Projected Loss of Medicaid Coverage for Children Amid Significant Cuts

The Congressional Budget Office (CBO) has projected that nearly 3 million children will lose Medicaid coverage over the next decade, according to its February 2026 baseline projections. These estimates stem from the federal legislation known as the "One Big Beautiful Bill" (OBBB), which includes significant fiscal reductions to Medicaid and the Children's Health Insurance Program (CHIP).

OBBB legislation is poised to cut federal spending on Medicaid and CHIP by approximately $1.2 trillion through 2036. This marks one of the most significant reductions in the program's history. The CBO's projections highlight that a total of 9 million individuals might lose their Medicaid and CHIP coverage due to the enactment of the OBBB.

One pivotal aspect of the OBBB is the introduction of work requirements for certain Medicaid beneficiaries. This measure has led to disenrollment or loss of coverage for families unable to meet the documentation requirements. Additionally, the law cuts federal matching funds for state-directed payments and provider taxes, critically affecting states' ability to maintain adequate funding for providers serving children, such as pediatricians and children's hospitals.

Research in states like Arkansas and Georgia shows that work requirements often cause eligible individuals to lose coverage due to administrative hurdles. This impacts children not directly targeted by these policy changes. When parents lose their coverage, children frequently become disenrolled due to procedural barriers, even if they remain eligible. This pattern contributes significantly to the projected loss of Medicaid and CHIP coverage among children.

As Medicaid funding decreases, existing procedural issues, such as the "unwelcome mat" effect—where families may not re-enroll eligible children—are expected to worsen. Many children remain without coverage, despite eligibility, due to complex administrative processes.

While Medicaid faces significant cuts, projections also indicate significant growth in Medicare spending, particularly in drug costs, which are expected to rise substantially. The CBO estimates a considerable increase in Medicare Advantage expenditures, igniting debates around potential systemic reforms to address these rising costs. However, legislative action on these issues has lagged behind the urgency suggested by financial trends.

The OBBB's legislative strategy has sparked debate as it appears to shift financial burdens and potentially revoke coverage from economically vulnerable groups while implementing substantial permanent tax reductions. As the situation evolves, it remains critical for Congress to consider policy alternatives that could mitigate these adverse effects, such as revising Medicaid work requirements or addressing Medicare Advantage cost inefficiencies.