U.S. House Passes Drastic Cuts to Medicaid

Heather Braum | May 27, 2025

After months of discussion, and under the sneaky guise of late nights, twisted language, and artificial, fast-paced legislation, the U.S. House quickly passed its budget bill last week that includes tighter restrictions on and cuts to Medicaid and the Affordable Care Act marketplaces. With estimates of at least $800 billion across 10 years, these cuts amount to the largest decrease in the program’s budget in its 60-year history.

Despite political talking points assuring Medicaid services won’t be negatively impacted, the proposed cuts to Medicaid and tighter restrictions will result in:

1. Loss of health insurance coverage for eligible populations, including medically complex kids;
2. Forced cuts to the state budget, both in Medicaid or in other critical state-funded services;
3. Threats to optional Medicaid services (like prescription drug coverage and home and community-based services [HCBS waivers]);
4. An increased number of people uninsured and uncompensated care costs; and
5. Risks to provider reimbursement rates, resulting in provider and hospital closures.

The bill also fails to continue the enhanced premium tax credits that help make insurance plans on the federal marketplace more affordable. Refusing to extend these credits means thousands of Kansans will no longer be able to afford insurance coverage on the marketplace. With participation in the state having significantly grown over the past 10 years, according to a Kansas Health Institute analysis, this could prove devastating to thousands.

What Parts of Medicaid Are Impacted?

National groups have broken out the changes at a high level (Families USA) and at a detailed level (KFF). While many of the changes particularly target the Medicaid expansion population and other specific populations, these changes will still harm Kansans enrolled in Medicaid and CHIP (in Kansas, known as KanCare).

Here are three key changes that will immediately and directly impact Kansans.

1. Freezing Provider Taxes

Longstanding practice is to allow states to determine how they raise their state’s share of paying for Medicaid costs. States fund Medicaid through their general fund and through other sources, including taxes on health providers and organizations like hospitals and nursing homes. Taxing health providers allows the state to fund more of the Medicaid program through non-state general fund sources, and results in drawing down more federal dollars.

Generally, the congressional proposal restricts state use of provider taxes and undermines the state’s Medicaid financing options. Under one provision, states won’t be able to increase current taxes on nursing homes or hospitals or add new ones.

Impact. If Congress is successful in restricting provider tax options, the Kansas Legislature will no longer have the same flexibilities available to choose how the state raises money to fund the state share of Medicaid and draw down additional federal dollars.

If fewer federal dollars can be brought in, the state will have to reduce its funding, even as health care costs continue to increase. In this scenario, cuts to the program or other state services will be required.

One model suggests that if this proposal becomes law, hospitals and other health care providers will receive less funding for Medicaid and be forced to cut services.

Also, already fragile health care entities (especially in rural areas) will be at greater risk of closing. If hospitals and health care providers close, everyone’s health care access is impacted in that area, regardless of insurance type.

2. Harmful Targeting of Medicaid Expansion

Currently, states that expand Medicaid receive a higher federal match rate (90% federal funds). In 2021, Congress passed a 5% added incentive, known as an enhanced match rate, to states who had yet to expand Medicaid.

The congressional proposal would eliminate this enhanced match rate. It also implements work requirements (which evidence shows don’t work) as soon as next year, requires eligibility redetermination every six months for at least the expansion population, adds copays for some, and more.

Impact. This proposal burdens states that have already expanded Medicaid in a multitude of ways. Adding requirements that increase paperwork for enrollees results in supposed cost savings – but that’s because people lose their coverage due to administrative issues and they may give up reapplying rather than cycling through the hoops again.

States will be required to spend more money to review people’s eligibility and fewer eligible people will sign up for coverage because they are unable to navigate the complex system.

If Kansas still wants to expand Medicaid – which most Kansans support – the congressional proposals will force the state to fund expansion in different ways than other states have been able to. New federal rules will add a multitude of burdens on those eligible for expansion, including work reporting requirements that have already failed in Georgia and Arkansas and more frequent eligibility reviews.

Medicaid expansion’s future possibility in Kansas is threatened by the congressional proposal. And people in the coverage gap – including thousands of parents – will continue to lack access to affordable health care coverage.

3. Pausing Key Federal Administrative Rule

In the spring of 2024, the previous federal administration approved a final version of the “eligibility and enrollment rule.”

This federal rule contains several provisions that protect Medicaid and CHIP enrollees from burdensome paperwork requirements at enrollment and renewal times. More enrollees keep their coverage as a result. Instead of eligible people churning on and off Medicaid and CHIP due to paperwork errors or system burdens, this rule instructs states to make changes to be more friendly to enrollees instead of putting up additional barriers.

Congress proposes to pause the implementation of this rule for 10 years.

Impact. Pausing the eligibility and enrollment rule will result in coverage loss from all population types that receive Medicaid and CHIP coverage – including kids, medically complex kids, pregnant women, and extremely low-income parents.

Some say that people should expect to jump through more hoops to get coverage like Medicaid and CHIP. In reality, policies that require additional barriers to access Medicaid and CHIP are a backdoor way to create supposed savings by eligible people losing coverage.

Health Care System Impacts – Especially on Maternal and Infant Care

 Health care costs don’t go away because people lose coverage. The costs continue elsewhere, particularly burdening local communities. The health care system – already fragile and strapped for funding, even as health care costs increase – will be forced to figure out how to absorb lower reimbursement amounts and higher rates of uncompensated care as more people will be uninsured.

Ultimately, these increased costs end up impacting everyone through increased commercial insurance rates and closed hospitals. Hospital closures threaten care for everyone, particularly for pregnant, postpartum, and infant care.

The preventative care and interventions for kids’ health care – especially for medically complex kids and those with developmental delays – will be weakened.

If medically complex kids lose access to optional HCBS waivers, which allow kids to receive care and services at home, they will likely be kept in institutions and hospitals that cost much more than home-based care.

If parents have more hoops to jump through to apply or renew health care coverage for their kids, their eligible kids lose coverage because of paperwork burdens, fewer providers accept Medicaid due to state-cut reimbursement rates, or providers close their businesses, parents will be less likely to pursue preventative care and interventions for their kids.

There’s Still Time for Congress to Back Down from Massive Cuts

While this legislation passed the U.S. House, there is still plenty of time to influence Senate members as they craft their version of cuts. Share Medicaid’s impact, like the stories captured in the Alliance for a Healthy Kansas’ new digital booklet, “What Medicaid Means to Kansas.”

But no matter how Congress attempts to frame this proposal – or future versions of it – the cuts and changes to Medicaid will harm all Kansans, regardless of insurance type.

Thousands of vulnerable Kansans will lose coverage, Medicaid expansion will likely permanently stall, and the state’s health care system will be destabilized.

Kansas lawmakers will be forced to cut other critical areas in the state budget to pay for required Medicaid services, while cutting optional Medicaid services to respond to the funding deficits, including HCBS waivers.

That should be enough to alarm everyone.

Yet Congress seems determined to push ahead with devastating Medicaid cuts to fund extreme tax cuts for the wealthiest. With the reconciliation bill, Congress is deliberately choosing to take health insurance coverage away from millions of Americans, and their harmful decisions will ultimately impact all of us.

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