The “One Big, Beautiful Bill Act” passed by GOP lawmakers and signed into law by President Trump last week contains a number of policy changes, tax breaks, and spending cuts to execute the Republican’s second-term agenda.
In order to afford a permanent extension of tax cuts approved during Trump’s first term, the law makes steep cuts to Medicaid – a move blasted by Democrats and a small number of Republican lawmakers who opposed the legislation.
To understand how cuts to Medicaid will affect New York, WAMC's Lucas Willard spoke with Duncan RyanMann, a business professor at Empire State University.
Medicaid is a huge, huge program. It ensures roughly one in five Americans, a huge number. So it is, it's grown over the years. And it's not as politically controversial as Medicare, which is health care for people over 65. So, Medicaid is aimed at lower income people. You basically have to be in poverty or very close to it to be eligible for Medicaid. And people talk about waste, fraud and abuse, yeah, yeah, there probably are some people that are, you know, getting Medicaid that shouldn't be getting it. Probably, you know, in the in the very small percentage of the Medicaid population. But the cuts that are going into effect are going to affect millions and millions of people. Estimates are, the New York State Department of Health has data up that suggests, that close to one and a half million people in New York state alone will lose Medicaid coverage. And additionally, beyond Medicaid, the legislation also has reductions in the subsidies that somewhat higher income or moderate income people have to purchase health insurance through what's referred to as the health insurance exchanges or marketplace that was created through the Affordable Care Act. So, if people don't get health insurance through their employer and aren't eligible for Medicaid, they can purchase subsidized health insurance through these health care or health insurance marketplaces that are typically run at the state level. But the subsidies available through that program are being cut to a significant degree, so that in addition to people being, sort of cut off Medicaid, there are going to be another chunk of people who are going to lose health insurance because of the reductions in the subsidies for their private health insurance. So it's going to be a big impact.
Now, Duncan, if you wouldn't mind, sort of explaining, Medicaid itself is not like traditional health insurance. It functions as a reimbursement. If you wouldn't mind, could you sort of explain to me and the listeners how in New York State, Medicaid funding is actually distributed?
Right. So, New York State is a bit of an outlier in the sense that counties are responsible for much of the Medicaid spending, rather than in terms of direct, The eligibility offices are county-based rather than state-based. So Medicaid people, people eligible for Medicaid in New York State, get to see a doctor if a doctor is willing to see them, and the state and county reimburse that doctor, or pediatrician, or whatever health care provider it is, a set amount that typically is below market amounts. So, it's a Medicaid reimbursement, or Medicaid payments, historically and currently, are the lowest of any of the insurers, lower than Medicare and lower than private insurers. And that's been true historically since the creation of Medicaid in the mid-1960s. So, doctors, other healthcare providers, provide the service to Medicaid beneficiaries, and those providers are paid directly by the state for the services that they provide, whether it's a hospital, a doctor, a pharmacy, whatever.
There is a raise in the age of eligibility, under certain work requirements, that are changing under the new law. And what can you tell me about those new work requirements, and how do you envision this could also affect the care that people are able to receive?
Right. So, the work requirements that will be now mandated across the country have been in place in a couple of states already. Arkansas was the first to adopt work requirements back in 2018 and there has been some research done on the effectiveness of those work requirements. But in general, people of working age, meaning, I think it's 18 to 64 roughly, who are able bodied, not disabled, and don't have young children or disabled people in their household, will be required to demonstrate that they have worked or they've engaged in education or training to the tune of about 20 hours per week to be eligible for Medicaid. So, that may not sound like a big deal, but it's going, it definitely is going to discourage a lot of people from pursuing Medicaid. People's lives are complicated. The number of people who are in that, that age category, 18 to 64 who are able bodied and not already working, is relatively modest, so most people who are eligible for Medicaid are there because they can't work or they're at home supporting young kids or disabled or bedridden relatives that they're that they're basically taking care of.
Now, I also just want to talk briefly, Duncan, about the cost and the amount of cuts that are being made, and that number had fluctuated in the debate over the House version of the bill, and then the Senate version of the bill, and then the bill went back to the House. So, in total, what is the dollar amount that will be going into effect when it comes to cuts to the committee that oversees Medicaid spending?
Right. So, the way that the Congress handles this is doing 10-year projections. So, the estimate is that these cuts will amount to roughly $1 trillion, that's rounding to a few billion dollars, but roughly $1 trillion over the coming 10 years. That's roughly $100 billion a year in cuts to Medicaid. And these are real cuts that are going to I mean, I'm an economist, so you're basically taking money away from states, localities, etc. That’s going to have a macro economic impact on states and individual communities. So, there'll be a multiplier effect, in this case, a multiplier effect in the negative. So, to the extent that communities have fewer Medicaid dollars being spent, that's going to mean that there are fewer dollars, overall, being circulated through the state economy and the local economy, and it's going to have a detrimental effect on, potentially, on growth and the overall state economy. So, the estimates are that that this is going to have roughly a $13 billion drag on New York State, in terms of the fiscal impact.
Some states have expanded Medicaid, expanded the eligibility for Medicaid over the last few years, but not all. So, what do the federal cuts in Medicaid mean for states that have, so to speak, expanded Medicaid coverage?
Okay, right. To date there, there are 40 states that have expanded Medicaid coverage, and it's a growing number. North Carolina was the most recent, just in the last couple of years. And that expansion was increasing the threshold below which people are eligible for Medicaid from 100% of the poverty level to roughly 135, 130% roughly of the over of the poverty level, still not a lot of income. And the way that this legislation is written, states that expanded Medicaid coverage are going to have an impact on their reimbursements from the federal government. So, the federal government is going to reduce the amount that they pay for expansion Medicaid coverage and states are going to have to pick up that cost unless they cut back on the eligibility requirement, basically return to the non-expansion situation. So that's, and that's, you know, really problematic. New York State probably couldn't afford to do that for more than a year or two, and may not want to do it for even that amount of time, given the dollar impact, the billion plus, billions and billions of dollars that it would impact the state government and the limited ability of states to do this, given that all states have to balance their budgets, opposed to the federal government, which can run a deficit, which we have at the federal level for decades.
Do you have any prediction that if there were a change, say, in House leadership during the midterm elections, that if Democrats seize control of the House that there may be a push to alter the Medicaid changes and as well as other items in the Big, Beautiful Bill Act that there would be a push to actually stall or eliminate proposed cuts?
Yeah. I mean, this is a real guesswork. Yeah, if the congressional majorities change hands, there would be significant changes in this legislation. I do not doubt that. However, it would take, probably take, real adjustments at both this in both the Senate and the House, in order for any changes to go through because these are not unilateral change that one house of Congress, one half of Congress can make without the other. So, I think the likelihood of the House changing hands is probably greater than the Senate, but who knows? You know this, this, I think the polling at this point suggests this is highly unpopular legislation that I suspect that people will become even less enchanted with as they learn more about it, and the actual impact gets into place. As I said, it was strategically timed so that some of these big changes aren't going to happen till after the midterm elections. It's only parts of it that are going to be going into effect, starting in early 2026. One other piece, which is just the relative vulnerability of hospitals, particularly rural hospitals, to cuts in Medicaid. You know, there are impressive numbers of hospitals that rely on Medicaid for up to 25% of their total revenue. So even to the extent that that Medicaid cuts are, you know, are in the order of 10%, 5% that's going to have really serious implications for the revenues that are going to hospitals in general, and rural hospitals, that have a higher proportion of Medicaid revenue than many more suburban and urban hospitals.
