Understanding the Potential Impact of Medicaid Cuts
Medicaid, established in 1965, provides essential healthcare coverage to more than 70 million Americans, including children, pregnant individuals, seniors, people with disabilities, and low-income individuals and families. It operates through a federal-state partnership, ensuring vulnerable populations can receive necessary medical services.
Recently, discussions in Congress have focused on significant budget reductions, with proposals suggesting cuts from federal programs of up to $880 billion over the next decade. While these cuts could be distributed across various programs, there is concern, as evidenced by a recent New York Times article by Margot Sanger-Katz, about the potential effect of cuts on Medicaid.
Where the Cuts May Fall
Because Medicaid funding flows through state budgets, if federal funding to Medicaid is reduced, cuts could force states into difficult choices, including:
Reducing Medicaid coverage
Cutting optional benefits such as prescription drugs
Lowering reimbursement rates for doctors and hospitals, which could lead to fewer providers accepting Medicaid patients, as well as put some nursing homes or rural hospitals out of business
Redirecting funds from other essential services, such as education or infrastructure
Increasing state taxes to make up for the shortfall
Who Would Be Affected by Cuts to Medicaid?
Among those who could be affected are individuals with disabilities who rely on Medicaid for long-term care and specialized services, as we discussed in Episode 8 of The Death Readiness Podcast. Seniors in nursing homes who have exhausted their savings and require assistance with activities of daily living also rely on Medicaid, as we’ll discuss in future Episode 10 of The Death Readiness Podcast.
Special Needs Planning and Medicaid
Many families who include individuals with special needs, or seniors requiring skilled nursing care, plan their estates with Medicaid eligibility in mind. Special needs trusts, for example, help individuals with disabilities remain eligible for Medicaid while supplementing their quality of life. However, if Medicaid benefits shrink or become harder to access, families may need to rethink their estate planning strategies to ensure continued care for their loved ones.
The Bigger Picture
Historically, attempts to cut Medicaid have faced strong public opposition. As Sanger-Katz notes, efforts to roll back Medicaid funding in 2017 were met with resistance from both Republican and Democratic governors who feared the financial strain on their states.
While fiscal responsibility is important, it’s critical to balance budgetary decisions with the healthcare needs of millions of Americans. We’ll continue to follow how these budgetary cuts play out and to what extent, if any, Medicaid is affected.
Works cited:
Sanger-Katz, M. “The Morning: Cutting Medicaid?” The New York Times, 10 March 2025. Available at: www.nytimes.com/2025/03/10/briefing/republicans-medicaid.html (Accessed: 10 March 2025).
