Eric Patashnik is the Julis-Rabinowitz Professor of Public Policy and Political Science at Brown University. He is an RSF visiting scholar and editor of the Journal of Health Politics, Policy and Law special issue “Medicaid at 60.” In this new interview with the foundation, Patashnik discusses the history of Medicaid, who it serves, and proposals to cut funding for the program.
Q. How and when was Medicaid developed? Who was Medicaid intended to cover?
Medicaid was established through the Social Security Amendments of 1965, which also created the Medicare program. When the law was passed, Medicare was the main event—the New York Times didn’t even mention Medicaid in its article about the bill’s enactment. Medicare's passage was the culmination of a long struggle by advocates of national health insurance to build on the successful model of the Social Security system. Like Social Security, Medicare was designed as a national social insurance program in which workers earn rights to future benefits by paying payroll taxes. In contrast, Medicaid was created as a means-tested, state-administered program for low-income people, focused on mothers and dependent children. Many liberals viewed Medicaid as a gap-filling program. They hoped that Medicaid would be replaced when the U.S. later eventually passed a universal healthcare program—but, of course, things didn’t turn out that way. It is a fascinating twist on history that the Affordable Care Act used Medicaid, not Medicare, as the main vehicle for coverage expansion.
Q. How many Americans are covered by Medicaid? Who is enrolled in Medicaid? How did Medicaid expansion under the Affordable Care Act (ACA) alter the demographics of Medicaid enrollees?
Medicaid has grown enormously over the past six decades. The program is now the nation’s single largest health insurer, covering more than 70 million people, or around one in five Americans. Medicaid covers many vulnerable populations, including four in 10 children, more than four in 10 nonelderly people with disabilities, and about six in 10 adults living below the poverty line. Medicaid expansion under the ACA changed the program’s demographics. Rather than restricting Medicaid to certain categorical groups, such as pregnant women and people with disabilities, the ACA offers states financial incentives to expand Medicaid eligibility to many low-income adults with incomes up to 138% of the federal poverty level. In 2024, that was $20,783 for an individual and $43,056 for a family of four. While the ACA’s architects intended Medicaid expansion to be mandatory, the Supreme Court’s 2012 ruling in National Federation of Independent Business v. Sebelius made the Medicaid expansion optional for states. Forty states plus Washington D.C. currently participate in Medicaid expansion.
Q. Despite Trump claiming that Medicaid funding won’t be cut, Republicans are looking for ways to cut Medicaid costs. Why? How much does Medicaid cost each year? How much are they proposing be cut from Medicaid? What are some of the ways Republicans are looking to make cuts to Medicaid?
There are three main reasons why Republicans are looking to cut Medicaid. First, Republicans need to cut Medicaid to make their budget math work. Republicans want to extend the $4.5 trillion tax cuts passed during the first Trump Administration while increasing spending on border security and other GOP priority items. To keep the federal debt from exploding, the House Republican budget resolution called for the committee that oversees Medicaid (and other programs) to achieve a $880 billion reduction in spending over ten years. Given Medicaid’s size (the federal government spent $606 billion on Medicaid in fiscal 2023), Medicaid is a prime target for savings.
A second reason Medicaid is a retrenchment target has to do with what I call the politics of “backlash management.” Most Republicans, even those who favor a much smaller welfare state, are very hesitant to reduce benefits for Social Security and Medicare—the two other big safety-net programs in the federal budget. Medicaid is quite popular (about three quarters of the public has a favorable view of the program). Moreover, many Trump voters are on Medicaid. If Congress takes a budget ax to Medicaid, the blowback from Republican voters could be strong, as Steve Bannon has been warning his fellow Republicans. Still, Medicaid doesn’t have as powerful and well-organized a public constituency as Social Security and Medicare. For Republicans who are trying to slash social spending while maintaining their political viability, cutting Medicaid is a very risky target, but the alternatives—cutting Social Security or Medicare—look even more perilous.
Finally, many Republicans have ideological reasons for cutting Medicaid. Many conservatives believe that Medicaid was never intended to cover such a large share of the American population. Others may believe that some Medicaid recipients are “free riders” who do not really need or deserve government assistance for health insurance.
There are many ways that Republicans could reduce Medicaid spending, including cutting eligibility, lowering benefits, reducing provider payments, or capping federal Medicaid funding. Republicans could also impose work requirements on Medicaid enrollees (which more than six in ten Americans support).
Q. How would reducing federal funding for Medicaid impact states?
Reducing federal funding would impose a massive financial burden on the states. Individual states would face many choices on how to respond to the loss of billions in federal revenue—and all of the choices would be difficult. Unlike the federal government, states generally must balance their budgets. They cannot simply run deficits. States currently receive a 90 percent federal match rate for adults covered through Medicaid expansion. Many states would reverse or scale back Medicaid expansion if the federal match rate was cut. To be sure, states could raise taxes to offset their loss of federal revenue, but tax hikes are unlikely to be a politically attractive option for most states, especially at a moment when some economic forecasters say that the U.S. may be heading into a recession.
States could pay for Medicaid by cutting spending on other state programs. But the largest state budget items—such as K-12 education—are popular and have powerful defenders. States could also pay Medicaid providers less, but Medicaid payment levels are already lower than Medicare and commercial insurance. Further reductions might reduce Medicaid patients’ access to care if more doctors decline to participate in the program. If Congress does ultimately pass large Medicaid cuts, many community health centers and rural hospitals, already struggling to stay open, might close.
Q. How would the proposed Medicaid cuts harm Americans?
Depending on their size, Medicaid cuts could have a big impact on ordinary Americans. Although some fraction of the people who would lose Medicaid coverage under proposed Medicaid cuts will be able to transition to employer-based health insurance or obtain coverage through other government programs, many others will experience coverage gaps or become uninsured. Losing Medicaid coverage would be harmful to low-income citizens not only because the program promotes households’ financial security but also because it is associated with positive health outcomes, including improved access to care and an increase in the treatment of chronic conditions and substance use disorders. There is causal evidence that Medicaid reduces mortality rates. For example, one study found that Medicaid expansion saved the lives of at least 19,200 low-income adults aged 55 to 64 between 2014 and 2017 alone.