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

Episode Date: March 23, 2025

Fifteen years ago today, the Affordable Care Act was signed into law, kicking off a sweeping overhaul of U.S. healthcare and expanding Medicaid coverage to more than 30 million Americans. But with deep cuts to Medicaid being debated on Capitol Hill, could the U.S. healthcare landscape be in for a shock? WSJ health-insurance reporter Anna Wilde Mathews and Larry Levitt, executive vice president for health policy at the non-profit health policy research and polling organization KFF, discuss the kinds of changes that are on the table, from work requirements to federal contributions to states, and what they would mean for Americans’ healthcare more broadly. Luke Vargas hosts. Further Reading:  Fear of Medicaid Cuts Hits Health Insurer and Hospital Stocks  GOP Split on Medicaid Imperils Trump’s Tax-Cut Plans  Trump’s Medicaid Comments on Friday Provide Relief for Insurers  Learn more about your ad choices. Visit megaphone.fm/adchoices

With the Fizz loyalty program, you get rewarded just for having a mobile plan. You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. 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 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 U.S. 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 one in five Americans, 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 Esley-White, who's been keeping a close eye on the range of proposals we've been hearing about in Washington. 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 gonna 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. 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? 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 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 sick to work. But this is a very popular idea among Republicans to require work, and it could save a substantial amount of money. Ono, do you have anything to say on work requirements? One point to keep in mind is that if Republicans choose to try to make work requirements? 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 program. So that would definitely be a live issue.

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 Anna, 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 state level in terms of understanding the impact of a pullback in federal funding Federal funding is approximately 70% of Medicaid 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. 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.

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. Are you crushing your bills? Defeating your monthly payments?

Sounds like you're at the top of your financial game. Rise to it with the BMO Eclipse Rise Visa Card. The credit card that rewards your good financial habits. Earn points for paying your credit card bill in full and on time every month. 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 Holliday in Denver. 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.

Larry, broadly speaking, what kinds of effects on the healthcare system could a pullback in Medicaid funding or enrollment have at the individual level? And are there specific types of healthcare that might stand to be the most affected here? 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 health care system and provides all kinds of resources to prop up the system. Rural hospitals are operating on a shoestring 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. Nat. 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. Dr. Kirsten Kiefer 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. 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. 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 Churmle in Philadelphia, wanted to ask about. Is there something to be said about cutting some of the fat off of the government? They 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. Dave Korsunsky Larry, there's a kind of intuitive sense to what Nick is saying. How would you respond to that? Nick Hichman Yeah, I mean, there's fat everywhere, right? We can all be more efficient. And God knows our health care 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 healthcare system. – 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? 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 pays 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. Nat. Little window there in your answer, Anna, about some of the messaging, the lobbying

fights we could see if this Medicaid reform push continues. Larry, your parting thoughts. One of the things that people 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 healthcare 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 healthcare more expensive for other people

in some cases. Nat. Reporter, Anna Wiley-Matth Matthews covers health insurance for the Journal and Larry Levitt is the Executive Vice President for Health Policy at KFF. Anna, Larry, thank you both so much. Anna Wildy Matthews Thank you so much for having me. Larry Levitt Thanks. It was a great conversation. JS 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. Until then, thanks for listening.