Proposed House Medicaid Cuts Not Supported by the Data—Or the Math

I was at my most effective when I relied on sound data to make strategic leadership decisions. The opposite of data-based decisions is believing what we think or want to be true. Good data decisions are a form of mental discipline, something I’ve been thinking about given the current debate over a proposed $700 billion cut to Medicaid.

The main arguments for reduced Medicaid funding, as stated by my Colorado House representative, Jeff Hurd, are to tighten work requirements, remove illegals from Medicaid roles, and eliminate administrative fraud. However, data does not support such claims:  

Most people receiving Medicaid benefits already work. A Kaiser Family Foundation (KFF) analysis put the number conservatively at nearly two-thirds of adults under Medicaid between the ages of 19-64 were working (other studies put the figure as high as 90%). Of the remaining third of Medicaid recipients not working, most were unable to work due to caregiving responsibilities (children or a family member with a disability), illness or disability, or due to school enrollment. In part, the proposed budget increases the administrative and paperwork burden of proof for both individuals and administering social service agencies, which will discourage applications.

Undocumented immigrants (illegal aliens) are already ineligible for Medicaid and other benefits. Also, lawfully present immigrants are subject to eligibility restrictions. KFF notes, “The savings achieved from such changes (in the House-passed budget) are likely to be modest given that noncitizens account for a small share of Medicaid…enrollees.” While states have increased Medicaid coverage for lawfully present immigrants, such immigrants use less health care and have lower healthcare costs than U.S.—born citizens. Immigrants also contribute to the economy through their role in the workforce and tax payments. Research finds that they help subsidize health care for U.S.—born people, as well as stabilize Medicare and Social Security.

Medicaid fraud is mainly committed by providers, not patients. Every year, federal watchdog agencies report the most active offenders. Among those convicted are ambulance service providers, durable medical equipment suppliers, diagnostic labs, nursing homes, pain clinics, pharmacies, physical therapists, physicians, and substance use treatment providers. A 2024 report did not list any beneficiaries receiving fraudulent Medicaid benefits.

The House's approval of this bill hints at disingenuous motives. It won’t reduce the deficit, a legitimate economic concern approaching the catastrophic. On the contrary, it will increase the deficit between $3-5 trillion, according to the Congressional Budget Office. It would also cause a minimum of 10 million Americans  (other analyses put the number as high as  20 million) to lose their health insurance and increase hospital uncompensated care by $42 billion by 2034. As I noted in a blog earlier this year, these patients will lose primary, preventative care for their chronic illnesses such as diabetes and instead be redirected to hospital ERs for care, the most expensive point-of-entry into the healthcare system. They will be sicker and be hospitalized more often, for which hospitals will not receive adequate compensation if any at all. It is a guarantee that the current rate of hospital closures, especially in rural areas like where I live, will accelerate due to negative cash flow.

Drop the Tax Cut

I’d have an easier time believing Representative Hurd when he says he wants to “protect the program” if the legislation he voted to approve didn't also contain a $5.3 million tax cut that primarily benefits wealthy Americans. Hurd acknowledges that a third of the children, seniors, people with disabilities, and pregnant women in his district rely on Medicaid for their health coverage but that it is "important to recognize the financial reality our country is facing." In reconciling the bill, the Senate should remove the massive tax cut if it wants to convince anyone that deficit reduction is the priority. Right now, it looks as if vulnerable, low-income Americans and the often rural hospitals that care for them are being sacrificed for a big tax cut. It amounts to short-term gratification without consideration of the long-term trauma the House budget in its current form proposal would inflict.

John W. Mitchell, MS blogs at https://snowpackpr.com/blog