Biden promises to fight GOP on ‘gutting’ Medicaid. Budget talks seem like another story.

Reviewed by Emily Henderson, B.Sc.Mar 1 2023

Most lawmakers — Republicans and Democrats alike — have declared the marquee safety-net programs of Medicare and Social Security off-limits for cuts as a divided Washington heads for a showdown over the national debt and government spending. Health programs for lower-income Americans, though, have gotten no such bipartisan assurances.

More than 20 million people gained Medicaid coverage in the past three years after Congress expanded access to the entitlement program during the covid-19 pandemic, swelling Medicaid's population by about 30%. But enrollment will fall starting in April, when the pandemic-era changes end and states begin cutting coverage for Americans who are no longer eligible.

On Tuesday, President Joe Biden pressured Republicans to release the party's plans to cut government spending, which are expected to call for deeper cuts to Medicaid — and could offer Americans a preview of Republicans' wish list should the party gain full power in the 2024 election.

If far-right Republicans "try to take away people's health care by gutting Medicaid and the Affordable Care Act, I will stop them," Biden said.

Biden and other Democratic leaders have said they want to expand Medicaid, a goal likely to be reflected in the president's budget proposal out next week. But while top Democrats say they will not negotiate government spending with Republicans when the GOP is refusing to raise the debt ceiling, they have left open the possibility of talks over Medicaid spending at a later date.

Rep. Hakeem Jeffries of New York, the new House Democratic leader, said in January that Democrats are open to "a conversation" with Republicans separate from the debt ceiling debate.

"There is a budget process, and there's an appropriations process," Jeffries said when asked by KHN why Medicaid did not get the same red-line defense as Medicare and Social Security during Biden's State of the Union address. "We are willing to have a conversation with the other side of the aisle about how to invest in making life better for everyday Americans, how to invest in the middle class, how to invest in all those Americans who aspire to be part of the middle class."

Some Republicans hope to extract concessions with Democrats to cut the program by limiting benefits, such as by allowing more states to impose work requirements on Medicaid beneficiaries — a plan pushed by the Trump administration but largely struck down by the courts. Republicans could also target Medicaid provider taxes, meaning taxes placed on things like inpatient hospital services or nursing facility beds.

Progressive Democrats have drawn a hard line and hope the program's growth makes cutting Medicaid a riskier political idea than it once was. More than 1 in 4 Americans are currently covered through Medicaid or the Children's Health Insurance Program, including children, pregnant people, people with disabilities, and people living on a lower income.

"To my mind, Medicaid must be off the table," Sen. Bernie Sanders (I-Vt.), chair of the Health, Education, Labor, and Pension Committee, told KHN. "The idea of coming down heavy on people who are of low income would be outrageous, and I feel very much that's what Republicans have in mind."

The Biden administration is expected to send its annual budget blueprint to Congress on March 9, outlining the president's spending priorities for federal programs, including for Medicaid.

During his Feb. 28 speech, Biden pointed to recent Republican proposals to cut Medicaid and repeal the Affordable Care Act. And he listed the possible consequences of those proposals — such as the loss of mental health care for millions of children under Medicaid's guarantee of comprehensive health coverage — and urged Americans to compare the still-unknown cuts that Republicans want with his budget proposal.

Biden is likely to start any negotiations by arguing for more spending. He has called out conservative states that have resisted expanding Medicaid coverage, traveling to Florida after his State of the Union address to chastise nearly a dozen states that have not yet expanded the program under the ACA. He pushed to expand ACA subsidies during the pandemic and, more recently, to make them permanent.

House Republicans say they want to balance the federal budget in 10 years without raising taxes and without cuts to Medicare, Social Security, or military spending — a feat some analysts have called "impossible." Medicaid, Medicare, and Social Security, along with funding for the Affordable Care Act and Children’s Health Insurance Program, account for nearly half of the federal budget on their own.

The Washington Post recently reported that a former Trump administration official had briefed lawmakers on a balanced-budget proposal that includes $2 trillion in cuts to Medicaid. A separate proposal from House Republicans last year would cut total federal Medicaid, CHIP, and ACA marketplace subsidy spending by nearly half over the next decade.

Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy's Center for Children and Families, wrote that the House proposal "would likely drive tens of millions into the ranks of the uninsured and severely reduce access to health care and long-term services and supports needed by low-income children, families, seniors, people with disabilities, and other adults."

Because Medicaid is the largest source of federal funding for the states, dollars could also dry up for priorities like education, Park added.

A longtime push by conservatives has been to trim Medicaid by adding eligibility restrictions like work requirements or more stringent verifications. Republicans tried to do that in the failed repeal of the ACA in 2017. The same plan included a bid to convert state Medicaid funding to a per capita allotment instead of the federal government matching a percentage of whatever a state spends.

Republicans could also push to rein in the Federal Medical Assistance Percentage that states get for Medicaid. Currently, that percentage match has been boosted under the public health emergency. And at least one top Republican has expressed interest in making changes to the way disabled people get home- and community-based care services that allow them to remain in their homes, said Yvette Fontenot, senior policy and legislative affairs adviser at the liberal-leaning Protect Our Care.

Fontenot said Republicans could focus on fraud as a pretext for their proposals, raising oversight questions about how many people got benefits improperly and how many stayed on Medicaid under pandemic rules that required states to maintain enrollment when they would otherwise be kicked off. "I think it just becomes an underpinning of all the different potential policies here," she said.

Brian Blase, a former Trump administration economic adviser who is now president of the Paragon Health Institute, told KHN he doubted Republicans would have much success going after Medicaid — especially ahead of next year's presidential election, when Democrats would be less likely to cave on any entitlements.

But he noted potentially promising discussions on Capitol Hill for some GOP goals — specifically, cutting Medicaid provider taxes or pushing new work requirements, an idea that some conservative Democrats like Sen. Joe Manchin of West Virginia have signaled they are open to.

Conservatives see the taxes, which states levy on Medicaid providers, as a backdoor way to boost what the federal government sends to states, since states use those taxes to fund their share of Medicaid funding under FMAP.

Blase pointed to reporting from the major budget showdowns in 2011 and 2013 as evidence that Biden, who was then vice president, might be open to cuts there.

“The fact that Biden is on record as calling them 'a scam' that should be eliminated, I think, makes it a little bit easier for congressional Republicans to argue that they should be on the table,” he said.

The fight over government spending is nearing an inflection point. The nonpartisan Congressional Budget Office recently estimated the United States would hit the debt ceiling between July and September, meaning the Treasury Department's ability to pay the nation's bills and prevent defaulting on its debt could be exhausted as early as this summer without congressional action.

A recent NPR-PBS NewsHour-Marist poll showed that while a majority of voters support raising the debt ceiling, they are split on how lawmakers should address the nation's debt. Nearly three-quarters of Republicans and a majority of independent voters said Congress should cut programs and services rather than raise taxes and other revenue.

Though Republicans have yet to propose specific cuts, Democrats are betting that Medicaid and other entitlements will prove as difficult to target as Social Security and Medicare if voters understand the impact on many Americans' lives.

"I think it's going to be tough for Republicans right now," Rep. Alexandria Ocasio-Cortez (D-N.Y.) told KHN. If the GOP wants to cut benefits for low-income families "in a time when eggs are expensive and a time when groceries and food have gotten quite expensive for everyday people, then they need to go in front of the public, in front of the American people, and make the case as to why they want to cut people's ability to feed themselves and their children."