The Threat to Medicaid and Its Ripple Effect on Medicare: Why Congress Must Act Now

The Looming Medicaid Crisis and Its Impact on Medicare

The Republican-controlled Congress is currently considering deep and damaging cuts to Medicaid, a move that would have far-reaching consequences beyond just the Medicaid program itself. These reductions would significantly affect Medicare and its millions of beneficiaries by straining state budgets, reducing access to essential healthcare services, and threatening the well-being of low-income individuals and caregivers. Any cut to Medicaid creates a domino effect, ultimately undermining the security and stability of healthcare for older adults and people with disabilities.

The Target: Medicaid Expansion Under the ACA

One of the proposed changes involves targeting Medicaid expansion under the Affordable Care Act (ACA). This type of cut is not new; in 2018, when the ACA was at risk, Medicaid expansion was one of the primary areas of attack. However, the current proposals could be more insidious. Instead of eliminating the expansion outright, Congress may opt to reduce federal funding for it, shifting the financial burden to individual states.

States Under Financial Pressure

New data from KFF estimates the financial toll on states under two different scenarios:

• Scenario 1: States Continue Medicaid Expansion at a Higher Cost

  • If states choose to maintain their Medicaid expansions despite the funding cuts, their spending on Medicaid would increase by 17% over the next 10 years.

  • This increase could become even greater if external factors like a pandemic or economic recession lead to surging Medicaid enrollment.

• Scenario 2: States Abandon Medicaid Expansion

  • If states cannot shoulder the $626 billion in additional costs, many will be forced to abandon their Medicaid expansions entirely.

  • This decision would leave 20 million low-income individuals without insurance, leading to dire financial and health-related consequences.

  • The increase in uninsured individuals would strain healthcare providers and emergency services, leading to rising healthcare costs for everyone.

Trigger Laws: A Sudden Loss of Coverage

Adding to the urgency, nine states have “trigger laws” that automatically terminate Medicaid expansion if federal support is reduced. Additionally, three other states require alternative funding sources to maintain expansion, which may not be feasible. As a result, even if some states wish to continue their expansions, they may be legally prohibited from doing so, further accelerating coverage loss for millions of Americans.

The Consequences for Medicare Beneficiaries

While Medicare itself would not face direct funding cuts, the impact of Medicaid reductions would still be profound. State budget stress could lead to:

• Cuts in state-level health programs that many Medicare beneficiaries rely on.

• Reduced access to long-term care services for older adults and individuals with disabilities.

• Disruptions for caregivers, many of whom rely on Medicaid for their own healthcare coverage.

• Loss of direct care workers, as many healthcare workers who qualify for Medicaid would be left uninsured, forcing them to leave the field.

Many Medicare recipients depend on caregivers—whether family members or paid professionals—who receive healthcare through Medicaid. If these caregivers lose coverage and face financial hardship, they may be unable to continue providing essential care, placing Medicare beneficiaries at even greater risk.

A Cut to Medicaid is a Cut to Medicare

At Medicare Rights, we strongly believe that Medicaid, Medicare, and the ACA function as a unified system. Cutting one weakens all, with devastating effects on individuals, families, healthcare providers, and taxpayers. Instead of reducing coverage, lawmakers should focus on expanding access to affordable, high-quality care to ensure that no one is left behind.

Take Action to Protect Medicaid

The Senate is expected to vote on this harmful budget proposal in the coming days, with the House following shortly after. Now is the time for action. We must send Congress a clear and urgent message: Do not cut Medicaid!

How You Can Help:

• Call Your Lawmakers Today: Use the call-in line 866-426-2631 (provided by SEIU) to reach your representatives.

• Tell Them to Oppose Any Medicaid Cuts: No matter the form—work requirements, eligibility changes, or funding reductions—a cut to Medicaid is a cut to Medicare.

• Highlight the Impact in Your District: Use available data to show how many people in your Congressional district rely on Medicaid and share that information with your lawmakers.

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