Medicaid Cuts and Work Requirements Threaten Coverage for Millions Nationwide

Federal cuts to Medicaid under the recent tax legislation could lead to approximately 310,000 Pennsylvanians losing Medicaid coverage over the next decade. These cuts affect all states, with programs such as Pennsylvania's Medical Assistance and HealthChoices funded largely through federal Medicaid dollars.

Across the United States, over 78 million people are enrolled in Medicaid, often under state-specific branded names like HUSKY Health in Connecticut and BadgerCare Plus in Wisconsin. While these unique program names aim to reduce stigma and differentiate state rules, they also obscure Medicaid's federal connection, causing many beneficiaries to be unaware of their Medicaid status and the implications of federal changes. Managed care organizations administer Medicaid in 40 states plus D.C., covering about 75% of beneficiaries, further complicating beneficiary awareness as many recognize their insurer's brand but not Medicaid itself. The tax bill signed into law in 2023 includes nearly $1 trillion in cuts to federal healthcare funding over 10 years, with Medicaid slated for the largest reductions starting in 2027. Additionally, the new legislation imposes biannual work reporting requirements for adults aged 19 to 64 to confirm they meet criteria such as working 80 hours per month or being in school or community service. Prior state-level work requirements have led to significant coverage losses without noticeable employment gains. These administrative burdens and lack of beneficiary awareness could result in millions losing coverage nationwide, with many unable to find alternative insurance due to their low-income status. Medicaid remains primarily funded by the federal government, which pays about 69% of total costs, with states covering the remainder.

The pending reductions are expected to shift more financial responsibility to states and place vulnerable populations at risk of becoming uninsured. Researchers highlight the challenges beneficiaries face in understanding and complying with program requirements, which could exacerbate coverage gaps and increase uninsured rates in low-income communities. Overall, the complexity of Medicaid program branding, coupled with federal funding cuts and new eligibility verification policies, presents significant challenges for state Medicaid programs and the millions of Americans they serve.