In a seemingly off-the cuff television remark, President Trump said he’d protect Medicaid from government spending cuts. Don’t count on it, especially since at nearly the same time, and after dithering for months, Trump endorsed a draft House Republican budget framework that anticipates cuts of as much as nearly $900 billion in Medicaid over the next decade.
Supporters of deep Medicaid cuts have two goals: to help pay for tax cuts and to end what they say is widespread abuse by requiring recipients to work. More than 90 percent of non-disabled Medicaid recipients already work. But their pay is low, or they work part time, often because they are caring for loved ones.
A Tough Task
Is there waste in the program? Sure. The Centers for Medicare and Medicaid Services estimates it made about $85 billion in improper payments in 2024, though that was less than 10 percent of all payments. And much of it could be due to insufficient or inaccurate paperwork rather than actual fraud or abuse.
House Republicans have set a difficult—some would say impossible—goal for themselves. To finance $4.5 trillion in tax cuts, they’d need to make deep cuts in domestic spending.
Some of those reductions could explicitly target Medicaid long-term services and supports (LTSS), such as personal assistance at home or nursing home care.
Other cuts. aimed at the Medicaid program broadly, still would have a significant impact on those receiving Medicaid LTSS.
Direct Cuts To Seniors
The biggest direct risk could come from cuts to Medicaid home-based care or other optional services. States are required only to provide Medicaid LTSS in nursing homes. Other benefits are provided through voluntary waivers. Congress or HHS could limit those home-based services.
Congress also could extend the so-called lookback rule to limit Medicaid LTSS eligibility. Most states have both an income and asset test to determine whether someone is qualified to receive Medicaid LTSS. In most states, recipients are limited to no more than $2,000 in financial wealth. And Medicaid bars applicants from dropping below that limit by giving away or otherwise transferring funds within the last five years.
Congressional Republicans may extend that look-back to 10 years or more. In reality, most older adults who qualify for Medicaid LTSS have been poor for their lifetimes. But some do use trusts or other tools to get around the rules.
States also could be forced to require heirs of Medicaid LTSS recipients to repay the program. For example, if someone receives $50,000 in Medicaid LTSS during their lifetime, their children would have to repay that $50,000 after their parent dies.
This estate recovery technically is required today but many states enforce the rule only sporadically. Congress may mandate repayment.
Broader Cuts
Other efforts to slash federal Medicaid contributions could have more significant implications for older adults.
The idea most likely to win congressional approval would require every able-bodied adult to work, or at least actively look for work, to be eligible for Medicaid. Such a work requirement likely would exempt older adults themselves, but may not protect their adult children who leave paid work to act as caregivers.
If those caregivers are not exempt, low-income households would face severe financial pressure.
The other proposals to cut federal Medicaid spending go far beyond LTSS and are even more draconian, but they are less likely to pass.
Currently, the federal government pays nearly 70 percent of Medicaid costs, with the rest covered by the states. The federal share varies widely, from 60 percent in Massachusetts to 82 percent states such as Mississippi and West Virginia.
Congress is mulling at least four ways to cut federal Medicaid spending. It could:
- Directly cut the basic formula. The minimum basic federal contribution, called the Federal Medical Assistance Percentage or FMAP, is 50 percent. Removing that floor would cut federal spending by about $500 billion over 10 years. Reducing the rate for those who became eligible for Medicaid under the Affordable Care Act would save about $560 billion.
- Cap the dollar amount the feds contribute. Currently, the federal contribution rises automatically as health and long-term care costs increase. With a cap, the feds would contribute a fixed dollar amount. The states would have to absorb any additional costs, either by raising taxes, reducing benefits, or cutting enrollment. Including a small adjustment for inflation, such a cap would save about $460 billion.
- Impose a per-capita cap. This version would be similar to an overall limit on federal contributions, except it would be adjusted to reflect changes in Medicaid enrollment. It would slash the program by about $600 billion.
- Bar states from taxing Medicaid providers, such as hospitals, home care agencies, and nursing homes. States use this provider tax to boost their Medicaid spending. This allows them to qualify for a bigger federal match without dipping into their general funds.
While not explicitly aimed at benefits for older adults and younger people with disabilities, any of these moves inevitably would result in lower benefits for people who desperately need help. And many live in red states.
In deep red West Virginia, for example, more than 500,000 people were enrolled in Medicaid in 2024, almost 30 percent of the state’s total population. In 2021, about 58,000 were receiving Medicaid long-term care.
MAGA Pushback
The level of deep Medicaid cuts implied in the House budget framework have made even close Trump allies nervous. His informal populist adviser Steve Bannon warned, “You’ve gotta be careful on Medicaid cause there’s lots of MAGAs on Medicaid.”
Another loyalist, Sen Josh Hawley (R-MO) says, “I would not make severe cuts to Medicaid,” though he backs work requirements.
This concern may be one reason for Trump’s sudden ambiguity about Medicaid cuts. He may learn that what he imagines are cuts to Medicaid for healthy, working-age adults will end up cutting much-needed benefits for frail older adults, as well as children and people with disabilities.
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