4 Things to Know About Proposed Changes to Medicaid

Congress is proposing significant changes to Medicaid aimed at reducing federal spending.

The estimated $716 billion cut would be the first changes to the program since 2023 and the largest cut ever, according to the Center on Budget and Policy Priorities. If the proposal is implemented, an estimated 7.7 million people would become uninsured, according to the Congressional Budget Office (CBO). It could also affect state budgets and health care facility funding, advocates said.

Here’s what you need to know about the proposal.

Changes in Eligibility

A large piece of the Republican budget bill involves potential changes to who will be considered eligible for Medicaid.

Many Medicaid recipients would be subject to what the House bill refers to as new “community engagement requirements.” This would require recipients to work, go to school, or volunteer at least 80 hours per month. People under 19 years old, pregnant women, or those under postpartum medical care can receive a work requirement waiver.

Though these eligibility changes were originally said to not go into effect until Jan. 1, 2029, some Republicans are pushing for the date to be moved up. House Majority Leader Steve Scalise (R-La.) said in an interview Monday on CNBC’s “Squawk Box” that Republicans are instead hoping for the Medicaid work requirement changes to go into effect in “early 2027.”

Shifting Costs to States

Under the proposed changes to Medicaid, the states would be responsible for fronting more of the costs of operating the program—costs that currently come from federal funding.

“Very few of these states are going to have the resources to be able to replace the federal money that they end up losing because they can’t meet the red tape requirements, so they’re going to be forced, in many cases, to redefine who is eligible for the program,” Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare, told Investopedia.

States might be forced to shift spending from other state-supported programs, like education, to cover these costs or they could raise taxes to close the gaps, wrote analysts at health care think tank KFF.

Fewer People Will Have Access to Health Care

As of December, more than 70 million Americans are currently on Medicaid. The proposed budget could eliminate health care coverage for at least 11% of them, with more possible if proposed changes are made to the Affordable Care Act.

Advocates said there could be consequences even for those not eligible for Medicaid coverage.

“If your only hospital or emergency clinic ends up closing because they can’t afford to stay open anymore because Medicaid has been cut back, then everybody gets impacted, no matter your age or your financial situation,” said Freese, who also said these potential closures would be particularly hard for those living in lower-income and more rural areas.

Freese said nursing homes and at-home health care would also face risks of closures or eliminations if the bill goes forward.

It’s Not Finalized Yet

The proposal still has a long way to go before it is implemented as policy.

Despite the Republicans’ slim majority in both chambers of Congress, conservatives are somewhat split on the budget proposal, partly because of disagreements about Medicaid provisions. The bill has yet to be approved by the House. After that, it will need to be reconciled with the Senate proposal and could amended multiple times during the process.

The final step in the process would require a signature from Trump, who has vocally supported the current version of the budget plan.