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Democrats and Republicans are accusing one another of “lying” about what a House Republican budget resolution means for Medicaid, and both sides have made misleading or speculative comments. There’s little doubt the health care program would face cuts under the plan — and it would have to if Medicare cuts are off limits.
Democrats have seized on the resolution’s call for the Energy and Commerce Committee to cut $880 billion in spending over 10 years. The committee’s options for those reductions are almost entirely in spending for Medicaid, a federal-state program that provides health care for low-income people, and Medicare, the federal program that covers seniors.
Republicans have said the legislation doesn’t pinpoint any specific changes to Medicaid, which is correct but sidesteps the reality that the bulk of the spending cuts would likely be to that program. Democrats, meanwhile, have speculated that hospitals and nursing homes will close, impacts that aren’t known without details of how federal spending will be trimmed and how states will react.
The resolution that narrowly passed the House on Feb. 25 along party lines has several legislative hurdles to overcome before any spending cuts materialize. Most notably, it still needs to pass the Senate, where some Republicans want to change the legislation. The budget resolution is the first step to Congress using a maneuver called reconciliation to extend the 2017 tax cuts, most of which are set to expire at the end of this year. Reconciliation enables a tax and spending bill to pass the Senate with a simply majority, rather than 60 votes.
The House resolution lays out the broad parameters of extending the 2017 tax cut provisions and enacting some new cuts, at a cost of $4.5 trillion over 10 years, and reducing government spending by $2 trillion over the same time period. Both houses of Congress need to agree on this or another budget framework before lawmakers can then propose legislation on the specific ways they would cut and spend their way to those figures. (See slide 11 here for a flowchart on the process from the Committee on a Responsible Federal Budget.)
We’ll go through several claims about the resolution.
Size of Medicaid Cuts
Lawmakers have made conflicting statements about how much would need to be cut from Medicaid under the House resolution.
Democratic Rep. Pete Aguilar, Feb. 25 press conference: Now some of our friends on the other side of the aisle will say, “This is just a procedural step. Please don’t hold this vote against me.” Here’s the truth: This vote doesn’t just open the door for Medicaid cuts, it guarantees them.
Republican Rep. Steve Scalise, Feb. 25 press conference: The word Medicaid is not even in this bill. This bill doesn’t even mention the word Medicaid a single time. And yet, all Democrats are doing is lying about what’s in the budget because they don’t want to talk about the truth of what we’re voting to start.
As we said, the Senate would still need to pass the resolution, and lawmakers then would need to agree on the specific spending cuts. But Aguilar has a point that the $880 billion would have to touch Medicaid, unless lawmakers wanted to find the reductions in Medicare — which may be even more politically challenging. Plus, House Republicans already have talked about some options for Medicaid cuts, such as adding work requirements and finding efficiencies in the program.
Scalise is correct in saying the legislation doesn’t include the word “Medicaid.” But, again, there’s little doubt that the program would face spending reductions — and they could be substantial, as we’ll explain.
The Committee for a Responsible Federal Budget, a nonpartisan budget watchdog group, said in a Feb. 20 post that “it would likely be nearly impossible to meet the [$880 billion] target without including some Medicaid reductions.”
Democratic Rep. Brendan Boyle, Feb. 25 press conference: If Energy and Commerce Committee said, “We don’t want to cut Medicaid, instead we will cut literally everything else we possibly can 100%,” that only gets you about halfway to the $880 billion. So, by definition, they have to, as a minimum, cut hundreds of billions of dollars from Medicaid.
House Minority Leader Hakeem Jeffries, Feb. 27 press conference: Republicans are lying to the American people about Medicaid. The Republican budget authorizes up to $880 billion in cuts to Medicaid by directing the Energy and Commerce Committee to find those spending cuts. Everybody knows who has had any connection to the congressional budget that if you are directing the Energy and Commerce Committee to find up to $880 billion, if not more, in spending cuts, that means Medicaid.
All $880 billion over 10 years doesn’t have to come out of Medicaid, as Jeffries suggested in a Feb. 27 news conference, but Boyle is correct that there’s no way to get around sizable cuts to Medicaid — unless, again, lawmakers turn to cutting Medicare.
On Jan. 27, President Donald Trump said he would again “pledge,” as he did repeatedly during the campaign: “I will not sign any bill that cuts even a single penny from Medicare or Social Security for our great seniors.” He has said similar things about Medicaid, though he has left open the possibility of cutting waste or “fraud” from all three programs.
Robin Rudowitz, a vice president and director for the program on Medicaid and the uninsured at KFF, a health policy research group, told us that “the large majority” of the $880 billion “is likely to come out of Medicaid,” and if Medicare cuts are off the table, there’s “no other way to get to that magnitude of savings” without Medicaid cuts.
CJ Young, a spokesperson for the Democrats on the Energy and Commerce Committee told us: “Of the funding that’s available for the Committee to cut, approximately 98% percent of that is either Medicare or Medicaid funding. So if you take Trump at his word that he’s not touching Medicare, then the vast majority of the cuts will have to come out of the safety net health care program.”
We asked a spokesperson for the Republicans on the committee about this, but we haven’t received a response.
In breaking down the numbers of what the Energy and Commerce Committee can trim, the New York Times said that if the committee eliminates all non-health care spending, “it will still be more than $600 billion short” of that $880 billion target.
“The reality is that this 880 number is targeting Energy and Commerce, and the place where they have the ability to make cuts is going to be in Medicaid,” Leonardo Cuello, a research professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families, told us.
Medicaid is jointly funded by the states and the federal government; the federal share over the next 10 years is estimated at $8.2 trillion. So, it would be about an 11% cut if all $880 billion came out of Medicaid.
Medicare spending over 10 years is even higher — approximately $15.8 trillion, according to this New York Times analysis. The Energy and Commerce Committee oversees about another $600 billion that it could trim, including money for the Children’s Health Insurance Program.
If this budget resolution moves forward, the committee would have to find the entire $880 billion in deficit reduction, Chris Towner, CRFB’s policy director, told us in an email. “If push comes to shove and lawmakers don’t think they can meet those instructions, they would need to amend the budget resolution,” he said.
Impact of Potential Cuts
Democrats have claimed that hospitals would close and people would lose health coverage, while Republicans have said any cuts would be to waste, fraud and abuse. Without the specifics on spending reductions, the impacts aren’t known, but experts told us that large cuts in federal funding would leave states with budget gaps and tough choices on what to do about them.
Democratic Rep. Frank Pallone, Feb. 25, CNBC: Well, I think the problem is that the Republican leadership is lying to the rank and file Republicans. In other words, they know that these Medicaid cuts will really take away health care from so many people and close hospitals and close nursing homes.
Democratic Rep. Ted Lieu, Feb. 25 press conference: And what does $880 billion of Medicaid look like? It means the shutting down of community health clinics, the shutting down of hospitals, the shutting down of nursing homes.
House Speaker Mike Johnson, Feb. 27, CNN: We’re going to take care of those who are rightful beneficiaries of the programs. We’re going to cut the fraud, waste and abuse out of Medicaid, and that’s where we’re going to get part of the savings to accomplish this mission. … There’s about $50 billion estimated that are lost every year in Medicaid just in fraud alone.
Trump, Feb. 26, Cabinet meeting: We’re not going to touch it [Medicaid, Medicare or Social Security]. Now, we are going to look for fraud. I’m sure you’re OK with that, like people that shouldn’t be on, people that are illegal aliens and others, criminals in many cases.
Medicaid is funded jointly by states and the federal government, which provides matching funds of at least 50%, as KFF explains. An expansion of Medicaid under the Affordable Care Act provides a match of 90% in federal funding. About 21% of the U.S. population, or 83 million people, have Medicaid coverage, including those with low income and disabilities, as well as seniors. Medicaid, not Medicare, covers long-term care expenses for the elderly.
Rudowitz at KFF told us that changes the federal government makes to Medicaid financing “really gets transferred to the states,” which then “have to figure out how they’re going to respond to those cuts.” She said states could raise revenue, make cuts to other parts of their budgets or cut their Medicaid programs — and the latter option could mean cutting coverage or benefits, or the payment rates to health care providers. “All states might respond differently,” she said.
She noted that while most of Medicaid’s enrollees are children and adults, most of the spending is for people with disabilities and seniors, because of their high health care costs.
Cuello at Georgetown told us an $880 billion cut is “gigantic” and “orders of magnitude too large to not be destructive.” He, too, said that the “final cuts might be made by states.”
“So in other words, you might reduce state funding by some gigantic number, and then the state has to react to that, and we can’t predict, we can’t tell you exactly what they’re going to do,” Cuello said.
We asked if he thought the potential impact would be as severe as community health centers, hospitals or nursing homes closing, as Democrats have claimed. “Yes, I do,” he said. “I don’t think we can predict that that is going to happen exactly in every state. Those things are the downstream consequences.”
Cuello noted that rural hospital closure is already a problem. “And if you defund the system … there are going to be hospitals that go over the brink,” he said.
In a Feb. 20 post, CRFB identified what it called “state financing gimmicks” that it said could be changed or eliminated to save federal dollars. It said that “incremental policy changes could improve the integrity of the Medicaid program and prevent states from unfairly gaming Medicaid’s financing laws while also leading to savings.” One example is lowering or banning Medicaid provider taxes, which are now capped at 6%.
“As we have discussed, states often tax providers up to 6 percent of providers’ revenue and then use those funds to remit payments back to providers, reporting the payments to the federal government in the process to collect matching funds,” which “essentially” boosts the Medicaid match, CRFB said. It estimated savings of $240 billion to $610 billion over a decade if provider taxes were restricted or eliminated, respectively.
Towner told us his organization’s post showed that “finding Medicaid savings also does not necessarily mean slashing Medicaid or even benefits – there are lots of non-benefit savings options available that could be used to fulfill this savings.”
Rudowitz and Cuello, however, said that a reduction in provider taxes would still leave states with a budget gap for their Medicaid programs. Some could argue that there should be more transparency and restrictions on provider taxes, Rudowitz said, but on the other side, “there are tradeoffs and consequences” to states getting less in federal matching funds.
As for Johnson’s and Trump’s claims about finding fraud, that’s unlikely to result in a sizable amount of savings — and certainly not $880 billion, these experts said. Johnson referred to $50 billion in fraud in Medicaid each year, but the Government Accountability Office estimated that amount for “improper payments” in fiscal year 2023 not solely “fraud.”
The GAO said that improper payments include overpayments and underpayments or payments that shouldn’t have been made. That can include fraud, “but not all improper payments are the result of fraud,” the report said. It didn’t give an estimate for fraud, saying that “estimates of improper payments cannot be used to determine the extent of fraud in a particular program.”
Johnson’s office hasn’t responded to our inquiry about his claim.
Often improper payments are missing some documents or paperwork, Rudowitz and Cuello said, and it doesn’t necessarily mean the payment shouldn’t have been made.
Andy Schneider, also a research professor at Georgetown’s McCourt School of Public Policy, wrote a January blog post about Medicaid fraud. He said that fraud does occur — mostly on the part of unscrupulous providers, who, when caught, are charged with crimes. But there isn’t a good estimate of how much fraud there might be.
The Department of Health and Human Services also provides estimates on improper payments and recommendations on how to reduce them, Schneider explained. HHS’ fiscal year 2024 report estimated Medicaid’s improper payment rate at 5.09%, or $31.1 billion for the year. Of this amount, 74.3% was classified as improper due to “insufficient documentation.” The report said: “The insufficient documentation errors include claims where information was missing, or states did not follow appropriate processes to determine if a payment was proper or improper.”
As Schneider said, “had the information been available, the claim may have been payable (or not).”
In his interview on CNN on Feb. 27, Johnson said adding work requirements was one possibility for cutting Medicaid spending (which would save about $100 billion over 10 years, according to the Times). But a per-capita cap on funding or reducing the federal match (measures that would save hundreds of billions more) weren’t being considered, he said.
“Look, everybody needs to watch the process play out,” Johnson said. “It’s going to take us five or six weeks, probably, to dig through all those details and come up with the final proposal.”
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