Name: How Medicaid Actually Works—And How Trump Can Cut Funding | WSJ
Uploaded: 2025-04-16T02:52:41.000Z
Duration: 6 min 33 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

This is a chart showing the growth of what is now the largest health insurance program in America.

Adverbs of degree

Medicaid covered nearly 23 million people in 1990.

Last year, more than 70 million depended on the program.

The cost to fund Medicaid has also grown.

In 2023, Medicaid cost taxpayers more than $870 billion, while President Trump has promised to love and cherish Social Security, Medicare, Medicaid.

His budget blueprint calls for $880 billion in cuts from the committee that oversees Medicaid over the next decade.

Republicans have repeatedly said that those cuts would be achieved by rooting out waste, fraud, and abuse.

There's no number that we could put to fraud in the program, but it's highly unlikely to be $880 billion.

Here are some options Republicans are exploring to cut Medicaid spending, like reducing waste and fraud, reducing federal matching dollars, and adding work requirements.

Before we dive into that, let's first explain what the program is.

Medicaid provides health insurance coverage for low-income parents, children, and pregnant women, and is also available to people with disabilities and elderly people with long-term care needs.

Robin Rudowitz is the director of the program on Medicaid at KFF, a nonpartisan health policy nonprofit.

It's a pretty complex program, and it has a lot of different roles in the health care system.

She said the program is complicated because it is jointly funded by the federal government and the states, which administer it by different names.

Each state gets federal matching dollars from about 50 to 76 percent of the costs in a funding formula tied to the state's per capita income.

So that means the federal government pays a larger share of traditional Medicaid in states with a lower per capita income.

In 2023, the federal government paid for 69 percent of the program, or $606 billion, while states paid the rest.

So what does Trump say they're looking to cut?

The White House has cited the billions of dollars in improper payments made to states or providers.

In 2024, the Centers for Medicare and Medicaid Services reported an improper payment rate of just over 5 percent, or $31 billion, a decrease from the 8.5 percent a year earlier.

CMS noted that 79 percent of those payments were the result of insufficient documentation, usually because a state or provider missed an administrative step.

No one is against addressing fraud, waste, and abuse in the program.

Fixing that problem will likely require funding.

In 2010, Obamacare came into the picture.

Everybody should have some basic security when it comes to their health care.

Because of the Affordable Care Act, known as the ACA, states have the option to expand Medicaid to adults making up to 138 percent of the federal poverty line, including single, able-bodied adults.

Since 2010, 40 states and D.C. have expanded Medicaid.

Under the ACA, federal dollars covered 100 percent, later phased down to 90 percent, of these new enrollees.

You can see that uptick in enrollment here.

That's about 20 million people in this expansion group.

Congressman Chip Roy, who favors big spending cuts, says the enhanced federal matching rate for Medicaid expansion should be reduced.

Why are we paying more for the expansion population, which tend to be more of the able-bodied, particularly single population, than it is the most vulnerable?

Why would we pay more federal match for that?

Because they wanted to goose the Obamacare expansion and to show that this is working.

Reducing the matching rate for expansion enrollees is estimated to save the federal government $561 billion over 10 years. 21 states that expanded Medicaid also voted for President Trump in the 2024 election, making this option difficult for Republican leaders of those states.

Kristi Putnam, who oversees the Medicaid program in Arkansas, wants enrollees to have a job, attend school, or be working towards both.

This is not intended to be a punitive measure.

It is intended to be a compassionate approach to working community engagement.

Arkansas was the first state in the U.S. to have work requirements for Medicaid in 2018.

You may need to report 80 hours of activity each month to keep your health insurance. 18,000 people in Arkansas lost coverage in the first five months.

A federal judge shut down Arkansas' work requirement program in 2019, citing the number of recipients who lost coverage.

In January, Arkansas' Republican Governor Sarah Huckabee Sanders announced she is submitting a new and different work requirements program, which still needs approval from the Trump administration.

The state estimates that nearly 90,000 people will be affected.

The new program will require Medicaid enrollees aged 19 to 64 to be on track with a personal development plan in order to keep their benefits.

And we're going to use some new state technology that we've just implemented to be able to do some data matching so that people won't have to do the reporting that was done in 2018.

It's meant to apply broadly to the expansion population, to have them get on a pathway through education or skills training or employment with an opportunity to advance in that employment.

A KFF analysis of census data found that about 64% of Medicaid expansion enrollees were already working.

Many individuals who are not working say that they're not working because they either have an illness or a disability.

They have caretaking responsibilities or they might be in school.

Under the Arkansas proposal, if the enrollee does not participate and gets what they call not on track, their Medicaid insurance could be suspended.

Secretary Putnam says she wants Arkansas to be a model for the future of Medicaid.

We're hopeful that actually at the federal level that this working community engagement becomes part of what we do in the Medicaid program.

An analysis of a bill that passed the House in 2023 that would mandate work requirements for all states estimated it would reduce federal spending by $109 billion over a decade.

And about 1.5 million adults would lose coverage.

Medicaid has become a key piece of the American health care system.

Even if Congress passes cuts to Medicaid, it's the states that have to decide how to implement them.

States really have to have these hard decisions about what to do in the face of less federal dollars.

You can either cut coverage, cut access and benefits, or cut provider reimbursement.