Did Republicans just propose cutting Medicaid by $880 billion? Not yet. (The alternative isn’t great either.)

Hi everyone,

Today’s Inside Medicine features one main story followed by three shorter ones. The top story is divided into two parts. In the first section, I explain how a new proposal floated by Republicans in Congress was misinterpreted online yesterday—but why it’s still bad. (Congress is the legislative branch of the United States federal government.)

Then, three shorter items: A reminder to get free Covid-19 tests before the federal government program disappears, updates on the Trump administration’s failure to pay its grantees (despite a judicial order), and the latest on the “Fork in the Road” deferred resignation program.

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Did the GOP just propose cutting Medicaid by $880 billion? Not exactly. (The alternative isn’t great either.)

Yesterday, House Republicans released a budget proposal that included a section calling on the House Committee on Energy and Commerce to reduce the deficit by $880 billion over ten years. Many interpreted this as a plan to cut Medicaid by $880 billion. Some social media posts suggested that this would end Medicaid entirely, since the proposed figure is approximately the program’s annual spend.

Having poked around on this all evening, it’s pretty clear to me that this is not an accurate representation. Now, what House Republicans are actually proposing isn’t good either, but it’s not yet a Medicaid cut (a conclusion that others reached as well).

Here’s why: First, the proposed cuts will be spread over ten fiscal years, meaning that Energy and Commerce has to find “merely” $88 billion in cuts per year. Second, the proposal does not require that cuts come from Medicaid. And even if all $880 billion in cuts were to come out of Medicaid, that would amount to a 10% reduction in the program from 2025-2034 (its 2023 budget was $871.7 billion). That would not be great, but it’s not the same as canceling Medicaid entirely. Third, there are other allocations that Energy and Commerce can target, including energy and environmental programs, telecommunications subsidies, and consumer protection. These are all beneficial and important things, which means that Republicans will certainly be willing to cut them. Therefore, in reality, Medicaid will be in a fierce competition with other valuable projects that shouldn’t be cut right now but might be, because why not? (For their part, Republicans downplayed the effect these cuts would have on Medicaid.)

The nonprofit Families USA seems to have threaded the needle nicely here. In its statement, it said the proposal sends “a clear signal of the intent to make significant cuts to Medicaid that will devastate health benefits for millions of Americans across the country.”

What might actually happen. Or: understanding Medicaid cuts 101.

This is a fair assessment. Nobody knows how much Medicaid will be cut—but even small amounts could have major effects. Here’s an example: One way to save on spending would be to reduce federal contributions provided to states that expanded Medicaid under the Affordable Care Act. The way this works is that for every dollar a state spends on something covered by Medicaid expansion (like Medicaid being available for people earning up to 138% of the federal poverty level, rather than the lower cutoffs that preceded the ACA), the federal government contributes 90 cents (90%). That’s a lot! That’s a big reason why many states agreed to accept it. The trouble comes if Energy and Commerce decides to decrease that at all. Eight states have “trigger laws” that stipulate ending Medicaid expansion if federal matching ever drops below 90%. So a 1% drop in matching could save the federal government some money, but millions of people would suddenly lose their effin’ medical coverage. If the figure drops below 80%, a ninth state (Arizona) joins the pity party. One analysis found that this wound end Medicaid coverage for 3.7 million people.

Arizona seemed like an interesting case to me. Some ChatGPT math (just being honest, though I checked everything over) suggests that decreasing federal matching from 90% to 79% would save the federal government $480 million per year. But because of the trigger law, it would save the government more like $4 billion. That’s great if all you care about is saving money. But if you care about the affected people, it’s way more pain than the federal government “intended” with a cute little matching cut of just 11%. See, from the fed’s perspective, cutting the matching rate from 90% to 79% would be a little haircut that the states could sort out, either by cutting some services or paying for the difference. But in reality, the general government would be saving $4 billion, not $480 million—because 600,000 people will suddenly be without Medicaid due to the trigger law ending Medicaid expansion participation. This will not be appreciated by voters when they realize what happened.

There are other ways to cut Medicaid, and each of them has consequences. The Energy and Commerce Committee has its work cut out. Of course, they could always stuff all the cuts into the fiscal years 2030-2034, so that nobody feels any of this until later. Responsible!

Free Covid-19 tests still available. But not for long?

Yesterday, rumors flew that the federal government’s program to provide every US household four free Covid-19 tests was going to end suddenly. So if you haven’t ordered any free tests from the program since it was renewed on September 26th (thanks, J’Biden), you should order them now before the new administration gets around to cancelling the program (thanks, Trump). While the program did not in fact end abruptly yesterday as feared (possibly because word got out and there was pushback), it still could end at any time. I personally used the rumor as a reminder to order tests for my family. Here’s the link the Trump administration definitely does not want you to click right now to get your free rapid Covid-19 tests. 🙌

Grant recipients to Trump administration: “Show me the money!”

A judge directed the Trump administration to continue providing previously agreed upon grant support to recipients. In many cases, it’s not happening. This New York Times story describes some of the programs being affected. Worth reading.

Deferred resignation program back on, judge says.

A judge ruled that the Trump administration’s “Fork in the Road” program, which offers eight months of salary in exchange for resigning, may continue—but only because the plaintiffs lacked standing. However, the program’s deadline was not extended, meaning that, for now, the number of federal employees who took the offer, 75,000, won’t increase. That amounted to a significant failure compared to the administration’s goal of convincing 230,000 (10%) federal employees to accept the deal. And while 3% isn’t nothing, another New York Times story pointed out that around 146,000 federal workers retire or quit each year anyway!

So, at the moment, this all looks pretty foolish and, ironically, wasteful. Rather than convincing 10% of the workforce to leave in an attempt to save money by downsizing, the offer may well have ended up simply paying tens of thousands of people for months for work they were never going to do anyway. And rather than a slow turnover, those 75,000 workers will at some point (if this thing is honored) stop working right around the same day. This could mean sudden shortages in key jobs, like, oh, air traffic controllers.

Friends, I have no choice. I am deploying the 🤦🏻‍♂️emoji. Please recall, that this is all occurring under the auspices of the new “Department of Government Efficiency.” It’s almost funny. Almost. Almost.

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That’s what we know for now. If you have information about any of the unfolding stories we are following, please email me or find me on Signal.

Thanks for reading, sharing, speaking out, and supporting Inside Medicine! Please ask your questions in the comments and if you can’t upgrade due to financial considerations, just email me.

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