House Republicans’ Medicaid ‘reform’ ideas would lead to massive funding cuts

At a June 25, 2023, campaign event in Novi, Michigan, President Donald Trump assured voters that if he was returned to the White House, “We’re not going to play around with Social Security, and we’re not going to play around with Medicare, Medicaid.” He and House Republicans have since signed off on a budget plan that would eliminate up to $880 billion in funding for Medicaid, however, and three powerful Republican representatives are trying to frame those cuts as reforms needed to save the country.

In a March 10 Fox News op-ed, House Freedom Caucus chair Andy Harris (R-MD) and caucus members Eric Burlison (R-MO) and Chip Roy (R-TX) pressed their House GOP colleagues to endorse a series of so-called Medicaid reforms. “For lawmakers who claim to be on board with cutting the waste, fraud and abuse­ — and delivering on Trump’s historic mandate — this is it. Nothing you do in the next two years will come close to the importance of implementing the $880 billion required in savings to programs under the House Energy and Commerce Committee’s jurisdiction,” they wrote. “We are not asking you to slash Medicaid, only turn back the clock and reverse its explosive expansion in the last few years that has put it on an unsustainable course.”

The Freedom Caucus includes many of the most right-wing House Republicans. 

“A deal to help save the country is on the table. Take it,” the trio urged.

Health policy experts say the reforms they are offering would decimate the program, strip coverage from low-income Americans, shift costs to the states, and imperil access to care for rural communities.

Who is covered by Medicaid? 

Medicaid provides free or low-cost health insurance coverage to more than 72 million Americans. The program is operated by the states, with the federal government contributing at least half of the cost per person, to insure individuals and families who cannot afford coverage.

Medicaid pays for about 42% of all American births, according to March of Dimes data, and more than 60% of nursing home care, according to KFF. 

As of October 2024, more than 2.8 million Pennsylvanians were enrolled in Medicaid.

With the passage of the 2010 Affordable Care Act, commonly known as Obamacare, the program was expanded to cover households with incomes slightly above the federal poverty line, with the federal government paying 90% of the cost. Forty-one states, including Pennsylvania, have chosen to participate in that expansion.

What have Republicans promised about safety net programs?

On March 11, 2025, the White House said in an article on its website: “The Trump Administration will not cut Social Security, Medicare, or Medicaid benefits. President Trump himself has said it (over and over and over again).”

On Feb. 26, Speaker of the House Mike Johnson (R-LA) told CNN: “The White House has made a commitment. The president said over and over and over, ‘We’re not going to touch Social Security, Medicare or Medicaid.’ We’ve made the same commitment. Now that said, what we are going to do is go into those programs and carve out the fraud, waste and abuse, and find efficiencies.”

What was in the House budget resolution?

On Feb. 25, the House passed a 10-year budget resolution by a vote of 217-215, with every Democrat and Republican Thomas Massie of Kentucky voting no. (Massie said that the resolution would not reduce the deficit enough.) The plan included language requiring the Committee on Energy and Commerce to produce cuts of at least $880 billion for that period from programs within its jurisdiction, which include Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). Trump endorsed the plan, saying, “The House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it!”

According to an analysis by the nonpartisan Congressional Budget Office, if the committee cut every penny under its control from programs outside of those three, it would be able to save only $135 billion over 10 years. If it cut everything but Medicaid, the savings would total just $581 billion, still short of the $880 billion target. Even total elimination of the CHIP program, which covers more than 7 million kids, would save just $201 billion.

House Republican leaders misleadingly suggested that the budget did not contain Medicaid cuts beyond reducing waste, fraud, and abuse. “Do a word search for yourself. It doesn’t even mention Medicaid in the bill,” Johnson told reporters after the vote.

The White House and the offices of Johnson, Burlison, Harris, and Roy did not immediately respond to requests for comment for this story.

Natasha Murphy, director of health policy at the nonprofit Center for American Progress, said in a phone interview that the op-ed acknowledges that those cuts would require slashing Medicaid spending: “If there was any element of this which I could appreciate [it] was the fact that the Freedom Caucus did not seem to be fully shying away from the reality that in order to achieve this minimum of $880 billion in reductions, those cuts have to come from the Medicaid or the CHIP program.” 

A KFF Health poll conducted in February found just 17% of American adults want Medicaid funding decreased. The survey found 42% support for increasing funding for the program and 40% support for keeping it near current levels.

What would be the impact of the House Freedom Caucus leaders’ proposed cuts?

The op-ed specifies possible ways to save money on Medicaid. 

Implement work requirements to “save roughly $120 billion over 10 years and put more workers back in our economy”

The op-ed claims that “able-bodied, working-capable adults are on course to become the largest subgroup on Medicaid” and proposes requiring those people to work to receive Medicaid. 

A February KFF report, however, debunks this claim, noting that among adults on Medicaid, just 8% are “not working due to retirement, inability to find work, or other reason.” The other 92% work part or full time, are in school, are caregivers, or have an illness or disability.

“The way that their proposals save money is that it kicks people off Medicaid who deserve to be on the program or it punishes people who are in caregiving roles,” said Anne Shoup, senior adviser for strategic planning and projects with the advocacy group Protect Our Care. “We’ve seen from its implementation more recently in Georgia and Arkansas that the program has disastrous results, and it saves money because it takes away health care from people who are eligible and who deserve it.”

A work requirement adopted in 2018 by Arkansas’ state government, struck down by a federal judge one year later, led to more than 18,000 people losing coverage. After Georgia included a work requirement as part of its Medicaid expansion, only a small fraction of the eligible population successfully enrolled in the program. 

Matthew Cortland, a senior resident fellow at the think tank Data for Progress, said that in addition to taking away coverage from people who must stay at home to care for older family members, work requirements would be especially difficult for those with health problems: “Who decides if you’re healthy enough to work? Some government bureaucrat you never meet? And how do you, if you don’t have health insurance, get the tests in the medical records to prove that you’re too sick to work, if you can’t see a doctor?”

Site neutrality to “save over $471 billion”

The amount Medicaid reimburses for medical care depends, in part, on where the service is provided, as, for example, hospitals are often more expensive to operate than small private practices. 

Some lawmakers have proposed having Medicaid pay the same rates for care no matter where the services are provided, referred to as site-neutral payment. The American Hospital Association warns that a reduction in reimbursement rates would put many hospitals at financial risk. 

“Medicaid represents a decent portion of many hospital’s revenue sources, particularly in those rural areas. Any reductions in those Medicaid payments would only serve to exacerbate a lot of the provider shortages and access challenges that so many rural Americans face,” said the Center for American Progress’ Murphy. 

“The payment cuts envisioned by the House Freedom Caucus would result in the closure of rural hospitals,” said Cortland. “It would mean that people in need of emergent care and routine care would have to travel just phenomenally long distances for that care. It would harm older folks. It would harm disabled folks. It would also force health care professionals who live in rural communities where they provide care to leave. They would have to move for their job. So you would see a health care provider brain-drain effect from rural America, which is the opposite of what we need at this point.”

Lower the federal reimbursement rate for those covered under Medicaid to “save nearly $600 billion”

The 41 states that expanded Medicaid were promised that the federal government would cover 90% of the costs. The Freedom Caucus’ proposal would drop the reimbursement rate down to as low as 50%. 

According to a February report by the nonpartisan Urban Institute, such a reduction would force state governments to come up with an additional $44.3 billion or to scale back the program. Nine states have trigger laws that would automatically end their Medicaid expansion if the federal government’s contribution dropped below 90%; if all 41 states ended the expansion, about 11 million Americans would be left uninsured.

“The Medicaid expansion has been around for quite some time,” said Shoup. “It is now woven into the fabric of our society, and it has been a huge success to expand Medicaid in the states that chose to expand it.” 

Eliminate Medicaid provider taxes to “save the taxpayer $612 billion over 10 years”

Most states tax health care providers that receive funds through Medicaid and put that revenue toward their portion of the Medicaid costs. 

Cortland pointed to a December analysis by the Congressional Budget Office, which found that if states were barred from collecting the taxes, they would have to reduce their spending on Medicaid. It predicted, “Federal spending would decline because states would reduce some of their Medicaid spending in response to decreases in their collection of taxes paid by providers.”

The effect would be states and the federal government massively slashing the Medicaid program.

“The state has less money to spend on Medicaid,” Cortland said. Because federal spending is based on matching the state’s contributions, he continued, “there will be less spending for them to have to match. … It’s insane.”