President Donald Trump has endorsed a House budget blueprint, which will likely lead to substantial cuts to Medicaid, he announced on Truth Social.
The House Budget Committee released Feb. 12 a budget resolution detailing its plans. It advanced out of the committee the next day after a 12 hour marathon hearing.
The budget framework calls for $4.5 trillion in tax cuts and increases the debt limit by $4 trillion. It also instructs the Energy and Commerce Committee to slash spending by $880 billion over 10 years, which is expected to include major Medicaid reform, and the Education and Workforce Committee to eliminate $330 billion in spending over 10 years.
Trump’s endorsement comes less than one day after a joint interview with Elon Musk aired, where Trump promised Social Security, Medicare and Medicaid would not be cut in a budget deal.
“Medicare, Medicaid — none of that stuff is going to be touched,” he told Fox News’ Sean Hannity. He did leave open the door to address “fraud or something” or “illegal migrants” in federal programs.
Medicaid supports 80 million low-income people in the U.S. and accounts for one-sixth of all healthcare spending. The program is financed by the federal governments and states. Republicans view Medicaid cuts as a primary, and necessary, objective for upcoming legislation.
In order to pass reconciliation bills and advance major legislation on party lines, both the Senate and the House must pass identical budget resolutions first. The House, and now Trump, favors passing all priorities in “one big, beautiful bill,” as President Donald Trump coined, while the Senate prefers to break up the legislation into two bills.
It remains unclear whether Republicans will stay unified on Medicaid cuts when they see the impact it has on their states. Freedom Caucus members will likely push for even greater overall cuts to programs, citing Elon Musk’s desire to slash the federal budget by $2 trillion.
“People are under the impression, I think, that Medicaid all goes to urban areas and people in big cities,” Steve Bannon, former chief strategist for Trump, told The Wall Street Journal. “Medicaid goes all over. Working class people by and large are starting to depend more and more on Medicaid. None of these cuts are going to be easy.”
The Senate began its budget resolution process Feb. 13 but cancelled its hearing the following day. Democratic lawmakers framed the blueprint as Musk taking a sledgehammer to programs everyday people rely on, like Medicaid, veterans benefits, SNAP food assistance and more, instead of focusing efforts on the Department of Defense budget.
“Make no mistake, this budget resolution is a DOGE resolution, as it assumes the staggering amount of $1 trillion in unspecified cuts in 2025 alone, and $9 trillion over 10 years,” said Sen. Patty Murray, D-Washington, during Wednesday’s Senate Budget Committee markup hearing on the budget resolution.
Sen. Ron Wyden, D-Oregon, expressed concerns a Republican-led bill will overturn a Biden-era regulation that enforced strict standards on caregivers in nursing homes.
Republicans downplayed these concerns.
“We’re not slashing,” said Sen. Ron Johnson, R-Wisconsin, noting the national debt is more than $36 trillion. “These aren’t draconian cuts. We’re not giving things away to the ultra-wealthy.”
There has been internal strife over whether the House or Senate’s approach is the best course of action. It appears Trump has made up his mind.
Trump recently said he “loves and cherishes” and does not plan on cutting Social Security, Medicare and Medicaid, unless the administration finds waste and abuse. House Speaker Mike Johnson, R-Louisiana, echoed these remarks by saying their proposed Medicaid cuts don’t overhaul the program so much as reduce waste, fraud and abuse, reported The Hill.
A 51-page document circulated in Washington last month that outlines a menu of possible cuts Congress could take. In it, Republicans estimated Medicaid work requirements, an oft-cited tactic, would save $100 billion over 10 years.
Per capita caps are an evolution of block grants and would save up to $900 billion over 10 years, a nearly identical figure as outlined in the budget framework by the Energy and Commerce Committee. Under this proposal, the federal government would make a “limited” payment based on a formula focused on enrollee spending, not tied to state spending.
Policy proposals include various ways to change the federal medical assistance percentage (FMAP), which modifies federal reimbursement of state Medicaid expenditure, and repealing a finalized Medicaid and Children Health Insurance Plan access rule.
The Ways and Means Committee could also try to adopt site-neutral payments and reform the Affordable Care Act (ACA).
“This is probably the biggest threat to the Medicaid program since its inception,” said Anne Dwyer, associate research professor at the Georgetown University Center for Children and Families, last month at the Families USA Health Action Conference, where advocates spoke on how to protect Medicaid under the Trump administration.
Families USA and more than 400 organizations sent a letter (PDF) to Trump on Inauguration Day asking him to protect Medicaid, partly because it gives health coverage to millions of Americans with chronic disease, disabilities or in rural communities.
Medicaid is also the largest payer of mental health, with nearly 14 million enrollees suffering from mental health or substance use disorders. Diminishing the program would lead to worse health outcomes and more deaths by suicide or overdose, the Coalition for Whole Health and 150 organizations said.
Cutting Medicaid would inhibit state budgets, causing them to deprioritize the program or slash spending elsewhere, such as a state’s education budget. Medicaid benefits can vary by state but include acute care and long-term care benefits at a very low cost for individuals.
Conservative think tanks argue federal health programs are overwhelmed with fraud and abuse. The Paragon Health Institute says rich states are able to receive more funding than poor states because they can build more robust Medicaid programs, and Medicaid expansion through the ACA exacerbates that problem. The group proposes lowering the FMAP floor for wealthy states.
One of the more popular reform elements traditionally is the introduction of work requirements, which ensures anyone who receives Medicaid be employed.
Detractors say work requirements serve no other impact than to cut the program. Data from KFF find 92% of Medicaid adults either are working or cannot work due to illness, disability, caregiving responsibilities or school. In certain states, work requirements have limited enrollment due to procedural reasons including burdensome paperwork.
Medicaid fraud is also mischaracterized, said Andy Schneider, a research professor at Georgetown University. It’s providers, not enrollees, committing the fraud, as shown in an Office of Inspector General report (PDF) last year.
“The victims of fraud against Medicaid are enrollees, honest providers and the taxpayers,” he wrote. “Beneficiary fraud is negligible.”
Further, low-income adults are traditionally the first demographic to suffer in tough economic times, so work requirements would lead to an even harsher financial reality for macroeconomic situations outside an individual’s control, a report from the Economic Policy Institute found. The report goes on to say employment doesn’t necessarily increase in locations where work requirements are imposed.
Providers will be negatively impacted by broad Medicaid reform, said Tao Qiu, a healthcare equity research analyst at Macquarie.
“We believe hospitals, nursing home services and personal care services providers would be the most affected by the proposed Medicaid cuts,” said Qiu.
Some providers could lose up to $4.8 billion annually if Medicaid eligibility requirements are introduced, said Jeff Ellis and Chris Guiliano, co-founders of 1m, a risk management platform.
In a statement, the American Hospital Association’s Rick Pollack urged Congress to “reject” substantial reductions to the Medicaid program as part of reconciliation process and warned of harms to patients.