Medicaid's Reach: How Proposed Cuts Could Impact Millions

Medicaid covers 72 million people nationally, over 20% of the US population. In prior editions of Aurrera Health’s Medicaid at a Crossroads blog series, we have described the Budget Reconciliation process and the likely implications of currently proposed federal options for reducing Medicaid spending on enrollees and states. As Congressional committees translate budget resolutions into specific spending reduction proposals, we shift to take a deeper look at what these potential cuts mean for people who rely on Medicaid coverage to meet their health care needs.

Who does Medicaid serve?

Medicaid provides a wide array of services to populations with varied health care needs. Medicaid covers 40% of births, provides coverage to more than 40% of children, 1 in 6 adults, and almost 20% of Medicare beneficiaries who are dually eligible. Medicaid covers 14 million rural Americans—a group with tremendous access to care concerns, over 15 million American workers who do not have access to employer-sponsored insurance, and nearly 1 million veterans between the ages of 19 and 64.

Access to Medicaid can help improve health, particularly for groups that face greater health challenges. For example, Medicaid covers 40% of American Indian and Alaskan Native populations, 31% of Hispanic/Latinos, and, provides essential services for people who otherwise face increased barriers to accessing health services. Even with Medicaid, gaps in health care coverage, access, and outcomes persist. For example:

• Black people face higher rates of uninsurance, increased likelihood of going without care, and lower life expectancies than white people.

• Hispanic/Latinos have the highest uninsured rate than other Americans.

• American Indian and Alaskan Native people experience some of the worst health outcomes among population subgroups and often face steep barriers to accessing care.

What are the costs of cuts?

As Congress contemplates cuts to federal Medicaid spending, states will ultimately bear the responsibility for making hard decisions, invariably resulting in reduced access to services for populations with the greatest needs. Adverse effects will include:

• Reduced health care coverage. Access to health coverage and health services make people healthier and more financially secure. Through Medicaid Expansion under the Affordable Care Act, the national uninsured rate dropped from 18% in 2010 to 9.5% in 2023. Among low-income workers, the results were even more drastic - the uninsured rate fell from 38% in 2013, down to 17% in 2022.

• Worse health outcomes. Increases in access to Medicaid are associated with lower mortality rates, higher usage of relatively inexpensive preventive care services, and improvements in health outcomes. Having easier access to care, without the threat of catastrophic health care costs, means that people tend to use more cost-effective services, and experience enhanced health outcomes.

• Greater strain on the broader health care system. For every person who loses health coverage, the US faces $900 more in uncompensated care annually, more expensive acute care, more provider burnout, and increased churn. Medicaid plays a vital role in the US health care system’s stability.

The costs of cuts to Medicaid extend to almost every aspect of daily life, including reduced social benefits, as higher rates of access to Medicaid are associated with higher test scores, greater rates of high school and college completion, and higher rates of employment and greater earnings.

Medicaid at a Crossroads: Funding & Policy Implications

For more information regarding the potential impacts of Budget Reconciliation on Medicaid programs, be on the lookout for Aurrera Health’s continued analysis as discussions progress in our blog series Medicaid at a Crossroads: Funding & Policy Implications. If you would like to discuss how these developments might affect your state, please reach out to Aurrera Health Managing Principals Megan Thomas and Kristal Vardaman.

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Authors

Erik Hirschman [Policy Consultant]

Megan Thomas [Managing Principal]

Kristal Vardaman [Managing Principal]