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Congress is wrestling with how deeply to cut Medicaid, the government health program that covers about 72 million Americans and accounts for one-fifth of US healthcare spending. 

To preserve tax cuts passed in President Donald Trump’s previous term, the Republican-controlled House last week passed a bill proposing to slash federal spending by $880 billion over the next decade. Medicaid is the prime target, health policy experts say, as Republicans have resisted slashing Medicare and Social Security. 

Amid growing political backlash from state leaders and constituents, some Republicans are urging a more cautious approach. House speaker Mike Johnson (R-Louisiana), whose state has nearly a third of its residents covered by Medicaid, said last week that certain approaches to cutting the program are off the table. 

As the US Senate and House prepare to reconcile their spending bills to avoid a government shutdown, here’s what you need to know about Medicaid. 

Medicaid’s Reach

Medicaid, funded by both states and the federal government, covers about 1 in 5 US adults and 40% of US children. It pays for 40% of births and 60% of nursing home residents. This map shows percentages of residents covered by Medicaid by state. New York, Louisiana, and New Mexico have the highest percentage of Medicaid recipients; Utah, Wyoming, and North Dakota have the lowest. 

Patients may not know they are covered by Medicaid. In 27 states, Medicaid programs have other names, such as Medi-Cal in California. 

Financial Impact on Clinicians

The financial impact on providers remains unclear until Medicaid cuts are finalized. 

But uncompensated care costs will likely rise and patient revenue will decline, Megan Cole Brahim, PhD, MPH, co-director of the Medicaid Policy Lab at the Boston University School of Public Health, told the university publication BU Today. That’s especially true for community health centers and safety-net hospitals and could cause them to reduce services, lay off staff, or close some sites. 

Medicaid patients made up about 17% of the average physician’s caseload in 2016, according to the American Medical Association’s Physician Practice Benchmark Survey. But pediatricians, with the largest average Medicaid patient share of any specialty at nearly 35%, could see a bigger reimbursement hit, depending on whether they are on salary or not. 

Psychiatrists and emergency medicine physicians also have above average Medicaid patient shares (26% and 22%, respectively). Internists report the lowest Medicaid patient share at just under 12%. 

Medical residency slots also could be affected. Both Medicare and Medicaid fund graduate medical education, with the federal government matching a portion of what state Medicaid programs contribute toward residency programs. 

Hospitals at Risk

Medicaid on average covers about 13.5% of US hospital patient days, but children’s, rural, and psychiatric hospitals typically have a much higher percentage of Medicaid patients and would be most affected by federal spending cuts, according to the Children’s Hospital Association. 

For example, about 80% of patient days at Nemours Children’s Hospital in Orlando, Florida, are covered by Medicaid, according to Definitive Healthcare, a health data company. 

Alaska has the highest Medicaid payor mix at nearly 30% followed by Virginia and Montana at 26.9% and 26.4%, respectively, according to Definitive Healthcare. Virginia is estimated to have a particularly high percentage of its population enrolled in Medicaid. Texas and Pennsylvania have the lowest percentage of Medicaid payor mix, at less than 4% of hospital revenue on average. 

Cost Cutting Measures Debated

One target for Congressional Republicans is to cut the 90% state match given to participating states who expanded Medicaid eligibility under the Affordable Care Act for savings of up to $1.9 trillion over 10 years. If those states ended the expansion, about 20 million enrollees— a quarter of all recipients — could lose coverage, according to an analysis by the Kaiser Family Foundation. Some states could choose to boost their spending to keep residents insured. 

Republicans also have proposed a national work requirement for adult Medicaid recipients under age 65. Thirteen states applied for work requirements under the first Trump administration. Nearly two-thirds of recipients aged 19-64 are employed full or part time, with the rest working as caregivers or attending school, according to the Kaiser Family Foundation. 

Two controversial options would provide block grants to states rather than keeping Medicaid as an open-ended entitlement or reduce the federal match for state Medicaid spending, which now ranges from 77% to a mandated minimum of 50%. 

House speaker Mike Johnson has said he would rule out those two options, according to Politico, promising instead to cut “waste, fraud and abuse.” 

Next Steps

The House and Senate must agree on a spending bill by March 14 to avoid a partial government shutdown. But it’s possible Congress will pass a stop-gap continuing resolution that would keep spending at current levels until a final bill can pass.