Medicaid insures 1 in 5 Americans. This is how the GOP budget could impact coverage.
The House narrowly passed a budget resolution Tuesday that would extend the 2017 tax cuts and require $2 trillion in federal savings.
While the Senate must sign off on the House's resolution before Congress adopts the legislation, the budget resolution starts a process that could result in significant changes to Medicaid, the federal-state health insurance program that covers nearly 1 in 5 Americans.
The budget resolution calls for the Energy and Commerce Committee to find $880 billion in savings and spending reductions from programs under its jurisdiction. The committee has vast oversight of the U.S. economy with subcommittees focusing on communications and technology, energy, environment, health, commerce and oversight and investigations.
President Donald Trump has repeatedly said he does not want cuts to Medicare, the federal health program for adults 65 and older and Americans with disabilities. So, experts say, that means Medicaid is a potential target for spending reductions. House Speaker Mike Johnson said Tuesday he's confident Republicans can follow through on Medicaid cost savings without eliminating coverage for those who qualify.
What is Medicaid?
Medicaid is a government health program for low-income and disabled residents that covers about 72 million people. Medicaid covers low-income pregnant women, 2 in 5 child births and nursing homes for some low-income seniors and others. Some low-income seniors are eligible for both Medicare and Medicaid.
The federal government funds the majority of Medicaid spending, but states also contribute varying levels, depending on the program. States administer Medicaid programs, handle sign-ups and check eligibility, and many states contract with health insurance companies to manage Medicaid programs. Medicaid programs often operate under different names in states. For example, California's program is called Medi-Cal, Arizona's is the Arizona Health Care Cost Containment System and Ohio's is MyCare Ohio.
Will a work requirement save money?
Among the ideas floated by congressional Republicans: requiring many adults on Medicaid to get a job to keep their health insurance.
Conservatives say a work requirement for healthy enrollees would compel people to seek employment and potentially secure health insurance through the workplace, saving taxpayers money. In 2023, the Congressional Budget Office estimated a Medicaid work requirement would save $109 billion in federal spending over a decade.
While eligibility details vary by state, Medicaid work requirements generally require nondisabled adults to work full or part time or qualify for an exemption such as being a full-time student or caregiver. During the first Trump administration, 13 states sought a Medicaid work requirement but only Arkansas was far along enough to remove people from coverage.
Georgia is the only state with a work requirement for Medicaid enrollees. More than 6,900 residents are insured via the state's program, called Pathways to Coverage, according to the Georgia Department of Community Health. The Georgia program requires monthly eligibility checks.
Georgia plans to eliminate the work-reporting requirement for parents of children under the age of 6 and reduce monthly eligibility checks for other enrollees. Under the proposal, people would need to prove they meet the work requirement when they sign up and when they renew coverage each year.
About 2 in 3 people on Medicaid are employed full or part time, and others would qualify for an exemption from the work requirement because they are caregivers or students, according to KFF, a health policy nonprofit. Just 8% were not working due to inability to find work, retirement or other reasons, KFF said.
Can Medicaid fraud crackdown save taxpayers money?
While Democrats have warned about potential cuts to Medicaid, Republican leadership says enough savings can be found simply by rooting out fraud and waste and starting work requirements.
Johnson said Tuesday that Medicaid is "hugely problematic because it has a lot of fraud, waste and abuse."
Medicaid fraud alone can cost taxpayers $50 billion a year, Johnson said, citing earlier congressional testimony.
Johnson said Tuesday that Republicans are committed to preserving benefits "for those who desperately need it, deserve it and qualify for it. What we're talking about is rooting out the fraud, waste and abuse."
Medicaid fraud units investigate fraud in 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands and pursue civil and criminal cases. In 2023, the fraud units secured more than 1,100 convictions and recovered $1.2 billion, according to a Health and Human Services' Office of Inspector General report issued last March.
The OIG has the authority to exclude companies or individuals who are convicted in criminal or civil fraud cases from getting federal Medicaid or Medicare payments. In 2023, more than 2,100 people are entities were excluded due to fraud convictions. Total Medicaid spending surpassed $871 billion in 2023, according to the Centers for Medicare & Medicaid Services.
What other changes might be considered?
If the legislation calls for Medicaid cuts, among the proposals could include a per-capita cap on federal funding for state Medicaid programs.
The federal government pays a percentage of states’ Medicaid costs with no limit. Under a per-capita cap, states would get a fixed amount for each enrollee, according to an analysis by Georgetown University's Center for Children and Families.
Installing a per-capita cap would be a "massive cost shift to state budgets," said Joan Alker, a research professor and executive director of Georgetown's Center for Children and Families.
Medicaid covers more than half of long-term care costs, such as nursing home care for low-income seniors. Through the Children's Health Insurance Program, it also covers nearly half of U.S. children.
"With an aging population and Medicaid being the largest payer for long-term care, states would not be able to shoulder that burden," Alker said.
How would states be impacted by Medicaid cuts?
Medicaid contributes more than half of all federal funding to states, according to the National Association of State Budget Officers.
Medicaid programs made up 30% of total state spending in 2024, but that spending was covered by federal dollars. Just 15% of of total state spending came from state general funds last year.
If Medicaid programs are cut under the budget, that means states could be left with difficult choices of either reducing Medicaid spending or raising revenue, according to KFF.
Could the Affordable Care Act's Medicaid expansion be cut?
Under former President Barack Obama's Affordable Care Act, all but 10 states expanded Medicaid eligibility due to generous federal matching dollars.
The federal government pays 90% of the cost of Medicaid expansion, with the states paying the balance. Congressional Republicans circulated a memo that suggested the federal government could save money by reducing Medicaid expansion funding to the regular Medicaid matching rate of about 57%.
If such a proposal is adopted, it's "very likely that most or all expansion states would eventually drop their expansions over time in the face of this massive cost shift," Georgetown CCF said in a policy brief.
(This story was updated to fix a typo.)