Congressional budget reconciliation legislation and how it could affect Medicaid

Congress is considering legislation through the budget reconciliation process that would result in significant changes to the Medicaid program — changes that AKF opposes. The House of Representatives passed this bill on May 22, and the legislation will now go to the Senate, which could make changes to the legislation. The nonpartisan Congressional Budget Office (CBO) estimates these changes in the House bill related to public health insurance would result in nearly 8 million people losing their health insurance. To help sort through this complex issue, we've provided information below that explains how proposed changes could have a major impact on millions of Americans across the country. 

What is Medicaid?

Medicaid is a joint federal and state health insurance program created by Congress in 1965. People with low incomes, limited resources or who receive public assistance use this health insurance program to pay for their health care, including doctor and hospital visits, preventive care, medicines, inpatient care and long-term nursing home stays. About 72 million Americans have Medicaid as their health insurance plan.

Medicaid plays an important role in fighting chronic kidney disease (CKD). It provides access to health care services and medicines, so people with or at-risk for developing CKD who qualify for Medicaid can manage their disease, either halting or slowing progression of the damage to their kidneys. One percent of Medicaid beneficiaries have CKD, and 45% of dialysis patients on Medicare are dually eligible, which means they are enrolled in both Medicare and Medicaid. Medicaid pays for the cost-sharing of Medicare, and for Medicare Part A and Part B premiums. 

The Medicaid program has different names in different states, and some Medicaid beneficiaries may not know that they are on a Medicaid plan. If you are unsure if your health coverage comes from Medicaid, please use this webpage to find out.

Proposed work requirements for Medicaid recipients

The reconciliation bill includes work requirements, which are policies that mandate verification of a minimum level of employment, number of hours worked or number of hours volunteered to qualify for Medicaid health coverage. If enacted, Medicaid recipients would have to report working hours to access their health care, including medicines and doctors' visits. 

The CBO estimates that 7.6 million people will lose health insurance due to work requirements and other changes to the Medicaid program included in the reconciliation bill; however, other economists have estimated that this number could be over 14 million by 2034.

Since Medicaid is a health insurance program for low-income, ill, disabled and vulnerable populations, many of these recipients do not have the ability to work or report their work.

Additionally, people turn to Medicaid for their health insurance when the economy goes into a recession and they cannot find work. Requiring people to work to be eligible for Medicaid undermines one important reason Medicaid exists in the first place.

Data from a KFF analysis on work status among Medicaid beneficiaries shows:

• Forty-four percent of Medicaid recipients between the ages of 19 and 64 already work full-time, while 20% work part time, but some recipients have jobs that do not offer health insurance.
• Twenty-nine percent of Medicaid recipients do not work because they are a full-time caregiver, attending school or have an illness,
• Eight percent are not working because of other reasons, including they are unable to find work or are retired.

Work requirements would put the responsibility on states to create a system where Medicaid recipients would report their work. For Medicaid beneficiaries to keep their health insurance, they would have to learn a new reporting system, and their state would need to do outreach to Medicaid beneficiaries to educate them on how to use that system. The states could be spending these resources on health care instead. In fact, the state of Georgia has spent $40 million on administrative costs and consultant fees to launch its work requirement program and enrollment in Medicaid has fallen far short of the state's estimates on first-year enrollment. 

Arkansas implemented a Medicaid work requirement from June 2018 through March 2019, and in that time, 18,000 adults lost coverage, primarily because of administrative reasons such as not submitting reports to the state or providing documentation for an exemption. The work requirement did not increase employment, and for many of the adults who lost coverage, they had to delay care, delay taking medications, and encountered problems with medical debt. 

Changes to Federal Medical Assistance Percentage (FMAP)

States administer the Medicaid program, but both the federal government and the state government jointly pay for services, medicines and equipment. The federal share of the cost of Medicaid services in each state is determined by the Federal Medical Assistance Percentage (FMAP).

Medicaid expansion population

The Affordable Care Act allowed states to expand Medicaid eligibility to adults under 65 with specific income levels. This significantly increased the number of people covered by Medicaid. States that expanded Medicaid received an enhanced federal matching rate (FMAP) covering 90% of the costs associated with Medicaid expansion, while states are responsible for the remaining 10%. The expansion has provided health care coverage to millions of low-income adults and has improved access to care, health outcomes and financial security for this population. As of March 2024, 41 states and the District of Columbia have adopted Medicaid expansion. If Congress enacts legislation that cuts funding to the FMAP, it will force the states to make cuts to the program and have a negative impact on health outcomes, increase medical debt and strain health care systems.

A major study published this month by the National Bureau of Economic Research found that the expansion of Medicaid has saved more than 27,000 lives since 2010, adding to a "growing body of evidence that health insurance improves health," demonstrating that "Medicaid's life-saving effects extend across a broader swath of the low-income population than previously understood." 

Medicaid provider taxes

Federal Medicaid provider taxes are state-imposed assessments on health care providers, like hospitals and nursing homes, to help finance the state's share of Medicaid spending. These taxes are a significant source of Medicaid funding for states, allowing them to receive additional federal reimbursement for Medicaid costs. The states have been using provider taxes for over 35 years.

Provider taxes allow states to increase Medicaid payment rates without relying solely on general state funds. There's ongoing debate about the use of provider taxes, with one side arguing that they allow states to shift costs to the federal government and the other side arguing that they are a necessary tool for ensuring the stability of Medicaid programs, according to an article published by the Bipartisan Policy Center. The Centers for Medicare and Medicaid Services (CMS) oversees the use of provider taxes and enforces federal regulations.

The legislation includes capping new provider taxes, freezing provider taxes and banning states from implementing new provider taxes. These provisions will cut services because states increase these taxes to meet funding shortfalls. Without the ability to expand provider taxes to raise needed funds, in times of economic hardships, the states will cut services.

AKF's opposition to Medicaid funding cuts

As a patient advocacy organization that focuses on the health of people with and at-risk for kidney disease, the American Kidney Fund opposes cuts to the Medicaid program. We believe it will result in more uninsured people, which will mean that people with and at-risk for chronic kidney disease will not have access to the health care services they need.