We’ve been hearing a lot about Medicaid recently – and mostly for troubling (and somewhat terrifying) reasons, as this important safety net program is being targeted by Republican lawmakers, who need to cut billions of dollars from Medicaid and other programs to offset tax breaks that will mainly benefit the wealthiest Americans.
Here’s some basic information to help you understand this vital program that provides basic healthcare services to millions of the most vulnerable Americans.
Medicaid was designed to provide healthcare for the needy.
Medicaid was created in 1965 – at the same time as Medicare – to provide healthcare coverage to the poorest and most vulnerable Americans. Initially, Medicaid provided healthcare to low-income people who were also receiving cash assistance, but the parameters for Medicaid eligibility have expanded over the years to ensure coverage to people whose employers don’t provide health insurance and who would be unable to afford health insurance otherwise.
Many people benefit from Medicaid services.
Medicaid helps ensure that many Americans can receive the basic healthcare services they need. This includes preventative care as well as maternity and childbirth services. (Medicaid covers over 40% of births in the U.S., including nearly 50% of births in rural communities.) Ensuring coverage helps avoid more serious health problems that would be much more costly to treat later. Medicaid sometimes goes by a different name, depending on the state – for example, it’s known as Medi-Cal in California, while in Oklahoma it is called SoonerCare.
Medicaid supports our comprehensive health care system.
By providing critical support for public healthcare by covering many people who would otherwise be uninsured and providing the funding for a significant portion of hospital care and medical treatment, Medicaid alleviates some of the strain on communities, hospitals, and other medical facilities. These systems are often already struggling, particularly in rural areas, and losing this funding could be devastating to these communities. Medicaid accounts for nearly one-fifth of hospital spending – it covered 19% of all spending on hospital care in 2023. Nearly one-third of Medicaid spending goes toward hospital care, which is more than Medicaid spends on physician and clinical services or retail prescription drugs. That funding is very important to hospitals – and in some cases, particularly when it comes to hospitals in rural areas that serve low-income communities, these facilities rely on that Medicaid money to keep the doors open.
Medicaid cuts would have a domino effect that would impact everyone who needs healthcare – as well as those who work in the healthcare system
The American Hospital Association says that Medicaid cuts would impact the availability of health care services for everyone and could strip essential health care services for entire communities. The National Rural Health Association notes that when people who currently rely on Medicaid lose that coverage, they’re unable to get preventative care or the routine care that helps them manage chronic health conditions. They are then more likely to end up in the emergency room or needing an inpatient hospital stay, which puts increased stress on hospitals. The NRHA warns that reductions in Medicaid funding will force rural facilities to shut their doors and will cause rural residents to lose access to necessary care. When hospitals lose funding and must make up for budget shortfalls, that often means staff reductions. This means people in roles all across the healthcare system (and related organizations that support the healthcare system, like insurance companies) will likely lose their jobs – which in turn means fewer healthcare professionals available to support patients, regardless of their insurance coverage.
Medicaid cuts would be devastating to nursing homes and those who need nursing home care
It isn’t just the care provided by hospitals and doctors that would be impacted by Medicaid cuts. In the United States, 63% of nursing-home residents and 20% of assisted-living residents rely on Medicaid to pay for their care. Reps for the American Health Care Association and National Center for Assisted Living say that many nursing homes are already struggling financially and facing staffing shortages – but any Medicaid cuts could lead to downsizing, staff reductions, or closures. In a cruel twist, the GOP bill would make it tougher for people to avoid needing nursing home care, as the proposed Medicaid cuts would also reduce funding for home health care and family caregivers.
It’s a federal-state program.
Unlike Medicare – which is solely run at the federal level – Medicaid is a joint federal and state program. This means that the rules, eligibility criteria, and benefits can vary from one state to another, although there are some basic federal rules that all state Medicaid programs must follow.
It’s for people of all ages (who meet eligibility guidelines).
While Medicare is primarily for people ages 65 and older – although people with certain disabilities may be able to qualify earlier – people of all ages can be enrolled in Medicaid. However, if you’re an adult without a disability or a young dependent, it may be difficult to get Medicaid (regardless of your income) if you live in a state that didn’t pass Medicaid expansion.
Eligibility is (partly) based on income.
To qualify for Medicaid, you must meet eligibility criteria which is mainly based on your income, family size, age of your children (if any), and any disabilities you may have. Eligible children and families, people with disabilities, and the elderly can qualify for Medicaid in all states (provided they fall within the income limits). In states that passed Medicaid expansion, some other adults may also qualify if their income is under a certain limit. In order to qualify for Medicaid, applicants must provide proof of the income of everyone in their household, along with proof of identity and citizenship (or legal residency for qualifying non-citizens) for all household members. Those seeking eligibility based on medical need must also provide documentation related to their disability or medical conditions, along with copies of their medical bills. That’s already a lot of red tape to navigate, so adding more steps to the process will create an additional burden to those who are trying to enroll or maintain eligibility.
Medicaid covers a range of healthcare services.
The specific services covered by Medicaid varies by state, but there are some basic categories of services that must be covered by all Medicaid programs. These mandatory covered services include inpatient and outpatient hospital services, nursing facility services, physician services, laboratory and x-ray services, and home health services. Optional services that vary by state may include physical therapy, private duty nursing services, dental services, eyeglasses, hospice care, case management, and others. While pharmacy coverage is technically an optional benefit according to the federal rules, all states cover outpatient prescription medications for most Medicaid recipients. However, Medicaid can deny covering a specific prescription based on a variety of reasons.
Medicaid funding is complicated.
Because Medicaid is a joint federal and state program, it gets funding from both the state and federal governments. The portion of funds each state receives from the federal government is determined through a formula known as Federal Medical Assistance Percentage (FMAP) that’s based on the state’s per-capita income – so the poorest states on a per-person basis would traditionally get more funding. But the federal government provides a higher level of funding in states that passed Medicaid expansion. States typically pay for their portion of the Medicaid costs through general revenue, generally using money collected through income taxes and sales taxes.
Congress can change the Medicaid funding.
Congress can change the FMAP formula so that the federal government kicks in a lower percentage of the money needed to fund Medicaid. This would mean each state would have to come up with more money to pay for this program – something that could be challenging for states that are already struggling to cover the current costs, such as Kentucky, South Carolina, and West Virginia, among others.
Medicaid cuts are a core part of the Big Beautiful Bill.
A comprehensive tax and spending bill – officially known as the One Big Beautiful Bill Act – is currently making its way through Congress. It passed the U.S. House of Representatives on Friday and will now be debated in the Senate. In order to offset the costs of tax breaks – which will mostly benefit the richest Americans – the legislation calls for cuts to major programs and expenses. Some of the biggest and most painful costs will involve Medicaid, along with cuts to SNAP (food stamps). While the specific details will likely change as the bill is being debated by Congress, some of the big changes in the bill’s current form include mandatory work requirements and more frequent eligibility reviews for people covered via the Medicaid expansion. In addition, it would eliminate some tax credits that many people currently use to obtain health insurance through the Affordable Care Act marketplace.
Millions of Americans could lose Medicaid coverage as a result of this bill.
The Congressional Budget Office estimates that nearly 14 million Americans could lose health insurance as a result of the changes listed in the current version of the bill. Jumping through the hoops to apply or prove continued eligibility for Medicaid can be frustrating and time-consuming. Navigating the systems involved in submitting documentation for work hours, income, medical conditions, and medical expenses is notoriously difficult and often confusing – and people may face additional challenges if they are laid off, have work schedules that may fluctuate, or have other special circumstances. For people who may also be juggling family responsibilities or coping with medical challenges, it can be easy to overlook a step or forget about a deadline. Implementing more complex processes or increasing the frequency of eligibility reviews will lead to millions of additional people losing coverage, even though they are eligible for Medicaid.
What you can do
It’s important to contact your legislators to let them know how strongly you feel about protecting Medicaid. Since the bill has already been passed by the House, you should focus on contacting Senators. A few Republican senators, including Susan Collins and Josh Hawley, have expressed concerns about cutting Medicaid, so we’re hoping those legislators might be swayed to oppose these cuts. While Democratic senators are expected to be unified in their opposition to the bill’s proposed Medicaid cuts, we can’t take anything for granted in a situation as important as this, so it’s important to contact Democratic lawmakers too, especially those like John Fetterman, whose actions have sometimes been unpredictable recently.
The programs that make sure our communities work are under attack, and now is not the time for complacency or inaction. We all must do whatever we can to protect these lifelines and to fight back against the wealthy’s attempts to rob us even more than they already do.