Trump’s Medicaid cuts add to the woes of people – and agencies

Lisa Jarvis, Tribune News Service

When Congress passed sweeping Medicaid cuts as part of President Donald Trump’s signature tax bill last year, the headline numbers were grim: Some 7.5 million people were expected to lose coverage due to changes to the public health insurance programme. Now, an already bad situation for Americans’ health is getting worse. Seemingly at every opportunity, the Trump administration is taking a harsher approach to implementing that policy than anticipated — or required by law. That could mean bigger headaches for state Medicaid agencies, more people needlessly losing insurance, and eroded access to care for everyone.

A large chunk of Trump’s nearly $1 trillion in Medicaid cuts will come from the introduction of new work requirements for the program’s nearly 68 million enrollees, which go into effect on Jan. 1, 2027. Able-bodied adults will need to prove they have put in 80 hours each month working, going to school, training for a job or volunteering. Putting that policy into practice was always going to be a headache. From the moment Trump signed his One Big Beautiful Bill into law last July, states have been scrambling to make sure their systems are ready to verify everyone’s insurance eligibility. Yet they were building those systems without a blueprint. The Centers for Medicare & Medicaid Services had relayed its general thinking to states, but needed time to sketch out the exact details.

A lengthy document released by CMS last week threw that already difficult process into disarray. The law exempts people who are “medically frail” from the work requirement, and states had come up with plans to identify those enrollees. The expectation was that most states would rely on a list of conditions that would automatically qualify someone for an exemption — a list that could be further backed up by insurance claims data.

But CMS decided to go a step further and ask people to prove their medical condition affects their ability to work. The stricter stance “was a real surprise to states,” says Adrianna McIntyre, a health policy expert at the Harvard T.H. Chan School of Public Health. “If states have to rush to change their systems, the chance of errors goes up. And in this case, the stakes are high: Errors mean people not getting coverage or losing coverage.” The proposed rules aren’t just hard to put into practice. They fail to capture the complexity of people’s lives. For some, access to regular care for a chronic condition, whether physical or mental, is what allows them to work. For others, the onset of a serious condition — a stage when steady care is crucial — could complicate their ability to work consistently.

Health policy experts offered a few examples of people who are particularly vulnerable to losing coverage. Someone with HIV who is healthy enough to work — so long as they have access to their medication — could be at risk, as could someone newly diagnosed with cancer who needs radiation therapy. “They’re technically able to work,” McIntyre says. “But they also need to be able to make those doctors’ appointments, and their oncologist may not be able to work around their McDonald’s schedule, right?”

Yet even those who make it through the eligibility gantlet could find their access to care diminished. States facing a Medicaid-induced budget crunch have spent the past year looking for ways to cut back on spending. Several have said they will no longer pay for popular GLP-1 medicines, and others are considering reducing coverage for optional services — services that likely don’t feel so optional to the people who need them. For example, states are weighing cuts to in-home care, a change that could mean the difference between a disabled child being able to live with their parents or being forced to move to a residential care facility.

And some people will find providers a lot harder to come by. The Medicaid cuts are a gut punch to already fragile healthcare systems, particularly the rural hospitals and urban safety-net hospitals that disproportionately serve people with public insurance. The health policy research organization KFF estimated last year that rural areas alone could see $137 billion fewer Medicaid dollars in the next decade.

But the situation could get even worse. In recent weeks, the government proposed changes to a wonky area of regulation that allows state Medicaid agencies to boost payments to providers in managed care. These so-called state-directed payments have been used since 2016 to help close coverage gaps — say, by raising payments to pediatricians in a bid to increase the number who accept Medicaid in an area.

Lawmakers sought to rein in those payments, which had grown substantially in recent years, under the One Big Beautiful Bill. Yet, like the work requirements, CMS’s overhaul goes far beyond the letter of the law by eventually cutting off a mechanism through which some 70% of those dollars flow, explains Leonardo Cuello, an expert on Medicaid policy at Georgetown University.

The results so far have already been dramatic: Cuts to state-directed payments are three times as large as originally anticipated — to the tune of some $515 billion over a decade. State Medicaid programmes might try to reroute some of those dollars — adding to their overall administrative nightmare created by all these late-breaking rule changes. But many will fall short, Cuello says. Those cuts will ripple out to hospitals’ bottom lines, further destabilising these already strained systems.