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Who does Medicaid cover? How Congress’ proposed budget cuts could be felt

Berkeley Lovelace Jr. – March 2, 2025

A budget resolution adopted Tuesday by House Republicans could jeopardize the health insurance coverage of millions of low-income and disabled people who rely on Medicaid if lawmakers follow through with their proposed spending cuts, experts warn.

The budget plan instructs the Energy and Commerce Committee, which oversees Medicaid, to identify at least $880 billion in mandatory spending cuts over the next 10 years. The savings are expected to be used to extend President Donald Trump’s 2017 tax cuts, which are set to expire at the end of this year.

While the resolution doesn’t specifically mention Medicaid, experts say it would be unfeasible for Republicans to hit that target without significant cuts to the health program, since it’s one of the largest sources of federal spending, costing more than $600 billion per year, according to government data.

“The way the math would work is that those cuts would largely need to come out of Medicaid,” said Robin Rudowitz, director of the program on Medicaid and the uninsured at KFF, a nonprofit group that focuses on health policy. “Medicare is off the table, and there just aren’t any other sources of funding for the Energy Commerce to look at.” (During his presidential campaign, Trump vowed to preserve Medicare.)

The possible cuts are expected to extend beyond those who benefited from the 2014 Medicaid expansion under the Affordable Care Act, potentially affecting nearly all of the people in the program.

“Everyone who relies on Medicaid would be at risk,” said Edwin Park, a research professor at the McCourt School of Public Policy at Georgetown University in Washington, D.C.  “Specifics of the proposal will matter — each state will be hit, and how hard they’ll be hit will vary — but certainly they’re all at risk.”

Who does Medicaid cover?

Medicaid provides health insurance primarily to people with low incomes, although it covers other groups including some older adults, pregnant women and people with disabilities. That includes about 72 million people.

In 2023, Medicaid covered nearly 4 in 10 children, including over 8 in 10 children in poverty, 1 in 6 adults, and almost half of adults in poverty, according to KFF. The program covers more than 1 in 4 adults with disabilities and provides coverage for 41% of all births in the U.S.

“There’s a sense that Medicare and Social Security are sort of these sacrosanct programs and Medicaid is often not lumped into the category,” said Allison Orris, the director of Medicaid policy at the Center on Budget and Policy Priorities, a think tank. “Polling over the last few years shows that two- thirds of adults in the U.S. have some connection to Medicaid, and almost three- quarters of the population have a generally favorable view of the program. And that’s because Medicaid really touches people and provides health care at all stages of life.”

The program is jointly funded by states and the federal government. States cover the upfront cost of care and then are reimbursed by the federal government for at least 50%.

When the Affordable Care Act expanded Medicaid to more people, the federal government committed to paying at least 90% of the total costs for the people who enrolled due to the expansion in each state.

The share of people on Medicaid varies by state, but the states with the highest number of enrollees include California, New Mexico, Arkansas, Louisiana, Kentucky, West Virginia and New York, according to KFF. The program covers nearly half of Puerto Rico residents, the largest share among states and territories. Only 10 states, including Florida and Texas, don’t participate in Medicaid’s expansion.

With fewer dollars coming from the federal government, states would bear a larger share of Medicaid costs, which many would likely struggle to afford, Orris said.

“Capping federal spending doesn’t make health care needs go away,” Orris said. “It just shifts the risk of higher spending to states and makes states make choices about: do they cut coverage, do they cut eligibility, do they cut provider rates?”

What about fraud in Medicaid?

The GOP House budget plan is only the first step in a series of negotiations between House and Senate lawmakers before a bill can reach Trump’s desk.

Republican leaders have argued that the proposed budget cuts would eliminate fraud in Medicaid, but Park, of Georgetown, said there’s no data to support the claim that fraud is more prevalent in Medicaid than in other parts of the health care system, including Medicare and private insurance.

On Wednesday, House Speaker Mike Johnson, R-La., said on CNN that lawmakers were not going to make cuts to Medicaid benefits. “We’re going to take care of those who are rightful beneficiaries of the program,” Johnson said. “We’re going to cut the fraud, waste and abuse and that’s where we’re going to get the savings to accomplish this mission.”

Park said that’s misleading.

“The fraud argument is being used as a frame to justify Medicaid cuts, but the major proposals that are under consideration today to achieve this $880 billion target are the same major Medicaid cuts that were included in the [2017] Affordable Care Act repeal and replace bills that ultimately failed,” Park said. “Back then, there was no talk about combating fraud or waste or abuse.”

“Republicans are saying, ‘We’re not going to hurt enrollees, we’re not going to hurt people, we’re just going to deal with waste, fraud and abuse,’” Orris said. “But I think we need to unpack that and understand that just like any health care program, there are some improper payments in Medicaid, which generally result from paperwork not being filled out. That happens across all programs.”

The argument, experts say, shifts the focus away from the harms that would come to people across age and income spectrum if Medicaid gets cuts.

“Congress is very unlikely to say, ‘Dear states, you need to cut coverage for people with disabilities,’” Orris said. “All of those hard decisions are going to be left for states to make and it’s hard to say that any population would be spared, especially if you get into the realms of cuts that are big enough that lead to hospitals closing and impacting access to care.”

Without Medicaid coverage, people often don’t have any other options.

“Medicaid is such a complicated program, and it covers so many different facets of the health care system, many of which people don’t fully appreciate,” Rudowitz said. “We know that most people who lose Medicaid would likely become uninsured and then would still need health care services, and may still show up to clinics, and those providers would likely not be reimbursed.”