Medicaid Cuts Would Increase Medicare Costs and Impact Access to Care

Proposals to significantly cut Medicaid funding are likely to increase costs in the Medicare program, impacting taxpayers and government spending. Medicaid serves as a critical complement to Medicare by covering expenses Medicare does not, such as premiums, co-pays, and long-term care services, which helps make Medicare affordable and prevents more expensive medical interventions down the line. About 12.2 million Medicare beneficiaries also rely on Medicaid to cover these essential costs, preventing delays in care and avoiding costly hospitalizations and emergency visits.

Medicaid is the largest payer for long-term nursing facility care among Medicare recipients and supports home- and community-based services that help seniors stay healthy and independent. Without Medicaid’s support, Medicare spending would rise due to unmanaged chronic conditions and increased use of intensive healthcare services. Dual-eligible individuals, who are enrolled in both Medicare and Medicaid, account for a disproportionate share of Medicare expenditures because of their more complex health needs.

In addition to supporting those already on Medicare, Medicaid funding helps manage health conditions before individuals become Medicare-eligible, reducing future healthcare costs for the federal government. Cuts to Medicaid could lead to poorer health outcomes at the time of Medicare enrollment, increasing the federal government’s financial burden. Furthermore, Medicaid supports healthcare providers, including hospitals and clinics, in both urban and rural areas, maintaining provider networks and access for all patients, including those with employer-based insurance.

Proposals such as the House budget blueprint that suggest cutting $880 billion from Medicaid over ten years would not reduce overall government spending but would instead shift costs to the Medicare program and the broader healthcare system. Such cuts could weaken access to care, increase wait times, reduce the availability of specialists, and jeopardize healthcare jobs. Increasing recognition among policymakers, including some Republicans, underscores the fiscal and healthcare system risks tied to Medicaid reductions. The data and analysis signal that Medicaid cuts equate to future cost increases in Medicare and other services, making them a fiscal risk rather than a saving.