Medicaid Cuts = Healthcare Crisis: Why Every American Should Be Concerned
Understanding Medicaid and Its Role in Long-Term Care
Medicaid is a critical safety net for millions of Americans, providing health services and supports to low-income individuals, older adults, and people with disabilities. Jointly funded by federal and state governments, Medicaid is an essential asset to offer cost effective, accessible services for some of the nation’s most vulnerable populations. It includes of long-term services and supports (LTSS), home and community-based services (HCBS), skilled nursing care, and personal assistance for individuals who require help with daily activities. When an older relative or neighbor needs help running errands, getting to appointments, cleaning their home, getting dressed, taking essential medications, Medicaid waiver programs offer services paid for jointly by states and the federal government. This helps people with physical disabilities, intellectual and developmental disabilities, and older adults age in place, safely, and ensure independence is optimized.
To be eligible for services and qualify for Medicaid, individuals must meet specific income and asset requirements, which vary by state. Since there are eligibility requirements,
Medicaid is not considered an entitlement program; that is, just because you meet qualifying factors does not mean you are entitled to receive services since there a funding and access limits determined at a state level. Even if you’re eligible, you may be put on a waiting list as many states have limited service availability due to limited program funding. Many of those who rely on Medicaid are among the most vulnerable in our society—older adults that need assistance or who have complex care needs, individuals with disabilities, and those in low-wage jobs who do not receive employer-sponsored health insurance. The program also plays a vital role in sustaining the direct care workforce, a sector overwhelmingly comprised of women and people of color, who provide essential care but often earn low wages with minimal career advancement opportunities.
The Trump Administration’s Federal Funding Freeze:
What Happened?
On January 29, 2025, the Trump Administration attempted to implement a temporary freeze on federal grants, loans, and financial assistance programs, a move that sparked immediate legal challenges and widespread concern among Medicaid stakeholders. Although a federal judge temporarily halted the freeze, the incident highlighted the administration’s broader policy agenda—one that includes long-term reductions in Medicaid funding.
A White House memo later clarified that Medicaid would not be directly affected by the temporary freeze. However, the uncertainty surrounding the decision underscored the Republican-led push for permanent Medicaid spending cuts, which would have far-reaching consequences for millions of Americans who rely on the program for essential care.
Medicaid Cuts in 2025:
A Target for Spending Reductions
Congressional Republicans have identified Medicaid as a major target for federal spending reductions, with proposals aiming to limit the federal government’s financial obligation. These proposed changes include (LeadingAge):
Per capita caps on Medicaid spending ($918 billion in projected federal savings)
Equalizing Medicaid payments for expansion populations ($690 billion in projected savings)
Restricting Medicaid provider taxes ($175 billion in projected savings)
Lowering the Federal Medical Assistance Percentage (FMAP) floor ($387 billion in projected savings)
Imposing Medicaid work requirements ($120 billion in projected savings)
If enacted, these cuts would fundamentally alter Medicaid financing, forcing states to either increase tax revenues to fill the gap, reduce covered services, or lower reimbursement rates to providers—all of which would negatively impact access to and the cost of care.
The Impact on Vulnerable Populations:
Adverse Effects on Population Health, Healthcare Quality, Access, and Cost
The consequences of these Medicaid cuts extend beyond individual coverage losses; they pose significant threats to public health, the quality of care, and overall healthcare costs. Here’s how:
Deteriorating Population Health: Reduced Medicaid funding would lead to lower utilization of preventive services, such as screenings, vaccinations, and early interventions. This increases the likelihood of chronic conditions worsening due to delayed care, leading to more costly emergency room visits and hospitalizations.
Decline in Healthcare Quality: With fewer resources, providers may be forced to reduce staffing levels, limit available services, or close entirely, particularly in rural and underserved areas. A decline in provider participation in Medicaid could result in longer wait times and decreased access to specialists, ultimately reducing the quality of care patients receive.
Reduced Access to Essential Services: Medicaid is a primary payer for long-term services and supports, including home-based care and nursing facilities. Funding cuts would force states to scale back these services, potentially increasing institutionalization rates and placing greater burdens on unpaid family caregivers. Exacerbating the burden on family caregivers will affect all markets and industries as employees are forced to leave the workforce to care for loved ones in need full time.
Higher Healthcare Costs: While Medicaid cuts may reduce immediate federal expenditures, they will likely increase overall healthcare spending. When people lose Medicaid coverage, they often delay necessary treatment, resulting in costly emergency care and hospital admissions that could have been avoided with earlier intervention. Additionally, uncompensated care costs will rise, straining hospitals and state healthcare budgets.
By reducing Medicaid funding, these policy changes will not only impact beneficiaries but also reverberate throughout the entire healthcare system, ultimately leading to higher costs and worsening health outcomes for millions of Americans.
The proposed Medicaid cuts would disproportionately harm older adults, people with disabilities, and low-income families who depend on Medicaid for health care and long-term services. Key risks include:
Loss of Coverage: Reducing federal contributions to Medicaid would likely lead to a decrease in the number of people eligible for coverage. For example, Texas is projected to see a reduction of over 350,000 Medicaid enrollees, while California could face a loss of approximately 500,000 beneficiaries, according to recent estimates.
Reduced Access to Services: Cuts to Medicaid funding would result in fewer HCBS options, forcing more individuals into expensive institutional care settings that are already overburdened and understaffed.
Higher Out-of-Pocket Costs: As states struggle to compensate for federal funding shortfalls, Medicaid beneficiaries may face higher copayments, premiums, or reduced covered benefits.
Work Requirements: Proposals to impose Medicaid work requirements have been shown to result in significant coverage losses, as seen in Arkansas and Georgia, where thousands of enrollees lost their coverage due to bureaucratic hurdles rather than an actual failure to work.
The Direct Care Workforce:
A Crisis in the Making
The direct care workforce—comprised of home health aides, personal care attendants, and nursing assistants—relies heavily on Medicaid funding. Nearly half of all direct care workers are employed by Medicaid-funded providers, and many qualify for Medicaid themselves due to low wages. Proposed cuts would exacerbate an already dire workforce crisis in several ways:
Lower Reimbursement Rates: State Medicaid programs would be forced to cut provider payments, making it harder for agencies to offer competitive wages and meaningful careers advancement opportunities.
Reduced Workforce Supply: Many direct care workers would be pushed out of the industry due to stagnant wages, leading to increased turnover and workforce shortages. With increased turnover comes increased interruptions to care for vulnerable populations which negatively affects access to essential care and quality of services. When there is a revolving door of caregivers, the opportunity to learn and grow with a care partner are removed. This requires that each time you receive services you will start from scratch with a new caregiver rather than the person who knows your needs, preferences, and strengths.
Higher Caregiver Burdens: As the paid workforce diminishes, family caregivers will be forced to take on even greater responsibilities without adequate support removing themselves from the workforce.
The Bigger Picture:
What Comes Next?
The Trump Administration’s recent funding freeze, coupled with Congressional efforts to reduce Medicaid spending, signals an era of increased uncertainty for Medicaid beneficiaries and providers. Moving forward, key questions remain:
Will Congress pass significant Medicaid cuts through budget reconciliation?
How will states respond to federal funding reductions?
Will direct care workforce shortages reach a breaking point, exacerbating the long-term care crisis?
As these policy debates unfold, advocacy will be critical. Nonprofits, healthcare providers, and direct care worker organizations must push back against efforts to weaken Medicaid, ensuring that vulnerable populations continue to receive the care they need. The fight for a sustainable, high-quality long-term care system requires collective action and unwavering commitment to protecting Medicaid’s foundational role in American healthcare.
Conclusion
Medicaid is more than just a government program—it is a lifeline for millions of Americans. The recent federal funding freeze and ongoing proposals for Medicaid cuts highlight the urgent need to safeguard this essential program. Reductions in federal Medicaid spending would have devastating consequences for older adults, people with disabilities, and the direct care workforce. Advocates, providers, and policymakers must work together to resist harmful cuts and push for policies that strengthen, rather than weaken, the long-term care infrastructure in the U.S.
The stakes are high, and the time to act is now.
