Trump may again seek cuts to Medicaid. Here's who would be affected.

MW Trump may again seek cuts to Medicaid. Here's who would be affected.

By Chris Matthews

The program covers more than 30% of the population in 11 states

President-elect Donald Trump will enter the White House in January on a wave of conservative enthusiasm that his victory has given Republicans a mandate to enact significant budget cuts to help offset the costs of extending tax cuts they enacted in 2017.

Trump announced Tuesday night that Tesla Chief Executive Elon Musk and former Republican presidential candidate Vivek Ramaswamy will lead his administration's efforts to identify wasteful federal spending and recommend ways to restructure the government to save taxpayers money.

Trump may find success, where so many before him have failed, finding significant levels of waste and fraud in the budget to cut, but experts say real spending reform will have to come in the form of cuts to Social Security and government health-insurance programs like Medicare and Medicaid.

It's Medicaid - which largely provides health insurance for low-income Americans - that's most likely to be cut, according to Spencer Perlman, director of health care policy research at Veda Partners.

"Many Republican lawmakers and conservative thought leaders are increasingly concerned by the substantial growth in Medicaid enrollment and federal spending that has occurred over the last 15 years, driven primarily by the coverage expansion authorized by the Affordable Care Act," he wrote in a Wednesday note to clients.

Tobin Marcus, policy analyst at Wolfe Research and former Obama administration official, concurred in a Friday note.

"If there's any serious effort by [Trump and congressional Republicans] to cut spending, we think that has to mean Medicaid cuts," he wrote.

Perelman said the GOP will consider reforms including, adding a work requirement for able-bodied adults, capping federal spending on the program, cutting the ACA expansion of the program and other rules changes.

Medicaid is now the largest government health-insurance program, with roughly 72 million beneficiaries compared to nearly 68 million Americans enrolled in Medicare, the health insurance program that serves senior citizens.

It's the third-largest federal program by spending, however, trailing Social Security and Medicare.

Trump's actions in his first term indicate that he will likely target Medicaid for cuts, according to Robert Greenstein, a visiting fellow at Brookings.

"The Trump administration budgets were distinguished by their proposals to lower taxes and to scale back or end various social programs and other government spending," he wrote in a recent report, adding that his proposals primarily sought to cut "programs for people with low or modest incomes rather than universal social insurance programs."

Trump proposed cutting the federal food stamp program, eliminating the Medicaid expansion that was passed as part of the ACA, and other programs serving low-income Americans.

Republicans are on the lookout for ways to save money to finance the extension of the Trump 2017 tax cuts, estimated to cost almost $5 trillion over ten years.

Meanwhile, the major force driving federal budget deficits today is the costs of entitlement programs. Without raising taxes or cutting benefits, these programs will explode the national debt and lead to interest costs totaling more than 8% of the total output of the U.S. economy by 2050.

Cuts to Medicaid, however, could be very costly for low-income Americans.

Medicaid covered more than 40% of births in the U.S. in 2021, according to government statistics.

It also covers, along with the Children's Health Insurance Program, more than 30% of the population in 11 states, including Republican strongholds like Louisiana, Arkansas, Kentucky, West Virginia, Oklahoma and Alaska.

Investors have taken notice, given the sharp selloff over the past week of shares of what Evercore ISI analyst Julian Emanuel dubbed "ACA-leveraged health insurers," and other healthcare companies that receive much of their revenue through Medicaid and other government programs.

Companies including Centene Corp. $(CNC)$ , which bills itself as the nation's largest Medicaid managed-care organization and Lantheus Holdings Inc. $(LNTH)$ are down 7.2% and 15.2% respectively over the past week.

Other major insurers and healthcare companies have also taken a hit since the election, with Molina Healthcare Inc. $(MOH.AU)$ down 9.4%, Elevance Health Inc. (ELV) falling 4.9%, and United Healthcare Inc. $(UNH)$ declining by 3.8%, according to FactSet.

-Chris Matthews

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November 15, 2024 10:53 ET (15:53 GMT)

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