Impact of Proposed Medicaid Cuts on Iowa's Healthcare and Economy

A report by an independent healthcare research firm outlines the potential impacts on Iowa if Congress implements substantial Medicaid funding cuts. Proposed reductions amounting to $880 billion could significantly affect Iowa's Medicaid program, Iowa Health Link, which covers 673,000 residents, including 38% of children and about half of nursing home residents in the state.

With Medicaid serving as a primary source of health coverage for low-income individuals and families, cuts could reduce access to essential medical services for vulnerable populations. Economically, the report forecasts serious repercussions: nationwide,

Medicaid reductions could lead to nearly 900,000 job losses and a $95 billion drop in state GDP. For Iowa specifically, the effects could result in $865 million less economic activity, over 33,000 lost jobs, and a $177 million decrease in state and local tax revenues. Currently, the federal government covers 90% of Medicaid costs, and states cover the remainder. However, proposed changes might alter federal matching rates, especially for the Medicaid expansion population of about 250,000 adults in Iowa, and introduce work requirements affecting eligibility. Iowa has requested approval to implement a work requirement waiver mandating at least 100 work hours monthly for certain Medicaid-eligible adults, intended to incentivize employment among able-bodied beneficiaries under age 65.

Experts note that imposed cuts and eligibility restrictions will present implementation challenges, particularly in rural areas already experiencing healthcare workforce shortages and financially strained hospitals. Medicaid is characterized as a critical economic driver in states, underpinning both the health sector workforce and broader economic health.