Medicaid Cuts: What’s on the Table and What It Means for You

Summary

Summary of "Medicaid Cuts: What’s on the Table and What It Means for You"

Podcast: WSJ What’s News
Host: Luke Vargas
Release Date: March 23, 2025

Introduction

In the March 23, 2025 episode of WSJ What’s News, host Luke Vargas delves into the pressing issue of potential Medicaid cuts being debated on Capitol Hill. Marking the 15th anniversary of the Affordable Care Act (ACA), Vargas explores how these proposed changes could reshape the U.S. healthcare landscape, affecting millions of Americans who rely on Medicaid for their health insurance needs.

Overview of Medicaid and Proposed Changes

At the outset, Vargas provides a comprehensive overview of Medicaid, highlighting its significance in the American healthcare system:

• Federal Expenditure: Approximately $600 billion annually.
• Coverage: Around 72 million people, or 1 in 5 Americans, including children, low-income individuals, and those with disabilities.

Vargas introduces the two primary areas of proposed Medicaid cuts:

1. Work Requirements
2. Reduction in Federal Funding

Analysis of Proposed Medicaid Cuts

Work Requirements

Liz Eslie White, a reporter from The Wall Street Journal, outlines the Republican-favored proposal to implement work requirements for Medicaid recipients:

• Policy Details: Able-bodied Medicaid recipients without small children would need to be employed, seeking work, or volunteering to maintain eligibility.
• Federal Funding Caps: Potential reductions in per capita federal contributions to states, particularly those like California and New York that already receive substantial state funding.
• Medicaid Expansion Funding: Proposals to decrease the federal share for expanded Medicaid under the ACA, risking the continuation of the expansion in several states.

Notable Quote:

"Medicaid work requirements are probably the most popular on the Republican side of the aisle." – Liz Eslie White (00:31)

Expert Insights:

• Larry Levitt, Executive Vice President for Health Policy at KFF, discusses the contentious nature of work requirements:

  "It sort of gets to this fundamental disagreement over what Medicaid is." (04:33)

• Ana Wilde Matthews, a health insurance reporter, warns of significant legal challenges:

  "If Republicans choose to try to make work requirements a mandatory part of Medicaid, that could face a very significant court challenge." (04:36)

Reduction in Federal Funding

Vargas shifts focus to proposals aimed at decreasing federal contributions to Medicaid:

• Impact on States: States may need to either increase their funding or reduce benefits and coverage.
• Medicaid Expansion Threat: A drop in federal contributions could lead to the termination of Medicaid expansion in states dependent on ACA funding.

Notable Quote:

"Federal funding is approximately 70% of Medicaid's funding." – Ana Wilde Matthews (05:21)

Listener Concerns and Implications

The episode features questions from listeners concerned about the real-world impacts of Medicaid cuts:

• Richard Rosenblum (Boston): Expresses worry about community health centers and increased emergency department usage.
• Sarah Akamazo (Oakland): Concerns about behavioral health services for low-income children and families.
• Mark Holiday (Denver): Questions about potential reductions in Medicaid coverage affecting occupational therapy services.

Potential Effects on the Healthcare System

Larry Levitt elaborates on the direct consequences of Medicaid cuts:

• Loss of Coverage: Eliminating Medicaid expansion could affect 20 million people.
• Impact on Rural Hospitals: Risk of closures or service reductions, such as maternity care, which is 40% funded by Medicaid.
• Mental Health and Substance Abuse Treatment: Significant reliance on Medicaid funding.

Notable Quotes:

"If you cut Medicaid, you risk some of those rural hospitals closing or eliminating services like maternity care." – Larry Levitt (08:27)
"Five out of eight nursing home residents are on Medicaid." – Ana Wilde Matthews (09:20)

Efficiency and Cost Concerns

The discussion transitions to the notion of healthcare efficiency:

• Listener Input: Nick Churmel from Philadelphia suggests that cutting government "fat" could lead to a leaner Medicaid program.
• Larry Levitt's Response: Challenges the idea by highlighting Medicaid's relative efficiency compared to other parts of the healthcare system:

  "Medicaid is probably the most efficient part of our health care system." (10:41) "Medicaid has actually grown slower in recent years than either Medicare or private insurance."
  Levitt argues that cutting Medicaid might paradoxically increase overall healthcare costs by burdening other parts of the system.

Broader Impacts and Final Thoughts

Ana Wilde Matthews emphasizes Medicaid's role beyond direct coverage:

• Economic Role in Rural Areas: Essential for maintaining healthcare providers.
• Hospital Sustainability: Medicaid payments are crucial for hospitals' financial health, especially for those obligated to treat all patients regardless of insurance status.

Larry Levitt concludes by underscoring Medicaid's widespread impact:

"Over half of people say they've been on Medicaid or someone in their family has been on Medicaid." (12:31)
"If there are cuts to Medicaid, it might actually make health care more expensive for other people in some cases."

Conclusion

The episode wraps up with Vargas summarizing the critical insights from his guests, highlighting the intricate balance between fiscal policy and healthcare accessibility. As Medicaid stands at a crossroads, the potential cuts could have far-reaching implications for millions of Americans, the healthcare system's sustainability, and the broader economy.

Production Credits:
Produced by Charlotte Gartenberg, Sandra Kilhoff (Supervising Producer), and Chris Sinsley (Deputy Editor).

Key Takeaways

• Medicaid's Importance: A cornerstone of U.S. healthcare, supporting 1 in 5 Americans.
• Proposed Cuts: Focus on work requirements and reduced federal funding pose significant threats to coverage and healthcare services.
• Long-Term Effects: Potential increase in uninsured populations, strain on rural hospitals, and higher overall healthcare costs.
• Legal and Political Challenges: Efforts to cut Medicaid may face substantial legal hurdles and political opposition.

Notable Quotes with Timestamps

• "Medicaid work requirements are probably the most popular on the Republican side of the aisle."
  – Liz Eslie White (00:31)

• "It sort of gets to this fundamental disagreement over what Medicaid is."
  – Larry Levitt (04:33)

• "If Republicans choose to try to make work requirements a mandatory part of Medicaid, that could face a very significant court challenge."
  – Ana Wilde Matthews (04:36)

• "Federal funding is approximately 70% of Medicaid's funding."
  – Ana Wilde Matthews (05:21)

• "If you cut Medicaid, you risk some of those rural hospitals closing or eliminating services like maternity care."
  – Larry Levitt (08:27)

• "Five out of eight nursing home residents are on Medicaid."
  – Ana Wilde Matthews (09:20)

• "Medicaid is probably the most efficient part of our health care system."
  – Larry Levitt (10:41)

• "Over half of people say they've been on Medicaid or someone in their family has been on Medicaid."
  – Larry Levitt (12:31)

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This detailed summary encapsulates the critical discussions and findings presented in the episode, providing listeners with a comprehensive understanding of the potential Medicaid cuts and their far-reaching implications.

Transcript

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[Luke Vargas]

Hey, what's news, listeners? It's Sunday, March 23rd. I'm Luke Vargas for the Wall Street Journal, and this is what's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. The Affordable Care act was signed into law 15 years ago today, a bill that kicked off a sweeping overhaul of U.S. health care, expanding coverage to more than 30 million Americans via its Medicaid expansion. And after surviving three legal challeng challenges at the Supreme Court, it's become firmly entrenched in the American healthcare system. But with big Medicaid cuts being debated on Capitol Hill, could the US Healthcare landscape be in for a shock? Let's get right to it. The federal government spends about $600 billion annually on Medicaid. States help fund and manage the program, which provides health insurance for roughly 72 million people, or about 1 in 5Americans, including children and people with low incomes or disabilities. And as you might have heard, some big changes to the program have been tossed around on Capitol Hill lately as congressional Republicans work to deliver a budget and tax cut bill in the coming months. We have got two excellent guests with us today to analyze the effects that those moves could have. But first, I want to play some comments from Journal reporter Liz Eslie White, who's been keeping a close eye on the range of proposals we've been hearing about in Washington.

[Liz Eslie White]

Here's Liz Medicaid work requirements are probably the most popular on the Republican side of the aisle. So this would say that most likely able bodied Medicaid recipients without small children need to be working or seeking work or volunteering in order to be eligible for Medicaid. There's a number of other things they could do, for example, cap the amount that the federal government gives per person to states. They could lower their contributions to richer states such as California and New York that already have a lot of state funding for Medicaid and theoretically could afford to get a lower federal contribution. They could get rid of A lot of the funding for Medicaid expansion. When Medicaid expanded under the Affordable Care act, it came with it, this promise that if your state signed up for expansion, the federal government was going to pay 90% for all those newly eligible people. One proposal is that the federal contribution for those people would drop. And if that happens, there are a number of states that just can't afford to keep going with the expansion, and they'll likely get rid of it or cut it back severely.

[Luke Vargas]

So let's go through some of these potential changes. We could see Journal reporter Anna Wilde Matthews covers health insurance. And also with us is Larry Levitt, the executive vice president for health policy at the nonprofit health policy research and polling organization kff. Larry, let me start with you. You've been at KFF for 28 years, watching all of this in Capitol Hill and so much else, starting with work requirements, a proposal that maybe seems to be on the more feasible end of the spectrum in D.C. right now. How many people could those changes affect?

[Larry Levitt]

Work requirements are an idea that has broad consensus, at least among Republicans, not among Democrats. It sort of gets to this fundamental disagreement over what Medicaid is. Is Medicaid a welfare program for the deserving poor and therefore people should have to work in order to qualify for health insurance, or is it a kind of stepping stone to universal health insurance? And that's, that's really the view of Democrats. The reality is the vast majority of Medicaid enrollees, other than those who are disabled or seniors, are already working or they're caring for small kids or they're too s to work. But this is a very popular idea among Republicans to require work, and it could save a substantial amount of money.

[Luke Vargas]

Ana, do you have anything to say on work requirements?

[Ana Wilde Matthews]

One point to keep in mind is that if Republicans choose to try to make work requirements a mandatory part of Medicaid, that could face a very significant court challenge, likely from blue states that really don't agree with that policy direction. And the Supreme Court has in the past signaled that there are limits to the federal government's ability to impose things on states in terms of their Medicaid programs. So that would definitely be a live issue.

[Luke Vargas]

A good reminder, Congress is not operating in isolation here. Let's shift to the constellation of options that reduce what the federal government contributes to Medicaid funding. And Ana, I understand this is where things get pretty delicate pretty quickly and where moves taken at a national level could have a huge impact at the.

[Ana Wilde Matthews]

State level in terms of understanding the impact of a pullback in federal funding. Federal funding is approximately 70% of Medicaid's funding. The rest comes from the states. So if the federal government pulls back, states have to either find that extra money or they have to make the very politically difficult choice of cutting back benefits or cutting back availability, cutting back coverage and the number of people who can access it. That's a really hard call for a state politician, no matter what your party is. And leave states in a very difficult position.

[Larry Levitt]

Yeah, I mean, there's about a dozen states that have these trigger laws related to the expansion of Medicaid under the Affordable Care act or Obamacare. If the federal government cut back on how much it would spend, those states would immediately end their Medicaid expansions.

[Luke Vargas]

We've got to take a very short break, but when we come back, we'll look at how potential changes to federal Medicaid funding could ripple out to change the nature of health care that people receive. That and look at some other areas of potential reform that might be palatable to both sides of the aisle. Stay with us.

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[Luke Vargas]

Well before the break, we were talking about the state budget impact of steps to pull back federal funding of Medicaid and how that could trigger an outright unwinding of the Medicaid expansion that happened as a result of the passage of the Affordable Care Act. But we also heard from a number of listeners very curious about how either they or people they care about or work with could be affected by changes to Medicaid. And let's play a selection of those from Richard Rosenblum in Boston, Sarah Akamazo in Oakland, and Mark Holiday in Denver.

[Listener]

I'm worried about my patient population. I work at a community health center and I'm worried that reduction in Medicaid may come at the expense of their health and higher rate of emergency department use. Medicaid is one of the main payers of behavioral health services for low income kids and families. So how will the potential cuts to Medicaid impact poor kids who are receiving mental health services through systems like schools, the justice system and the child welfare system. I'm an occupational therapist for kids. I wonder if cuts could lead to a reduction in the rates that I'm paid for my service to the kids and also if some of my clients might lose their Medicaid coverage.

[Luke Vargas]

Larry, broadly speaking, what kinds of effects on the health care system could a pullback in Medicaid funding or enrollment have at the individual level? And are there specific types of health care that might stand to be the most affected here?

[Larry Levitt]

Some of the effects would be very direct, Right? So if you eliminated the Obamacare Medicaid expansion, 20 million people would lose coverage. A very direct effect on those people's access to health care. Medicaid is so embedded in our healthcare system and provides all kinds of resources to prop up the system. Rural hospitals are operating on a shoe. And you cut Medicaid, you risk some of those rural hospitals closing or eliminating services like maternity care. I mean, Medicaid funds 40% of the births in this country. There's certain sectors like mental health, which one of the listeners mentioned, substance abuse treatment, where Medicaid is really key to just funding the whole system. And if you cut Medicaid, you remove resources from that part of the healthcare system, it just makes it harder to operate.

[Luke Vargas]

Ana, would we be right to throw in long term care for the elderly? That's a big part of what Medicaid is doing for many Americans.

[Ana Wilde Matthews]

Yes. Five out of eight nursing home residents are on Medicaid. It represents more than half of long term care spending. So it's really essential to that sector and to people getting that care. And honestly, it's not just low income people. People spend down and find ways to access it because there really is no other government program that pays for long term care in that way. There's not really a substitute.

[Larry Levitt]

You know, most of the people on Medicaid are kids, working adults, but the most expensive people on Medicaid are people with disabilities and seniors, particularly those in nursing homes. So if you blow a hole in state budgets with big cuts to Medicaid, they may go to where the money is, and the money is people getting long term care.

[Luke Vargas]

Let's change gears here to the topic of efficiency, a concept that's been very in vogue in Washington the last few weeks. And something one of our listeners, Nick Churmel in Philadelphia, wanted to ask about.

[Listener]

Is there something to be said about cutting some of the fat off of the government and get a little bit more lean? You know, maybe a couple years, it suffers. Care is not great, but the places that prove themselves they can grow within Medicaid from the muscle that remains.

[Luke Vargas]

Larry, there's a kind of intuitive sense to what Nick is saying. How would you respond to that?

[Larry Levitt]

Yeah, I mean, there's fat everywhere, right? We can all be more efficient. And God knows our healthcare system is not the most efficient. When you compare it to other countries, we spend double what other countries spend on health care. The reality is Medicaid is probably the most efficient part of our health care system. In some ways, Medicaid is too efficient, too cost effective in the sense that it pays doctors very low rates, much lower than Medicare or private insurance. Medicaid has actually grown slower in recent years than either Medicare or private insurance. You know, in many ways, Medicaid is not the place where you would first look to try to cut the fat out of our health care system.

[Luke Vargas]

I'm just imagining listeners hearing this who are on private insurance and saying, all right, well, what's the point of this discussion? Does any of this affect me? Could it?

[Ana Wilde Matthews]

Larry mentioned this earlier in the conversation, but particularly certain types of providers, nursing homes, very high among them, but also all types of rural providers, Medicaid plays a very important role in the healthcare economy of rural areas. And some of these providers, if they're not getting paid to take care of some of these patients, may not really be able to stay in business, or at least at the scale that they are. One key thing to understand about hospitals, for instance, is that they are obligated under the law to treat and stabilize anyone who comes to their doors, whether they're insured or uninsured. When those people have Medicaid or can be signed up for Medicaid, the hospital can get paid. If that option isn't there, the hospitals essentially have to, in some cases, eat the cost. And that, hospitals would argue is not always sustainable.

[Luke Vargas]

A little window there in your answer, Ana, about some of the messaging, the lobbying fights. We could see if this Medicaid reform push continues. Larry, your parting thoughts?

[Larry Levitt]

One of the things that people, you know, may not realize, a lot of people end up on Medicaid or someone in their family does at some point in their lives. In fact, we did a poll recently. Over half of people say they've been on Medicaid or someone in their family has been on Medicaid. Also the fact that health care providers are concerned that Medicaid underpays them and they've got to charge more to other payers. This is a controversial notion, but there is some reality to it. And if there are cuts to Medicaid. It might actually make health care more expensive for other people in some cases.

[Luke Vargas]

Reporter Ana Wilde Matthews covers health insurance for the Journal. And Larry Levitt is the executive vice president for health policy at kff. Ana, Larry, thank you both so much.

[Ana Wilde Matthews]

Thank you so much for having me.

[Larry Levitt]

Thanks. It was a great conversation.

[Luke Vargas]

And that's it for what's new Sunday for March 23rd. Today's show was produced by Charlotte Gartenberg with supervising producer Sandra Kilhoff and deputy editor Chris Sinsley. I'm Luke Vargas and we'll be back tomorrow morning with a brand new show. Till then, thanks for listening.