The cost of $880 billion in Medicaid cuts

Half of all Americans have a family member or know someone who has received help from Medicaid.

By Ezekiel J. Emanuel

Republicans face a dilemma. They want to make Donald Trump’s 2017 tax cuts permanent, which are estimated to cost $4.5 trillion over the next decade. To offset this massive cost and appease deficit hawks within their party, they have proposed cutting $1.5 to $2 trillion from the federal budget over the same period. Trump asserted that “the people won’t be affected,” he “loves and cherishes” Medicaid and only fraud and abuse will be cut.

But the math is clear: The cuts will be deep, and they will disproportionately impact Medicaid and the Children's Health Insurance Program (CHIP). All of this in service of providing the wealthiest 5% of Americans (those earning over $450,000 per year) nearly half of the tax cut benefits.

Most of the $7 trillion U.S. federal budget is allocated to mandatory spending on programs that don’t require annual congressional appropriations, such as Social Security and health care, as well as defense and interest on the national debt. This leaves just about $1 trillion to fund Trump’s tax cuts. Cutting $150 billion from critical but so-called “discretionary” programs, such as those supporting farmers, food stamps, and research, is simply untenable. As a result, the Republican budget bill instructs the House Energy and Commerce Committee to cover a lion’s share of the cuts by eliminating $880 billion over the next decade.

Herein lies the dilemma: The Energy & Commerce Committee oversees the $1.4 trillion budget for mandatory health care programs such as Medicare, Medicaid, and CHIP, as well as other smaller programs. Cuts to Medicare are said to be off the table. According to the nonpartisan Congressional Budget office (CBO), 93% of non-Medicare spending under the committee’s jurisdiction goes to Medicaid and CHIP. Over 10 years, these two programs will cost more than $8.2 trillion. The Republican plan proposes a cut of $880 billion—more than 10% of Medicaid and CHIP.

These numbers aren’t just abstract figures; they would strip crucial health care from millions of Americans, leaving the most vulnerable without the care they rely on. One such person is Rachel Litchman, a young adult from Wisconsin. She has experienced multiple hospitalizations, overcome homelessness, and recently became dependent on a wheelchair. She now advocates for others with disabilities. To get in and out of her apartment, there are 20 steps and no elevator. Through Medicaid, she receives care at home to carry her wheelchair and get help to go up and down those stairs so she can go outside, shop, and live as normally as possible. But the proposed Medicaid cuts target her support by severely restricting the definition of disability. Additionally, the cuts would fire the government civil servants who would make disability determinations expeditiously. The alternative for Litchman is a nursing home. This would not only cost the government more but is detrimental to many, if not most, disabled and elderly individuals who can live independently with proper support. Additionally, it has been deemed a violation of the Americans with Disabilities Act. The alternative for many others is that their families—overwhelmingly women—will step in to provide “unpaid” care, often forcing them to leave their jobs.

When Americans think of Medicaid, they tend to imagine pregnant women, children, and unemployed adults—not Rachel Litchman. This perception is wrong. Those groups make up the majority of Medicaid recipients. But more than 50% of Medicaid spending supports the smaller population of elderly and disabled Americans who rely on it. Medicaid provides essential long-term care and support for about 5.6 million elderly and disabled Americans, like Lichtman, either at home or in nursing homes. This is a group of people with serious needs for everyday care, including assistance with bathing, eating, dressing, mobility, and taking medications.

This is where denial and deception come into play. Republicans don’t want to admit to “cutting” Medicaid for individuals like Litchman and millions of other elderly and disabled Americans. One reason for this is political: Medicaid is personal for many Americans. Half of all Americans—including me—have a family member or know someone who has received help from Medicaid. Consequently, recent polls show that 82% of Americans, including 67% of Republicans, want to increase or maintain Medicaid spending.

Furthermore, cutting Medicaid and CHIP—or shifting more payments to states—will hit red states very hard. Roughly 85 million Americans rely on these programs—including 17% of adults and 49% of children. Fully 10 deep red states—ranging from Louisiana, Oklahoma, and Arkansas to West Virginia, Ohio, and Montana—have more than 21% of their populations on Medicaid. In states like Oklahoma, the issue was so critical to voters that they defied their legislature’s objections to push through the expansion of Medicaid under Obamacare. Some estimates suggest proposed cuts would force states to increase their Medicaid spending by more than 25%. This presents states with four unpalatable and unpopular options: 1) reduce the number of residents eligible for Medicaid, 2) reduce the optional Medicaid benefits, such as Lichtman’s in-home disability care, 3) raise taxes to pay for parts of Medicaid the federal government cuts, and/or 4) cut other state programs, the main one being support for state colleges and universities. So if in-state tuition at state universities go up, the reason is likely to be Republicans’ Medicaid cuts.

These consequences are so painful that Republicans are playing word games and being fast and loose with the facts. Republicans continue to deny that their cuts will directly impact Medicaid. They claim are not “cutting” Medicaid but rather “targeting” waste, fraud, and abuse.

No one doubts waste, fraud, and abuse exist. But it is nowhere near $880 billion over 10 years to cover the tax cuts. The Government Accountability Office estimated $31 billion a year in “improper” payments. But “improper” in governmentese is not waste, fraud, or abuse. Indeed, as the very report Republicans cite makes clear, nearly 80% of improper payments were clerical errors, such as leaving out a code or using the wrong form. Credible estimates are that over 10 years only about $60 billion could be squeezed from true waste, fraud, and abuse, a small fraction of the $880 billion needed to finance Trump’s tax cuts.

Medicaid has problems and could be reformed to reduce waste and fraud, improve care, and save money. But the Republican proposal to slash $880 billion over 10 years isn’t about thoughtful reform. It’s about funding the next handout for the richest Americans by abandoning hardworking neighbors, community members, the elderly, those with disabilities, and children who depend on these programs.

Ezekiel J. Emanuel is the vice provost for Global Initiatives and the Diane v.S. Levy and Robert M. Levy University Professor, co-director of the Health Transformation Institute. From January 2009 to January 2011, he was special advisor for health policy to the director of the Office of Management and Budget in the White House. From 1997 to 2011, he was chair of the Department of Bioethics at the National Institutes of Health. He is also a breast oncologist.

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