What Medicaid Cuts Could Mean for Healthcare Access and Hospital Stability

Cuts to Medicaid could have significant consequences for millions of Americans, including those who rely on the program for healthcare and the hospitals that serve them.

Jennifer McGuigan Babcock, senior vice president for Medicaid policy at the Association for Community Affiliated Plans (ACAP), and Gabe Scott, a partner at K&L Gates Health Care Group, spoke with Managed Healthcare Executive about what these cuts could mean for the healthcare system.

Republican proposals made regarding these cuts have sent mixed signals about the seriousness of Medicaid cuts, leaving many unsure about what will happen next.

Babcock noted that some lawmakers have expressed concerns about the impact on their communities, while others continue to push for reductions in federal Medicaid funding.

"There are certainly folks on both sides of the aisle that really, very much want to protect the Medicaid program,” Babcock said. “But, if Congress winds up with a reconciliation package that needs to cut that much from Energy and Commerce jurisdiction, it will wind up cutting a lot of that from the Medicaid program, unfortunately.”

Reflecting on Medicaid’s history, there’s been more than one time it’s garnered political attention—most notably during the 2017 effort to repeal and replace the Affordable Care Act (ACA).

This repeal included an effort to replace the Medicaid expansion that was part of the ACA during that time.

“The importance of Medicaid played a really big role in discouraging members of Congress from repealing the Affordable Care Act,” Babcock recalled.

She noted that with around 80 million people currently covered by Medicaid, any changes to the program will have serious political and social consequences.

She also pointed out that many of the districts with the highest Medicaid enrollment are Republican, which could influence how lawmakers approach the issue.

Hospitals and healthcare providers would also feel the effects of these cuts, especially nonprofit and rural hospitals that rely on Medicaid funding to stay open, according to Scott.

He explained that losing this funding would be a major loss for many hospitals, putting them at risk of financial collapse.

As of February, there were 748 hospitals at risk of closure—almost one in every state, Scott said, referring to a Becker’s study released at the time that highlights the potential impact on access to care.

Beyond the immediate risk of closures, Medicaid cuts could also damage hospitals’ financial stability, he said.

Many rely on Medicaid reimbursements to cover the cost of care for uninsured or low-income patients.

Scott warned that losing this funding could lower hospitals' credit ratings, making it even harder for them to operate.

As policymakers continue to debate Medicaid’s future, both experts stress the importance of the potential effects these cuts can have on healthcare services, patient outcomes, funding and hospital stability.