Implications of Proposed Medicaid Cuts on Health Outcomes and Healthcare Costs

Republican proposals to reduce federal health care spending include significant cuts to Medicaid, a program providing insurance coverage to 82 million Americans, chiefly those with low income or disabilities. Medicaid is a critical funder of long-term care services, especially for older adults and disabled individuals, covering care in homes, community settings, and nursing facilities. Although states must meet federal Medicaid guidelines, 41 have expanded eligibility under the Affordable Care Act to cover more people. Analysis by gerontology researchers highlights the potential adverse effects of Medicaid cuts on access to care and overall health outcomes.

Medicaid jointly funded by federal and state governments is under scrutiny as recent GOP strategies focus on reducing the federal reimbursement rates to states for Medicaid spending. Earlier attempts to control costs through work requirements and fraud reduction yielded minimal savings. Budget cuts historically result in reduced payments to providers and restrictions on eligibility and benefits, disproportionately impacting home- and community-based services, which are more cost-effective compared to nursing home care.

Research following individuals who lost Medicaid at age 65, when income eligibility decreases, reveals deteriorating health outcomes over a decade. Those without Medicaid had more chronic conditions, reduced functional independence, higher rates of depression, and poorer overall health compared to counterparts who retained coverage. These individuals also experienced increased hospitalizations and outpatient surgeries, leading to elevated system-wide health care costs.

Medicare, which typically becomes primary insurer at 65, offers limited coverage and requires premiums and out-of-pocket payments for many services. Loss of Medicaid leads to decreased primary care visits despite Medicare enrollment, suggesting that cost barriers deter routine care, resulting in greater use of expensive hospital services. Supplemental insurance coverage varies among Medicare recipients; those losing Medicaid often cannot afford additional plans, increasing financial strain and health risks.

Alarmingly, the loss of Medicaid coverage corresponds with a 14% increased mortality risk within 10 years, underscoring the vital role Medicaid plays in supporting the health of aging populations. Currently, about 12 million Americans are dual-enrolled in Medicare and Medicaid, who may face substantial impacts if Medicaid funding is reduced through federal spending cuts.

This evidence indicates that Medicaid cuts could lead to worse health outcomes for vulnerable populations, greater reliance on costly acute care services, and increased long-term costs for federal and state governments. The program’s role in supporting affordable, accessible care for low-income older adults and disabled individuals highlights the challenges policymakers face when balancing budget goals against public health consequences.