Understanding the wide-reaching impacts of Medicaid cuts

Medicaid is a state-federal partnership that guarantees federal funding for states in providing comprehensive health care, as well as long-term care for elderly and disabled people with low income. This program touches every part of the health care system and the economy by keeping rural and safety net hospitals open and supporting job creation.

However, recent proposed cuts to Medicaid put this essential program in jeopardy — and 3.5 million Illinoisans are in danger of losing health care coverage. The Shriver Center’s Hana Urban spoke to Stephanie Altman, director of healthcare justice and senior director of policy, to break down what these cuts could mean for Illinois and discuss lessons from Trump’s first administration.

To start, what exactly are these federal Medicaid cuts?

Congressional Republicans are proposing $2.3 trillion in budget cuts, to justify tax cuts to wealthy individuals and corporations. The budget instructs the Energy and Commerce Committee to cut $880 billion which can only realistically come from Medicare, Medicaid, or Social Security. Since Congress and Trump have said that they will not cut Medicare or Social Security, what’s left? Medicaid.

How are the Republicans planning on getting that kind of savings from Medicaid?

To get that kind of savings out of Medicaid, Congress has to make drastic cuts to the Medicaid program. Project 2025 — a pre-election conservative policy manifesto — and statements that have been said since the election, give us a window into how they might make those cuts. And there’s several options on the table to cut down $880 billion, for example:

1. Enact a population cap on Medicaid. Instead of Medicaid funding being an entitlement regardless of cost or population growth, the state would have a limit on federal funding. Illinois currently has over 3 million people on Medicaid. During the early pandemic, that increased by 500,000. A cap doesn’t account for inflation, an economic downturn, or a global pandemic. Basically, it’s a big cost shift leaving the states left holding the bag.

2. Give states less federal funding. The Affordable Care Act (ACA) mandates that states only pay 10 percent of costs for the ACA Adult Medicaid Expansion program — which covers 770,000 people — and the federal government pays 90 percent. A reduction in that match would break the promise the federal government made to states. In Illinois, we’re one of nine states with a trigger, which means if that federal support goes below 90 percent the program ends, leaving 770,000 people without coverage.

We’re likely heading into a recession, too, so if Medicaid is cut for all these people, then the loss of income and health coverage is a double whammy.

That’s a good point, because we are possibly heading into a recession. What about all these people being fired from federal employment; where are they supposed to get health coverage? When people lose jobs and employer-sponsored health insurance, that drives Medicaid enrollment even higher as people scramble for health insurance. Instead of strengthening the safety net, these proposed cuts would leave millions without coverage when they need it the most.

Who would feel these cuts the most?

In addition to people who lose coverage through loss of employment, 770,000 19–64-year-olds in Illinois could lose coverage. Statistics show a majority — up to 70% — of them are employed but have no health insurance available to them or can’t afford it. They’re working low-income jobs, making under 138% of the poverty level [$35,000 for a family of three]. People who aren’t working in that age group generally have chronic diseases and can’t work yet are not eligible for Social Security and Medicare until age 65.

These cuts are also going to hurt hospitals, especially safety net hospitals. They depend on the Medicaid reimbursement that they get for their patients. The proposed cuts will really take us back to prior to the Affordable Care Act when there wasn’t anything for people 19-64 who weren’t disabled or parents. There was no coverage. There was nothing.

How does all this affect our policy priorities? Does it affect our legislative agenda?

It refocuses our attention on the federal side of things. We need to spend a lot of time fighting this at the federal level, so we don’t have to deal with it at the state level.

Attorneys Daniela Vélez-Clucas and Andrea Kovach are focused on parts of the cuts that will hurt immigrants. There are a lot of people who are eligible for and enrolled in Medicaid who are immigrants, including legal permanent residents over five years, for example.

Unfortunately, for immigrants who are undocumented or have a status that doesn’t entitle them to Medicaid, [Illinois Governor] Pritzker has announced that he’s going to end the Health Benefits for Immigrant Adults [HBIA] program, which covers 31,000 people ages 42 to 64. The Governor has stated that this cut is necessitated by the fact that we already have a big deficit in Illinois’s budget as well as looming federal cuts. Both things are coming together for the perfect storm.

If we’re going to be advocating for covering everyone and arguing that the federal government shouldn’t shift costs to the states, then we shouldn’t jump on the bandwagon and cut off more people. So, we are fighting to make sure it doesn’t happen.

We are heading up the fight for saving and restoring the immigrant programs in Illinois, both the HBIA and Victims of Trafficking, Torture or Other Serious Crimes (VTTC) through pending legislation and budget advocacy. We are also focusing on training and outreach to alleviate fears of enrolling in programs immigrants are eligible for and will help them with income, food, and medical care. Daniela has been leading Know Your Rights trainings for hundreds of community providers on deportations, safe spaces, and privacy and confidentiality.

What are some differences you’ve been seeing in public opinion from 2017 to now?

There was a lot more protest against the ACA repeal efforts than we are now seeing against proposed federal Medicaid cuts. During the first Trump administration, the first thing they took on was immigration and the ACA. The administration is taking on a lot more this time, especially trans rights, immigration, and health coverage.

The ACA had so many components in it that middle class and upper-middle class people benefit from — like coverage of dependents up to age 26, coverage of preexisting conditions, guaranteed coverage for insurance — that drew out more protests from more people. The ACA had this big constituency. There were a lot of people protesting who had the time, energy, and money to make their voice heard.

Medicaid cuts aren’t the lightning rod issue the ACA repeal was largely because I think most people don’t understand how Medicaid is important for everyone; it supports the whole health system and economy. For ACA Adults for example, if 70 percent of enrollees are working full time and still have income below the poverty level, they’re not going to have a lot of time to be out there protesting. The messaging is also couched in “oh well, states will just pay instead of the federal government” so the larger impacts may not be well understood. People who are not on Medicaid may not realize how the cuts will touch them, like higher taxes, higher cost shifting to private insurance, or hospital closures.

However, there is still big business in health care, so they are also fighting against these cuts. The insurance companies are fighting this cut to Medicaid because they run managed care programs for Medicaid. You have some big moneyed interests fighting it, which helps and hopefully saves it.

I don’t remember so many things happening at once during the first Trump administration. Now, they want to cut marketplaces, they want to cut DACA eligibility for the marketplaces, and the new rule that was just announced bans gender-affirming healthcare with insurance companies in the marketplace. There’s just so much this time.

Yeah, and this Medicaid issue goes into all those things too. When I was on Medicaid, it covered much of my gender-affirming care, including top surgery. I would never have been able to afford that without Medicaid.

Yes, they want to cut everything that provides support for people seeking gender-affirming care. The administration’s focus on transgender healthcare and trans people in general is pervasive in every rule. We will also be commenting on the rule prohibiting states from requiring insurance companies to cover gender-affirming care and supporting lawsuits if filed to block the rule from taking effect.

We talked about how things are different this time than they were like in the first Trump administration, but were there any tactics or like things that you learned from the first time that you’re bringing into this time?

In some ways we’re reviving our ultimately successful defense playbook from ACA repeal and replace, at least regarding Medicaid. Protect Our Care IL was formed in 2017 to fight the ACA replace and repeal. Now we’re very reactivated. We have 100 members with over 60 organizations joining in the last couple of months. We have an updated website with fact sheets, resources, phone banking, and a lot of different people telling their stories. We are activated and ready to fight for Medicaid and the ACA with fact sheets, resources, phone banking, and a lot of different people telling their stories. We are activated and ready to fight for Medicaid and the ACA.

Learn how you can get involved in the fight to protect Medicaid with Protect Our Care IL’s fact sheets, and stay up to date by signing up for text alerts.

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