With potential Medicaid cuts on the table, National Governors Association (NGA) Chair Colorado Governor Jared Polis and Vice Chair Oklahoma Governor Kevin Stitt made it clear that states would end up paying the price for any federal changes to the safety net program. In a joint release, the two Governors noted, “Without consultation and proper planning, Congressionally proposed reductions to Medicaid would impact state budgets, rural hospitals and health care service providers. It is necessary for Governors to have a seat at the table when discussing any reforms and cuts to Medicaid funding.”
While Medicaid serves as a lifeline for millions of Americans, it also serves as a critical foundation for individual states’ economies. Research has consistently shown that proposed federal Medicaid cuts could decimate state credit ratings and force governors to make difficult choices about reducing health care access, cutting other critical programs or raising taxes.
Medicaid Cuts Would Deepen State Budget Pressures
Medicaid is the largest source of federal funding to states, funding nearly one-fifth of states’ total spending.
- Federal Medicaid cuts do not eliminate health care costs. Instead, they shift the burden to states and force tough budget decisions.
- Among the proposals being considered, two potential changes – establishing per capita caps and elimination of the ACA expansion match rate – could lead to a $1 trillion cost shift to states between FY 2025 – 2034, according to KFF.
Governors Would Face Devastating Tradeoffs
If federal Medicaid funding is reduced, states will be forced into difficult decisions, such as:
- Reducing or eliminating coverage for vulnerable populations, including children, seniors, veterans and people with disabilities.
- Slashing provider payments, potentially leading to hospital closures in rural areas and making it harder for doctors to see Medicaid patients.
- Cutting other essential services, like education, infrastructure or emergency response.
- Raising taxes to compensate for the loss of federal dollars, which could hurt families and businesses.
Economic Consequences of Medicaid Cuts
Medicaid funding also sustains jobs and local economies.
- Every dollar in federal Medicaid funding ultimately translates into increased employment and economic activity.
- Medicaid supports millions of jobs across hospitals, nursing homes and physician offices.
- Cuts would reduce hospital revenue, potentially leading to closures and layoffs, especially in rural communities.
States Cannot Absorb These Cuts Without Significant Harm
- Past efforts to cut Medicaid have resulted in higher uninsured rates and worse health outcomes.
- Governors and state legislatures across party lines have opposed Medicaid cuts because they threaten health care access and state economies.
Congress must protect Medicaid funding and prevent devastating cuts that harm state budgets, families and local economies.