March 6, 2025  – A budget resolution approved by House Republicans last week has raised concerns among health policy experts, who warn that proposed federal spending cuts could significantly impact Medicaid. The plan instructs the Energy and Commerce Committee to identify at least $880 billion in savings over the next decade. While it does not explicitly target Medicaid, analysts say reaching that figure without affecting the program is nearly impossible.

Medicaid, which provides health coverage to low-income individuals, older adults, and people with disabilities, is one of the largest components of federal spending. According to government data, the program costs over $600 billion annually. Experts argue that given the size of Medicaid’s budget, it would be a primary target for cuts if lawmakers proceed with the proposed reductions.

“The way the math would work is that those cuts would largely need to come out of Medicaid,” said Robin Rudowitz, director of the Medicaid and uninsured program at KFF, a nonprofit specializing in health policy. “Medicare is off the table, and there just aren’t any other sources of funding for the Energy Commerce to look at.” 

If Medicaid funding is reduced, the effects could extend beyond those who gained coverage under the Affordable Care Act’s 2014 expansion. Millions of individuals who rely on the program—including children, pregnant women, and people with disabilities—could face disruptions in their healthcare coverage.

Medicaid plays a crucial role in the U.S. healthcare system, covering approximately 72 million people. The program insures four in ten children and over eight in ten children living in poverty. It also covers nearly half of adults in poverty and provides health insurance for one in four adults with disabilities. Additionally, Medicaid funds 41% of all births in the country.

How States Could Be Affected

Medicaid is a joint state-federal program, with states covering upfront costs and receiving reimbursement from the federal government. Traditionally, states receive at least 50% of Medicaid funding from the federal level. For those who gained coverage through the Affordable Care Act’s expansion, the federal government covers at least 90% of the costs.

If federal contributions shrink, states would be forced to take on a greater share of the financial burden, which is something many may struggle to afford. The impact would vary depending on the number of Medicaid enrollees in each state. According to KFF, states with the highest Medicaid enrollment include California, New York, Kentucky, Louisiana, and West Virginia. Puerto Rico has the highest percentage of residents on Medicaid, while ten states, including Florida and Texas, have not expanded the program under the Affordable Care Act.

As discussions continue in Congress, healthcare advocates and state officials are closely watching how the proposed reductions might take shape. Any legislative action to reduce Medicaid funding is expected to spark significant debate, with states, healthcare providers, and recipients preparing for potential changes.