Cut taxes, then Medicaid
By Mike B
The importance of Medicaid.
Medicaid is a health insurance program jointly funded by the states and the federal government to provide care for low-income children, senior citizens, and disabled Americans. One in five Americans are on Medicaid, getting life-saving care and resources. For example, Medicaid is the primary payer for 63 percent of the country’s population in nursing homes, pays for 41 percent of all hospital births, and contributes to the care of 42 percent of all children with special health-care needs.
For disabled Americans in particular, Medicaid is the primary way by which those with high support needs are able to stay safely in their own home, rather than in nursing homes or institutional settings. Amongst the services that help disabled Americans stay in their homes one example is long term services and supports (LTSS). Medicaid is the single largest payer of LTSS and it made up 34 percent of total Medicaid spending in CY2020. Disability advocates fear that LTSS would be particularly impacted by Medicaid cuts.
Medicaid also compensates caregivers of people with disabilities, a group that otherwise receives insufficient support. The average American unpaid caregiver of a family member spends more than $7,000 a year out of pocket to meet the needs of those they care for. This includes the purchase of medical devices or aids and otherwise fill in financial gaps for people to meet their basic needs. These Medicaid-supported programs can help lessen financial barriers to providing care to their patient or loved one outside of an institution.
Due to the broad range of support that Medicaid provides Americans, it is viewed very positively. The latest KFF Health Tracking Poll finds that fewer than one in five adults (17 percent) want to see Medicaid funding decreased, and most think funding should either increase (42 percent) or be kept about the same (40 percent). Notably, 65 percent of those who voted for President Trump believe that Medicaid should be kept the same or increased.
Why are people worried about Medicaid?
The 2025 House Budget Resolution has passed both the House and Senate. Now, congressional committees are tasked with identifying areas to cut a total of $2 trillion in spending so the administration can finance $4.5 trillion in tax cuts. These cuts primarily benefit the top 10 percent of earners and act as a continuation of President Trump’s 2017 Tax Cuts and Jobs Act. The Trump administration’s tax-cut agenda is not good news for the economy as a whole. The U.S. Tax Foundation projects the cuts will increase long-run Gross Domestic Product (GDP) by only 1.1 percent over the next decade. Likewise, only 16 percent of the lost tax revenue would be offset by this GDP increase. This means that any claims of tax cuts “paying for themselves” are dubious at best. The poorly offset decrease in tax revenue will ultimately result in the bottom 90 percent paying for the benefit of the top 10 percent.
How are the 90 percent paying? Very likely by facing impending cuts to entitlement programs, such as Medicaid. To be clear, which specific programs will face decreased spending in order to fund the tax cuts has not yet been determined . But there is ample evidence to suggest that Medicaid is at risk.
Zooming in on the math
According to the Budget Resolution, the House Committee on Energy and Commerce (E&C) is ordered to cut $880 billion in spending over the next decade. This committee oversees multiple health programs. These include Medicaid, Children's Health Insurance Program (CHIP), the risk adjustment program, CHIPS and Science Act, and the Universal Service Fund. E&C also manages Medicare, but it is under the jurisdiction of more than one committee and hence excluded from the below calculations.
The largest percentage of spending by the E&C is on Medicaid. According to the January 2025 baseline budget, 93 percent of their total spending through 2034 is projected to be on Medicaid programs. Put differently, Medicaid comprises $8.2 trillion of the $8.8 trillion projected spending by E&C over the next decade. Even if E&C removed every other program and used it towards the $880 billion spending reduction—they would still fall approximately $582 billion short. This should be repeated: If every other program by E&C were gutted, it still would not be enough to cover the $880 billion cuts. Hence, cuts are almost certainly going to impact Medicaid. Alice Burns, the associate director of KFF’s Program on Medicaid and the Uninsured, has made a similar claim, stating that the “math is conclusive.”
The White House responded to these concerns.
In response to the above concerns, the administration has argued that these spending cuts can be met by targeting waste, fraud, and abuse ONLY—but that is improbable, if not impossible.
The White House recently published an article stating President Trump's stance on Medicaid in hopes of assuring beneficiaries that there will not be cuts to the program. The administration claims that Medicaid benefits will not be cut, yet they stand behind Elon Musk's comments about waste and fraud in entitlement spending being “a big [expenditure] to eliminate.” The administration and Musk continue to harp on the idea that removing inefficiencies would balance spending cuts, but that is mathematically inaccurate. The administration’s fact sheet is fact-checked below.
Fact-checking their response
The argument of there being significant waste, fraud, and abuse throughout entitlement program spending comes from a few key sources that are referenced by the aforementioned White House article. First, the article cites two sources from the Government Accountability Office (GAO) that claims $236 billion in improper government-wide payments were made in FY 2023, and that the amount lost to fraud is between $233 billion to $521 billion annually. Interestingly, the White House article chose to include data from 2023 rather than from 2024, when the most recent fraud report was made. If the fraud report for FY 2024 were used instead, the data would reflect that there were $136 billion improper payments, marking a $100 billion decrease from the year prior.
Those are large numbers, but it is important to keep in mind that this data reflects the total amount of improper payments across more than 60 government programs. Relying on composite data in this manner can be misleading. Focusing on Medicaid specifically, that same GAO report found that $31.1 billion of improper Medicaid payments were given in 2024. Although this is no small number, it is significantly less than the hundreds of billions that the Trump administration had cited.
The White House article also cites a FY 2024 improper payments fact sheet from the Center for Medicare and Medicaid Services (CMS). The Trump Administration says that the CMS estimated they made “$140+ billion in improper payments in 2024 alone”—but this appears to be a full misrepresentation of the data. When the improper payment rates for CMS’ programs are totaled, it comes to $87.1 billion for FY 2024. KFF has also noted this error. The reason for this misrepresentation is unclear, but it is very concerning that an official White House article would fully misrepresent data.
Some parts of the CMS fact sheet were misrepresented, but others were plain overlooked. The CMS’ fact sheet importantly shows that the improper payment rate (improper payment divided by total payments) is low and decreasing. For example, the average Medicaid improper payment rate between 2022-2024 was 5.09 percent. Another important fact from the CMS’ fact sheet is that 79.11 percent of the improper payments in FY 2024 were due to administrative errors by the states or providers, not a purposeful scheme of waste, fraud, or abuse in the system.
It is true that $31.1 billion of improper Medicaid payments is something that must be addressed, but the fact that the majority are due to administrative errors should bring us to consider if the issue underlying these errors were, in actuality, an overburdened system with too few supports. Cutting funding will only worsen these administrative errors and lead to additional improper payments.
In sum, the Trump administration has villainized the nature of improper payments made by the CMS and misrepresented the data by GAO and CMS. Using inflammatory language such as “waste, fraud, and abuse” aims to mislead the public into believing these improper payments were purposeful schemes, which is false in at least 79.11 percent of cases. Further, using cumulative data from more than 60 government programs in order to highlight the concerns of a few programs is disingenuous. Likewise, the White House article shamefully fails to highlight the relatively low 5.09 percent rate of improper payments in government programs like Medicaid. To end, a key statistic was fully misrepresented, overstating CMS’ improper payments in FY 2024 by $52.9 billion.
Yes, Medicaid is on the chopping block.
As mentioned earlier, the GAO report found that $31.1 billion of improper Medicaid payments were made in FY 2024. The main takeaway is that, even if 100 percent of all inefficiencies, waste, and improper payments were removed, it still would not be nearly enough to cover the $800 billion spending cut required by the House Budget Resolution.
The Trump Administration has said they will only cut waste, fraud, and abuse—but if this were implemented perfectly, it would still only reduce spending by approximately $31.1 billion. Where will the remaining $848.9 billion come from? Only time will tell for sure, but Medicaid is at the most risk given that it makes up 93 percent of the E&C budget.
What's next?
The House Budget Resolution continues Trump's tax agenda that unequally benefits the top 10 percent of earners, while reducing funds for entitlement programs that help the bottom 90 percent survive. The ends do not justify the life-threatening means. As the ranking member of E&C, Frank Pallone (D-N.J.), said in a statement, “This is a heartless and cruel proposal that will ruin people’s lives so the rich can get richer.”
A small bit of hope arose on April 14th when a dozen House Republicans filed a joint letter to Mike Johnson, the Speaker of the House, pushing for greater Medicaid protections. The letter says that “balancing the federal budget must not come at the expense of those who depend on these benefits for their health and economic security.”
The Republicans who signed onto this letter are: David Valadao (R-Calif.), Don Bacon (R-Neb.), Jeff Van Drew (R-N.J.), Rob Bresnahan (R-Pa.), Juan Ciscomani (R-Ariz.), Jen Kiggans (R-Va.), Young Kim (R-Calif.), Robert Wittman (R-Va.), Nicole Malliotakis (R-N.Y.), Nick LaLota (R-N.Y.), Andrew Garbarino (R-N.Y.), and Jeff Hurd (R-Colo.). This letter was originally obtained from Punchbowl News, and further reporting was done by Axios.
What can we do to help protect Medicaid?
We have power, and we need to use it at this moment, regardless of beneficiary status. If the administration can get away with cutting one entitlement program, they will not stop there.
Write to your legislators or call at 866-426-2631.
Stay up to date with health-focused organizations like the Coalition to Strengthen America’s Healthcare, the Medicare Rights Center, and the American Disabled for Attendant Programs Today.
Contact your state nurses and doctors associations, urging them to send a joint letter to Congress in defense of Medicaid funding. An example can be seen from New York healthcare organizations here.
Organize, organize, organize.
Hands off Medicaid, stop the cuts!
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