid.
The congressional memo specifies that work requirements would not include “pregnant women, primary caregivers of dependents, individuals with disabilities or health-related barriers to employment, and full-time students.” It pegs the savings from a work requirement at $100 billion over 10 years.
According to KFF, a nonpartisan, nonprofit health policy research organization, however, more than two-thirds of Medicaid recipients are working, and those who aren’t would largely fall into the groups the memo says would be exempt.
The first Trump administration approved state Medicaid program waivers that included work requirements, while the Biden administration withdrew its approval. Among them was a requirement in Wisconsin dating from the administration of former Gov. Scott Walker.
The GOP majority in the Wisconsin Legislature passed a bill in 2022 that included a Medicaid work-requirement variation, but it was vetoed by Gov. Tony Evers.
According to KFF, a Congressional Budget Office analysis of a 2023 U.S. House proposal to institute Medicaid work requirements found that while it would save the federal government $109 billion, it would also increase the number of uninsured people by 600,000 without increasing employment. An Arkansas work requirement instituted in 2018 but later found unlawful by a federal court led 18,000 people to lose coverage.
“What we know is, even though people are working or would be technically subject to exemptions, there are very significant administrative burdens on enrollees to prove that or be found ineligible,” says Richelle Andrae, associate director of government relations for the Wisconsin Primary Health Care Association. The organization represents federally qualified health centers that serve low-income patients, including those on BadgerCare Plus and those who are uninsured.
“More time-sensitive paperwork and steps that are hard for people to understand or do and lots of people trying to complete administrative tasks at the same time are a recipe for mistakes, by individuals and government agencies that must do the work,” says Jackson. “That is how policies like work requirements and more frequent eligibility checks save money. Eligible people lose coverage or struggle to get in.”
Block grants
Currently Medicaid pays states at least 50% of all Medicaid costs, with states paying the balance.
In President Donald Trump’s first term, his administration attempted to replace that long-standing guarantee with a block grant — a fixed amount of money per Medicaid beneficiary in the state, regardless of the actual cost.
That per-patient cap on federal funds “would instead radically restructure Medicaid financing,” according to the Georgetown summary.
The cost would be felt across the board, from long-term care in nursing homes or in the community home care to primary health care through BadgerCare Plus, health care providers say, to the detriment of patients.
“Whatever the proposals are that are at the federal level — changing the formula, [per-patient] caps, at the end of the day they they’re all aimed at reducing funding for the Medicaid program, and it really is a vital lifeline for long-term care services and support,” says Lisa Davison, executive director of LeadingAge Wisconsin. The organization represents nursing homes and assisted living providers in the nonprofit, publicly owned and for profit sectors.
Reducing support would send some patients who now have Medicaid coverage back into the pool of uninsured people, says Patricia Sarvela, chief development officer for Partnership Community Health Center, a federally qualified health center in the Fox Valley that serves uninsured people as well as BadgerCare recipients.
Lacking health insurance, people are likely to put off addressing symptoms until their condition worsens enough for them to go to the emergency room, Sarvela says.
Directly or indirectly, taxpayers will likely wind up having to cover the cost of that care, however. “There might be short-term federal savings but ultimately at the end of the day it’s going to cost the taxpayers a lot more because patients will then not have health insurance,” Sarvela says.
Changes to federal match
Several proposed changes relate to the amount of the federal Medicaid match or how it’s calculated.
A proposal published by the Paragon Institute in July 2024 calls for reducing the federal match below 50% of the costs. The Paragon Institute has close ties to the Heritage Foundation, which produced Project 2025, the 900-page document that, although disavowed by Trump last year, has been echoed in numerous actions since he took office.
In 10 states the federal match is at the minimum and would likely be lowered, the Georgetown summary says, adding: “These states would likely have to make deep cuts to their Medicaid programs in response.”
The states are California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington and Wyoming.
Other states receive a higher federal match; Wisconsin gets 60% of its costs covered. It’s not clear whether those states’ matches would also be reduced under the proposal or other Medicaid reduction proposals.
Medicaid expansion
Another likely cut would be to reduce the additional federal match for Medicaid recipients whose incomes are between 100% and 138% of the federal poverty line.
The additional match was included in the Affordable Care Act, enacted in 2010. Originally Medicaid expansion was mandatory under the act, but a subsequent U.S. Supreme Court ruling that upheld the ACA made Medicaid expansion voluntary.
States that have accepted the expansion got a 90% federal match for the added beneficiaries. The Congressional memo proposes ending the higher match, and some states that have expanded are already considering ending expansion if that happens.
Wisconsin never accepted Medicaid expansion, however, so that change would not directly affect the state. Although Evers first ran in 2018 on a vow to accept Medicaid expansion after Walker rejected it, he’s been blocked from doing so by the GOP majority in the Legislature.
As he has with every budget he’s proposed since taking office, Evers has included accepting Medicaid expansion in his 2025-27 budget proposal.
In an interview with the Wisconsin Examiner last month after a visit with constituents in Port Washington to promote his budget, Evers said he didn’t consider leaving out Medicaid expansion, despite predictions that it would be pulled back by Republicans.
“First of all, we don’t know if it’s going to go away,” Evers said. Under the current 90% match, he said, Wisconsin would get about $2 billion in additional federal money every two years and the additional people covered in the state “would get better health insurance, so it’s a win-win-win.”
Evers acknowledged that in the current Congress, there’s a risk for sharp reductions in Medicaid.
If that happens, “it would be disastrous,” Evers said. “We have lots of people on Medicaid in the state of Wisconsin.”
Among states, Wisconsin’s Medicaid profile is “pretty average,” he added.
“There are places in the country where Medicaid is a huge, huge player, and if they would get rid of Medicaid, our health care system would implode. There’s just no question about that. That’s the thing that concerns me.”
Advocate: Combatting ‘waste, fraud and abuse’ won’t make a big dent in Medicaid costs
U.S. House Speaker Mike Johnson has been quoted as saying that, as Republicans in Congress take aim at Medicaid, their only target is eliminating “waste, fraud and abuse” in the federal-state program that provides health insurance for the poor.
Richard Redman, whose adult son, Phillip, has been able to live at home and remain occupied under a Wisconsin Medicaid long-term care program called IRIS, says he and his wife, Harriet, are closely watched as their son’s home caregivers.
“It’s almost impossible for us to abuse or defraud the system,” Redman says.
He lists regularly scheduled meetings with professionals whose job it is to monitor Phillip’s care and establish that the money being spent on his care is spent carefully.
There are visits to screen Phillip to see whether he still qualifies as functionally disabled; a consultant who meets to plan, based on that screening, how the funds under the state Medicaid waiver should be allocated; and quarterly visits with a nurse whose job it is to verify that as Phillip’s guardians the Redmans are addressing his needs
The program consultant visits in person four times a year and, in the other nine months, is in long-distance contact with them, Redman says.
At times it seems like people are checking to see if their son — “who has never spoken a word, and was deemed in our 2010 guardianship hearing as ‘incompetent’ (we don’t care for that word, but that’s the legal term in guardianship proceedings) and always needing 24-hour care – is still disabled,” Redman says in an email message. “But we understand the need to prevent ‘waste, fraud and abuse,’ and we are glad this system does that.”
That system works, Redman says. “And we are grateful for the quality of life that Medicaid/IRIS money provides for Phillip.”
This story is Part Three in a series.
Read Part One: Wisconsin patients, families are wary as Congress prepares for Medicaid surgery
Read Part Two: How Medicaid fuels an economic engine for caregivers, family members and patients
GET THE MORNING HEADLINES.