The Future of Medicaid: Balancing Budget Cuts and Healthcare Access

By Biridiana Candela ‘27

Medicaid is a cornerstone of the American healthcare system, providing essential health coverage to millions of low-income individuals, children, pregnant women, and people with disabilities. Established in 1965, the program operates as a federal-state partnership, with the federal government setting broad guidelines and states administering their own Medicaid programs. Over the years, Medicaid has undergone significant policy shifts, often reflecting the priorities of different administrations. Recently, more light has been shed on Medicaid and whether or not funding should be cut or not. 

As of 2025, under the Affordable Care Act (ACA), individuals who make less than $20,120 per year or families of four that make $40,000 per year qualify for Medicaid. Additionally, pregnant women, children, and people with disabilities also qualify. They must either be a US citizen, a qualified non-citizen legal resident with at least five years of residency, or a refugee. Medicaid covers hospital visits, doctor appointments, maternity, and newborn care. Medicaid covers much more than just basic care. You are able to apply for Medicaid through your state medicaid agency. Continuous eligibility has been debated, but generally, states will verify your annual income to determine ongoing eligibility. The Trump administration has embarked on a series of policy initiatives aimed at restructuring Medicaid. According to the House of Republicans, they are proposing 2.3 trillion dollars in Medicaid cuts from policy changes. These cuts will include decreasing the federal government financial contribution to the ACA expansion population, lowering the minimum federal matching rate for program spending, altering the funding structure for the District of Columbia, and eliminating final incentives for states that chose to expand Medicaid under the American Rescue Plan Act. The American Rescue Plan Act was passed in 2021 to help with COVID-19 recovery.  This act encouraged states to expand Medicaid by offering final incentives.  These changes will most likely force states to reduce the number of people on Medicaid, cover fewer benefits, and force physicians to cut rates on services. 

The implementing work requirements for Medicaid recipients will most likely be back on the agenda with the Trump Administration. During Donald Trump's first administration, 13 states received 1,115 waivers to place Medicaid coverage on work requirements and reporting requirements. These waivers allow states to test new approaches in Medicaid that differ from federal program rules. The only state to actually implement this was Arkansas with consequences of noncompliance. Consequences of noncompliance refer to failure or refusal to act in accordance with a set of laws. This usually leads to punishments. The waiver was discontinued in 2019 after a federal court ruled that the approval of work requirements was unlawful. In Arkansas, 18,000 individuals lost Medicaid coverage, largely due to challenges in consistently reporting their employment status or proving eligibility for an exemption. The Biden Administration later rescinded these approvals, or states chose to withdraw them, leaving Georgia as the only state currently enforcing a work requirement waiver following legal disputes over the Biden Administration's efforts to block it. Despite evidence indicating that most Medicaid recipients are either employed or face significant obstacles to working, several states continue to push for work requirement waivers. Supporters of work requirements argue that they encourage self-sufficiency and reduce dependence on government programs. On the other hand, we have states like California pushing for more Medicaid access. California pushed an ambitious plan to include medicaid coverage for Immigrants. California is now facing a 6.2 billion dollar deficit in its Medicaid program, which could prompt Democratic Governor Gavin Newsom and state lawmakers to reconsider health coverage for some of the 15 million residents who rely on the program, including immigrants. California is preparing for substantial financial challenges if Congressional Republicans proceed with plans to cut billions from Medicare, which could threaten coverage for millions of residents. The state currently provides healthcare to over a third of its 39 million people. While some states, such as California, are expanding Medicaid access, the federal government is moving in the opposite direction with proposals to cut funding. The estimate is that 36 million Americans would lose coverage under the work requirement. 

Medicaid has played a key role in reducing health disparities for low-income individuals nationwide, particularly for rural communities and people of color, including black, Latino, and indigenous populations, who face distant challenges in accessing healthcare. Reducing Medicaid would disproportionately affect these groups and worsen overall health outcomes. While current laws ensure broad access to essential services, proposed changes such as funding cuts, work requirements, and restrictions on eligibility could significantly alter the program's reach and effectiveness. Proponents of work requirements argue that such policies encourage an increase in workforce participation and ensure that limited resources are directed to those in most need. However, critics warn that these requirements may create unnecessary barriers for vulnerable populations who already face systemic obstacles to employment. The ongoing policy debates highlight the tension between cost-saving measures and the need to maintain comprehensive healthcare coverage for those who rely on it. As lawmakers continue to shape the future of Medicaid, the decisions they make will have lasting consequences on public health, economic stability, and health equity across the country.

Biridiana Candela is a sophomore majoring in political science.

Sources

Hinton, E., Raphael, J., & Diana, A. (2024, November 21). Medicaid Work Requirements: Current Waiver and Legislative Activity. KFF.  https://www.kff.org/medicaid/issue-brief/medicaid-work-requirements-current-waiver-and-legislative-activity/ 

Orris, A., & Zhang, E. (2025, March 17). Congressional Republicans Can’t Cut Medicaid by Hundreds of Billions Without Hurting People. Center on Budget and Policy Priorities.  https://www.cbpp.org/research/health/congressional-republicans-cant-cut-medicaid-by-hundreds-of-billions-without-hurting?utm_source 

Rudowitz, R., Burns, A., Hinton, E., & Tolbert, J. (2025, January 23). Medicaid: What to watch in 2025. KFF. https://www.kff.org/medicaid/issue-brief/medicaid-what-to-watch-in-2025/?utm_source