Funding Cuts for Medicare and Medicaid: Challenges Ahead
Federal funding reductions for Medicare and Medicaid, including Washington's Apple Health, are set to continue until 2027 and 2028, posing significant challenges for these programs. Individuals eligible for both programs are facing hurdles when enrolling in the Medicare Savings Program. Rural hospitals and skilled nursing facilities are experiencing financial strain from decreased Medicaid payments, forcing some towards closure.
Funding for critical services, such as cancer screenings and birth control under Medicaid, has been halted. The end of pandemic-era premium subsidies for ACA Exchange Plans has caused premiums to rise significantly, reducing health coverage for nearly 40,000 Washington residents. With these shifts, many low-income individuals are expected to face increased challenges accessing healthcare.
Impact on Medicaid and Medicare
By October, many legal immigrants and victims of trafficking will lose Medicaid coverage. Starting in January, more rigorous enforcement of Medicaid eligibility redetermination will occur, reducing expanded Medicaid coverage in states like Washington. These Medicare funding cuts complicate seniors' access to providers. By 2028, Medicaid will introduce patient copays and work requirements.
This scenario is likely to result in rising uncompensated emergency care costs, potentially leading to increased private insurance premiums and employer health plan contributions. Washington faces a $2.3 billion budget shortfall for the next biennium due to substantial state responsibility for Medicaid funding for over two million residents, as well as coverage for state employees and retirees.
Exploring Alternatives
States may consider reducing reliance on commercial insurance providers or managed care organizations (MCOs) to mitigate healthcare spending while improving service quality. Washington collaborates with five MCOs, including Centene's Coordinated Care, despite Centene's legal challenges for overbilling practices. These MCOs have high administrative costs and denial rates for prior authorizations, according to the Office of Inspector General.
Connecticut's 2012 shift from MCOs to non-risk-bearing administrative service organizations for Medicaid management serves as a precedent. This move achieved significant cost savings and improved service coordination, as noted by Physicians for a National Health Program in a 2025 report. In Washington, discussions about adopting similar strategies continue, with initiatives like Health Care for All-Washington engaging policymakers to explore such models, despite the significant resource demands.