MW Millions of Americans may lose health insurance under GOP tax plan. Here's who will be affected most.

By Chris Matthews

The plan would represent the largest cut to Medicaid ever

House Republicans are advancing a budget bill this week that could impose the most significant cuts to Medicaid in U.S. history.

The Congressional Budget Office - legislators' official scorekeeper on the effects of legislation - estimates the bill would cut federal spending on healthcare by more than $700 billion over a decade, or what Democratic Sen. Ron Wyden of Oregon called Monday "the largest Medicaid cut in history."

The proposed changes include adding new work requirements, new cost-sharing fees for Medicaid enrollees and much stricter and more frequent eligibility checks, all of which would fundamentally reshape the program relied on by 78 million Americans.

Republicans are framing these reforms as cutting wasteful spending that protects the Medicaid program for those who need it most.

The bill "eliminates waste, fraud and abuse in Medicaid that jeopardizes care for millions of women, children, people with disabilities and elderly Americans," said Republican House Energy and Commerce Committee Chairman Brett Guthrie of Kentucky during a Tuesday hearing on the plan.

Here's who the reforms, if passed in their current form, would hit the hardest:

Low-income, working-age adults

The bill mandates that starting in 2029, Medicaid recipients aged 19-64 must work or engage in approved activities for at least 80 hours a month. Failure to meet the requirement, or properly prove to the state that you've met it, would result in the loss of health insurance.

The Congressional Budget Office estimates that the bill could lead to at least 8.6 million Americans losing health coverage, with the majority expected to lose Medicaid. Most affected would be low-income adults without dependents, earning a bit more than a poverty income of $15,650 for a single person.

Not all of these losses are from Medicaid. Some of those would come from Americans who would lose access to subsidized insurance on the Affordable Care Act marketplaces, as the bill also rolls back enhanced tax credits for those plans.

Bobby Kogan, former director of the Office of Management and Budget under President Joe Biden, called the measure a "work-reporting requirement" rather than a true work requirement.

"They've instituted so much red tape that enrolling becomes impossible for many," Kogan told MarketWatch. "Most people getting kicked off are actually working."

He pointed to a 2018 pilot in Arkansas - granted under the first Trump administration - which led to more than 18,000 people getting disenrolled over just four months before a federal court halted the program in 2019. A follow-up study by the Urban Institute found no increase in employment as a result of the policy.

Meanwhile, the bill also tightens rules for older Americans applying for Medicaid long-term care. A new provision would cap the amount of home equity that applicants can exclude from the asset test at $1 million with no future inflation adjustment.

That limit will shrink in real terms over time and could disqualify residents in high-cost housing markets, like parts of California and New York.

The bill also imposes mandatory cost-sharing on adults covered under Medicaid. Beginning in 2028, states would be required to charge enrollees for outpatient services, up to $35 per visit, capped at 5% of monthly or quarterly household income.

States with high Medicaid enrollment

States with the highest Medicaid enrollment will be hit the hardest if these reforms become law, and could lead to states raising taxes or cutting other government services to make up for changes at the federal level.

Here's a list of the top 10 states by per-capita Medicaid enrollment, according to the Medicaid and CHIP Payment and Access Commission, as of 2024:

   State          Percent of population enrolled in Medicaid 
   New Mexico     42% 
   Kentucky       39% 
   New York       39% 
   California     38% 
   Alaska         37% 
   Oregon         35% 
   Louisiana      34% 
   Arkansas       34% 
   Indiana        33% 
   Massachusetts  32% 

Other states that would be hit hard by the GOP bill include the 14 states that use their own funds to give healthcare to children who are undocumented immigrants. Seven of those states also offer healthcare to undocumented adult immigrants.

These states include California, Oregon, Washington, Utah, Colorado, Minnesota, Illinois, New York, Vermont, Connecticut, New Jersey, Rhode Island, Massachusetts and Maine.

The bill would cut off significant funding to these states unless they revoke policies that help to insure undocumented immigrants.

"California is the most exposed state to this policy change, because it currently spends about $9.5 billion [annually] on covering the undocumented," Spencer Perlman, director of healthcare policy research wrote in a Monday client note.

Hospitals and insurance companies

The financial pain could also extend to institutions that rely on Medicaid dollars, including hospitals that treat large numbers of low-income patients and insurance companies that run Medicaid health plans in dozens of states.

Hospitals that serve poor and rural areas in high-enrollment states receive extra funding to help cover the gap between what Medicaid pays and what care actually costs. These dollars often come through supplemental payments and provider tax arrangements that allow states to draw more federal matching funds.

The bill would sharply restrict both mechanisms by barring states from paying Medicaid providers more than Medicare rates unless they can justify the difference. It also tightens rules on provider taxes, or fees paid by hospitals to fund the state's share of Medicaid, that would mean less federal money supporting healthcare providers.

Hospital companies that could be impacted by these changes include HCA Healthcare Inc. $(HCA)$, Tenet Healthcare Corp. $(THC)$ and Universal Health Services Inc. $(UHS)$.

Insurance companies that manage Medicaid benefits on behalf of states could also be hit by a likely decline in the Medicaid population by millions. The big managed-care organizations that could be threatened include Centene Corp. $(CNC)$, Molina Healthcare Inc. $(MOH.AU)$ and Elevance Health Inc. (ELV).

"We anticipate fierce opposition to these reforms," including changes to provider taxes and supplemental payments," Veda's Perlman said, adding that "states and hospitals were anticipating" much less aggressive reforms, and that they may not make into a final bill.

Perlman said his "belief is that the Senate will not support these reforms."

-Chris Matthews

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May 13, 2025 17:15 ET (21:15 GMT)

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