Proposed Medicaid budget cuts could have a substantial effect on healthcare workers, experts say.
The House of Representatives on Feb. 25 adopted a budget resolution calling for the Energy and Commerce Committee, which oversees the federal insurance program, to slash a minimum of $880 billion from its budget over the next eight years as part of the Trump administration’s $4.5 trillion tax-cut plan.
While President Trump has said since taking office that he won’t cut Medicaid funding (barring any “fraud or abuse” the administration may find), analysts say doing so would be inevitable under the proposal. Even if the committee got rid of every other part of its budget, it would still need to reduce at least $600 billion from Medicaid to meet the $880 billion total, according to a New York Times analysis.
Total Medicaid spending was roughly $880 billion in 2023, with about $606 billion of that coming from the federal government, data from health policy research firm KFF shows.
Since the budget was adopted, Trump has maintained there won’t be Medicaid cuts, telling reporters at a Feb. 26 press conference that he’s “said it so many times, you shouldn’t be asking me that question,” the Washington Post reported.
The White House and US Department of Health and Human Services (HHS) did not immediately respond to Healthcare Brew’s requests for comment.
What it means for healthcare workers
If massive cuts are made under Robert F. Kennedy Jr.’s leadership as the newly minted HHS secretary, “it could lead to many people losing their Medicaid eligibility,” Paul Ginsburg, professor of the practice of health policy and management at the University of Southern California (USC) and a senior scholar at USC Schaeffer Institute, told Healthcare Brew.
That means health systems would treat fewer Medicaid patients, hurting hospital finances substantially, he said. Medicaid makes up about 19% of hospital spending (or $2.9 billion), according to 2023 data in a KFF analysis.
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That lack of funding could put healthcare jobs in jeopardy.
“I could see hospitals, medical practices, just reducing their staff because of the financial pressure they would be under,” Ginsburg said.
Some smaller hospitals may even be forced to shutter due to lack of funds, he added.
“You have a very profound effect on hospitals and physicians because some [Medicaid patients] might not be able to pay at all,” Ginsburg said. “Hospitals will lose these paying customers…particularly rural hospitals, which in many areas, are struggling financially. This could lead to them closing, and that’s affecting a much broader population in those areas than those eligible for Medicaid.”
Zooming out
Beyond Medicaid, Kennedy has taken several steps that could significantly change the healthcare industry’s status quo.
HHS on March 3 reversed a long-standing policy requiring public comment on the agency’s actions related to loans, grants, and agency management. The updated text in the policy statement claims HHS changed the policy because it was “contrary to the efficient operation of the department.”
Two vaccine-related meetings have also been canceled or postponed, including one to decide which flu strains should get put in next year’s shots and one to vote on guidelines for several vaccines, including GSK’s meningococcal vaccine and Moderna’s RSV vaccine.
Plus, Kennedy announced plans to investigate the potential “threat” of prescribing FDA-approved drugs, including antidepressants and weight loss drugs, which may lead to changes in the agency’s drug approval process, Ginsburg said.
“I could see tons of resistance to that from all kinds of people that care about medical innovation and new treatments, as well as the pharmaceutical industry,” he said.