House GOP lawmakers are proposing nearly $1 trillion in cuts to Medicaid and food stamps. Here’s who could be impacted

By Tami Luhby, CNN

(CNN) — House Republicans are pushing to slash nearly $1 trillion from two of the nation’s bedrock safety net programs, Medicaid and food stamps, as part of their sweeping package aimed at enacting President Donald Trump’s agenda. If the legislation is approved, millions of Americans could lose access to these benefits as a result of a historic pullback in federal support.

Trump has repeatedly vowed not to touch Medicaid, while GOP lawmakers insist that their proposals would largely affect adults who could – and should, in their view – be employed. But the actual impact would likely hit a far broader range of Americans, including some of the most vulnerable people the GOP has promised repeatedly to protect, experts say. They include children, people with disabilities and senior citizens.

A sizeable share of the US population depends on these programs. More than 71 million people are enrolled in Medicaid, and roughly 42 million Americans receive food stamps, according to the federal agencies that oversee them.

Hospitals would also feel the financial fallout of the Medicaid cutbacks, which could prompt some to raise their rates for those with job-based insurance and others to close their doors.

States would have to shoulder more of the costs of operating these programs, which could force them to make some tough decisions. Among their options could be slashing enrollment, benefits and provider rates in Medicaid or pulling back on residents’ access to food stamps. They might also shift spending from other state-supported programs such as education and infrastructure or hike taxes.

In addition, grocery store owners are warning that cuts to the Supplemental Nutrition Assistance Program, or SNAP, as food stamps are formally known, could harm local economies and cost jobs.

“We’ve never in history experienced coverage cuts of this size, and that makes it really difficult to predict how states, providers and patients will respond,” said Alice Burns, an associate director of Program on Medicaid and the Uninsured at KFF, a nonpartisan health policy think tank. “For the past 50 years, there have been these incremental increases in the availability and access to health care and health insurance coverage. So moving backwards and taking coverage away … This isn’t something we’ve seen before.”

What proposals actually make it to the House floor for a vote remain to be seen since conservative and moderate factions of the caucus are currently battling to make changes to the provisions – and more alterations are expected in the Senate before a final bill is enacted into law.

Changes to Medicaid

The House GOP package would reduce federal support for Medicaid by nearly $700 billion over a decade, according to an updated Congressional Budget Office analysis released on Tuesday. (CBO has yet to release a final analysis of the full legislation.)

The proposals would strip Medicaid coverage from more than 10 million people over 10 years, though some are expected to find health insurance elsewhere, such as through their jobs or the Affordable Care Act exchanges, according to an earlier CBO analysis released last week. Overall, an additional 7.6 million Americans are projected to be uninsured in 2034 because of the Medicaid provisions.

(Democrats have released a CBO analysis showing even greater potential coverage losses, but that also takes into account the Affordable Care Act provisions in the package and the expiration of the enhanced Obamacare premium subsidies at the end of this year.
GOP lawmakers did not extend those more generous subsidies in this legislation.)

The package’s most consequential provision is instituting work requirements in Medicaid, a longtime GOP goal.

For the first time in Medicaid’s 60-year history, certain recipients ages 19 to 64 would be required to work at least 80 hours a month to retain their benefits. They could also meet the mandate by engaging in community service, attending school or participating in a work program. The requirement would not apply to parents, pregnant women, medically frail individuals and those with substance-abuse disorders, among others. It would take effect in 2029, though conservative lawmakers are hoping to push up the start date.

However, many people who already are working or who qualify for exemptions could wind up losing their coverage, experts say. That’s because they may get caught up in the red tape of regularly reporting their work hours or applying for an exemption.

For instance, the mandate could affect low-income people with chronic conditions that make it hard to work if they are enrolled through Medicaid expansion, not the disability pathway. These folks would have to apply for an exemption and prove they are too frail to hold a job. Caregivers and students could also get bogged down in the procedural requirements and wind up kicked out of the program.

“We expect that millions of adults will lose coverage under work requirements, including many who are working, who are looking for a job, who are unable to work because of a health condition or disability or who are meeting some other qualifying activity, but just don’t successfully report it because they just have difficulty dealing with the bureaucracy of the new work reporting system,” said Michael Karpman, a principal research associate at the Urban Institute, a think tank.

Hospitals and nursing homes could also take a financial hit because the legislation would limit states’ ability to levy taxes on health care providers. States often use this revenue to boost provider rates and fund health-related initiatives, among other uses.
All but one state levy at least one type of provider tax, which some Republicans claim is a scheme by states to get more federal matching funds.

Also, with more people expected to be uninsured, hospitals could see their uncompensated care costs rise. While states have typically helped cover the added expense, they may not be in a position to do so if they are receiving less federal funding for Medicaid, Burns said.

These budget strains could prompt some hospitals and nursing homes to curtail services, increase rates for other patients or, in the worst case scenario, shut down. The impact may fall even more heavily on providers in rural areas and low-income communities.

“These hospitals, which already operate on thin margins, cannot absorb such losses without reducing services or closing their doors altogether,” Bruce Siegel, CEO of America’s Essential Hospitals, a trade group for hospitals that treat many uninsured or lower-income patients, said in a statement.

The bill could also hurt those who qualify for both Medicare and Medicaid, the latter of which helps cover their Medicare premiums and out-of-pocket costs, as well as pay for long-term care. One of the provisions would postpone the implementation of a Biden administration rule aimed at streamlining Medicaid eligibility and enrollment until 2035. Such a delay could make it harder for people to enroll in the program and renew their coverage.

Some 2.3 million people could lose their Medicaid coverage from this provision, according to a CBO estimate sent to Democratic leaders. They would include senior citizens, people with disabilities and children, in addition to adults, Burns said.

More broadly, states would have to decide how to cope with the loss of hundreds of billions of federal dollars. Medicaid is the largest single source of federal funding for state budgets, and the second largest expenditure for states, behind K-12 education.
So a reduction in federal support will be felt, especially in states that are already facing budget shortfalls. (Unlike the federal government, nearly all states must approve balanced budgets.)

How state lawmakers handle the loss will vary. They might pull back on optional benefits, such as dental care, physical therapy and home and community-based services, which help keep senior citizens and people with disabilities out of nursing homes.

One unpalatable option: If states decide to fill the gap by raising taxes, they would need to hike state levies by 4% overall, with the increases ranging from 1% in Kansas and Wyoming to 11% in Louisiana, according to KFF.

Changes to food stamps

Under the GOP package, more food stamp recipients would have to work to qualify for benefits. Currently, adults ages 18 to 54 without dependent children can only receive food stamps for three months over a 36-month period unless they work 20 hours a week or are eligible for an exemption.

The legislation would extend the work requirement to those ages 55 to 64, as well as to parents of children between the ages of 7 and 18. Plus it would curtail states’ ability to receive work requirement waivers in difficult economic times, limiting them only to counties with unemployment rates above 10%.

The bill would also require states to pay for a portion of the benefit costs – at least 5% – for the first time, starting in fiscal year 2028. States with higher payment error rates would have to shoulder more of the burden – as much as 25% of the costs for those with error rates of at least 10%. Plus, states would have to pick up 75% of the administrative costs, rather than 50%.

The work requirements could put 11 million people at risk of losing their nutrition assistance, said Ty Jones Cox, vice president for food assistance for the left-leaning Center on Budget and Policy Priorities. That includes 4 million children who live in families that could see reduced aid if their parents no longer qualify.

And as with Medicaid, states will have to decide how to handle the federal funding loss. Some may try to limit enrollment or even exit the program since it’s not mandatory that states participate in food stamps.

“They have more incentive to want to make it harder for people to get food assistance because they’re on the hook to pay for the benefit and they’re worried about their error rate,” Cox said.

Grocery store owners are also sounding the alarm, highlighting that food stamp recipients plow their benefits back into the local economy. Food stamps funding supports about 388,000 jobs and more than $20 billion in wages, and results in more than $4.5 billion in state and federal tax revenue, according to the National Grocers Association, which represents independent grocers.

“SNAP is not just food assistance for families — it’s an economic engine that bolsters jobs on Main Street,” Stephanie Johnson, the association’s group vice president for government relations, said in a statement. “This data confirms what independent grocers see every day: SNAP dollars circulate directly through local businesses, helping to pay local wages, keep shelves stocked, and support essential services in communities nationwide.”

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