The biggest Medicaid cut left for House Republicans will hit the red state the most violently

Republicans have been trying for months to find ways to cut Medicaid spending to help Trump enact the domestic agenda. However, the list of possible cuts has been reduced.

House Speaker Mike Johnson said Tuesday that it will significantly reduce the Medicaid expansion of the Affordable Care Act. It was off the table. The biggest cuts left in their whettle options now will disproportionately hurt the states that supported Trump in the 2024 election.

Republicans are also studying several other Medicaid changes for the budget bill, and the final package will likely include some of the smaller adjustments. But they $880 billion in spending cuts A House Committee overseeing Medicaid has been charged with discovery.

One policy will be significantly Dial fundraising The Obamacare Medicaid expansion estimated on Wednesday by the Congressional Budget Office, will save $710 billion over a decade. Some of the deepest cuts are felt by rich democratically driven states. This was an option Johnson has now ruled out after meeting with medium Republicans this week.

Large cuts on the table, limits Method state uses tax loopholes To increase federal spending on Medicaid, we could save $668 billion by reducing Medicaid spending primarily in poor southern states.

No matter which state gets hit hardest, facing a major budget shortage and covering some people could potentially drop Medicaid health insurance coverage to some low-income adults, cut hospital payments, or cut government priorities.

“The headlines for federal spending reductions are similar, but everything else is very different,” said Morgan Henderson, a health economist at the Hilltop Institute at the University of Maryland Baltimore County. Analysis of Republican Medicaid proposals.

The final package will probably include some small Medicaid changes, but perhaps one of the major cuts is needed to meet Republican budget goals.

At the heart of the difference is the Medicaid funding system for patient bills. The federal government covers a larger proportion of healthcare costs for patients in poor states. It gives less money to rich states that can better support Medicaid with their own taxes.

In New York, this Matching rate At 50%, the money is evenly divided. In Mississippi, the rate is 77%, with the federal government paying about $3 for each state funding.

The federal government gives all states a very generous matching rate for those signing up through Obamacare’s Medicaid expansion. For these subscribers, Washington covers 90% of the cost.

Options dropped by Johnson

The first Republican policy option will go back to what states that normally get 90% of the match from the federal government by cutting funds for Obamacare’s Medicaid expansion. It would be a richer democratic state in two ways: they are likely to participate in the expansion of Medicaid, with a lower rate of consensus.

an analysis The Urban Institute, a liberal policy think tank, estimates California, New York and Washington are among the places where the plan sees the sharpest cuts.

Ten states that are not participating in the expansion of Medicaid feel ineffective, mostly having Republican governors. But not all red states are spared. North Dakota, for example, has a robust natural gas industry that becomes a wealthy state. Medicaid has increased as the matching rate is low.

These and several other factors mean that if Congress takes this route, they could lose about 19% of the federal Medicaid funds.

Alternative versions still alive

Johnson moved to Medicaid expansion matching rates Tuesday afternoon after meeting with moderate Republicans. Many of them represent democratically driven state districts.

However, he suggests that similarities are open to widespread policies that completely eliminate the extended population matching system and replace each enrollee with fixed payments to the state.

The CBO estimates that such changes will generate approximately $225 billion in savings over a decade. However, over time, it could lead to greater funding cuts than would occur with changes in matching rates. This is because payments are designed to increase slowly than the cost of healthcare.

Large cut of the table

Closing the second biggest option, the provider tax loophole, will allow states to end a system in which they artificially inflate Medicaid spending using hospital and nursing home tax revenues and raise more matching funds from the federal government.

These policies tend to explain the majority of Medicaid budgets in poor states where each dollar spent on a program is matched two or three times by the federal government.

“The incentives to use provider taxes in these states are extremely important,” said John Holahan, a fellow at the Urban Institute who has been studying Medicaid provider taxes for decades.

There are four southern states: South Carolina, Mississippi, Alabama and Tennessee, and are perhaps at the most critical point as Congress cuts Medicaid.

If lawmakers finish a provider’s tax loophole, those states could lose 30% of federal Medicaid funds. analysis from Mr. Henderson and his colleagues. They have made a big hole in the state’s budget and may need to consider reducing tax increases and benefits.

(North Carolina, a swing state that votes for President Trump and has a Democratic governor, could also experience a major effect that analysis doesn’t get.

At least some states will face major budget holes

How you respond to which type of cut will likely be different. Some people cut payments to health care providers, raise taxes, and cut services in other states to make up for the shortfall. Some people reduce Medicaid registrations by removing the optional population. In 12 states, expanded Medicaid has laws that require that the expansion be automatically dropped if the match rate drops or formal studies of questions.

The reason CBOs expect these policies to save so much money is to reduce federal spending more than a direct cut, as they assume analysts there will choose to mix these reactions, so they will reverse the expansion of Medicaid.

“You’re not just saying, ‘The provider tax is gone, we’re going to cut it from the hospital,” says Alice Middleton, interim executive director at Hilltop, who previously worked for a federal agency that oversees Medicaid. “You’ll have to fill those holes in different ways and start to be creative. You’re looking at everything.”