As Congress wrestles with how to cut $1 trillion in federal spending over 10 years, the prime targets have been the state and federal Medicaid and food stamp programs.
On May 22, the U.S. House narrowly passed H.R.1, officially titled the One Big Beautiful Bill Act. If the Senate passes it, the bill would make deep cuts in federal spending, including for Medicare, Medicaid and the Supplemental Nutrition Assistance Program (SNAP) over 10 years, as Riley Beggin reported for USA Today.
The Congressional Budget Office projected that the bill would add $2.3 trillion to the deficit over 10 years and could force nearly $500 billion in cuts to Medicare beginning in 2026, as Jacob Bogage and Abha Bhattarai reported for The Washington Post.
In an article for STAT, John Wilkerson and Chelsea Cirruzzo reported that the Senate Finance Committee proposed steeper cuts to Medicaid funding than those in the House version of the bill to help pay for President Trump’s tax cuts.
“The spending reductions come from clamping down on tactics that states use to boost federal Medicaid funding,” they wrote, citing the committee’s draft legislation. “The text includes harsher restrictions on Medicaid provider taxes and places stricter limits on programs that states use to boost Medicaid funding to health care providers, known as state-directed payments,” they wrote. See Resources below for reports from KFF and the Center on Budget Policy and Priorities on changes the Senate could make in the bill.
Some will get tax cuts
One aim of the House bill is to offset the cost of extending low tax rates set under the 2017 Tax Cuts and Jobs Act, Beggin reported. That law cut all income tax rates, mostly for businesses and high earners, but the lower rates will expire at year end, she added. “The [House] bill would make those tax rates permanent at an expected cost of more than $2 trillion over the next 10 years,” she wrote.
The House-passed bill would also cut spending on social safety net programs by more than $1 trillion over the next decade, a team of Washington Post reporters wrote. And it could cut nearly $500 billion from Medicare, strip Medicaid coverage from 8.7 million people and lead to 7.6 million more people without insurance, the Post reporters wrote, citing projections from the Congressional Budget Office.
Others will lose their health insurance
Every state will feel the effects of this bill if lawmakers hit the $1 trillion target, according to a Commonwealth Fund report titled “How Does Medicaid Benefit States?” Most of that $1 trillion ($880 billion) would come from Medicaid, the nation’s gross domestic product would decrease by $95 billion and tax revenue would drop by $7 billion over those same 10 years, the report showed.
The federal and state governments fund Medicaid, the nation’s single largest health insurer, and that spending generates a return on investment for all states, the report noted. Medicaid covers 78.4 million Americans (about 23% of the population), including 71.2 million adults in Medicaid and 7.3 million young people in the Children’s Health Insurance Program, according to KFF. The KFF report includes the number of children and adults enrolled in every state.
Financial harm
Cutting Medicaid funding could lower employment in each state and slash state tax revenue and individuals’ spending power, the Commonwealth Fund reported. Every dollar the state and federal governments invest in providing health insurance to low-income Americans generates more than a dollar’s worth of economic activity, the report added.
“Those dollars that the states spend on health care services are investments in the current and future workforce,” Akeiisa Coleman said in an interview. Coleman, a senior program officer at the Commonwealth Fund, is one of the report’s authors.
“We’ve made huge gains in increasing coverage for children, because having health coverage and access to health care sets those kids on a path for success later in life,” Coleman added. Following such a path could lead to higher-education attainment or could boost children’s earning potential beyond what their parents had, she added.
“We know that health coverage and access to care improve worker productivity, and employers benefit from having a healthy workforce,” Coleman said. “There are ripple effects from these investments in health care that are not just about health outcomes. They are also impacting productivity and, ultimately, tax revenue that states and the federal government collect.”
Additional harm to come
In a new report published June 23, researchers for the Commonwealth Fund showed that if the cuts to Medicaid and SNAP proposed in the House-passed bill become law, gross domestic products in the states would drop within four years by $154 billion, 18% more than the $131 billion that the federal government is estimated to save. That report is “How Medicaid and SNAP Cutbacks in the ‘One Big Beautiful Bill’ Would Trigger Big and Bigger Job Losses Across States.”
The cuts also would result in the loss of 1.22 million jobs nationwide, equivalent to a 0.8% increase in the unemployment rate, the report showed.
States with higher rates of poverty would likely be harmed more than other states, and state and local tax revenue would fall by $12 billion, the report noted. Cutting spending for the ACA’s health insurance marketplaces and a proposed sequestration in Medicare funding would harm employment and the economies in the states, the researchers added.
Story angles
While Congress debates where to cut $1 trillion from Medicaid and SNAP, journalists have multiple stories to cover. Here are two to consider:
- Deep cuts to Medicaid could ripple through the nation’s economy and harm the more than 78 million people on Medicaid, according to the March report from the Commonwealth Fund.
- Slashing Medicaid funds combined with changes the Trump Administration made to the ACA could leave as many as 16 million low- and moderate-income Americans without health insurance, according to this analysis from KFF and this report from the Center on Budget and Policy Priorities (CBPP), including how 16 million Americans would lose health insurance under the House bill. Cuts to Medicaid spending would leave 7.8 million uninsured; changes in ACA marketplace coverage and other effects from the House bill would leave 4 million uninsured. A failure to extend the enhanced premium tax credits would mean 4.2 million would lose ACA marketplace coverage, the CBPP report showed.
An earlier CBPP report, “House Republican Health Agenda Cuts Coverage, Raises People’s Costs,” shows coverage losses in each state.
A big story in every state
While deep spending cuts would affect all states, the 40 states and the District of Columbia that expanded eligibility for Medicaid enrollment under the ACA would feel the effects the most, the Commonwealth Fund report showed. Also, cutting Medicaid would affect five of the nation’s largest states by population: California, New York, Texas, Pennsylvania and Ohio, the report added. Among those five states, only Texas has not expanded Medicaid enrollment.
Also included in the Commonwealth Fund report are two significant but little-known facts about Medicaid:
- In the 40 expansion states and the District of Columbia, more Americans have health coverage, but those states have not had significant increases in Medicaid spending, and those states have recorded increased tax revenue and declines in health spending overall.
- By covering mental health and substance-use programs and shifting some health care costs from state corrections’ programs to Medicaid, expansion states have increased coverage for health services and produced savings for Medicaid. “In the first full fiscal year following expansion, Maryland saved $13.6 million on uncompensated care while also raising $26.6 million in new revenue,” the report added.
More details on H.R. 1 – One Big Beautiful Bill Act
- For more information, search this Ballotopedia page for descriptions of these sections in H.R.1 — One Big Beautiful Bill Act or follow the links:
- Sec. 10008. Expands work requirements for those enrolled in SNAP
- Sec. 10011. Repeals the nutrition-education and obesity-prevention grant program
- Sec. 10012. Restricts access to SNAP for some immigrants
- Sec. 44110. Ends Medicaid and CHIP for those without verified legal status
- Sec. 44122. Limits retroactive Medicaid coverage
- Sec. 44125. Bans federal Medicaid or CHIP funding for gender transition procedures for minors
- Sec. 44131. Ends extra funding for states that expanded Medicaid enrollment
- Sec. 44141. Requires all states to impose Medicaid work requirements starting next year
Resources
- Health Provisions in the 2025 Federal Budget Reconciliation Bill, KFF, June 17.
- Tracking Senate Action on Tax and Budget Reconciliation Plan, CBPP, June 17.
- State-Level Estimates of Health Care Spending and Uncompensated Care Changes under the Reconciliation Bill and Expiration of Enhanced Subsidies, The Urban Institute, June 2025.
- A Complete List of Everything in the Republican Bill, and How Much It Would Cost or Save, The New York Times, May 23, 2025.
- Proposed Medicaid Federal Match Penalty for States that Have Expanded Coverage for Immigrants: State-by-State Estimates, KFF, May 22.
- How Trump’s ‘one, big, beautiful’ tax bill could impact programs for women and children, The 19th News, May 22.
- In a significant change, House GOP tax cut bill would start Medicaid work requirements next year, John Wilkerson, STAT News, May 21.
- The Truth About Medicaid Coverage for Immigrants – and the Looming Threats, Georgetown University, McCourt School of Public Policy, Center for Children and Families, May 21.
- Harsh Work Requirements in House Republican Bill Would Take Away Medicaid Coverage From Millions: State and Congressional District Estimates, CBPP, May 21.
- House Republican Bill Grows Even Harsher, Cutting Medicaid Funding to States That Cover Lawfully Residing Children and Pregnant Adults, CBPP, May 21.
- How the Medicaid reconciliation bill could help wither away the Affordable Care Act, Noah Tong, Fierce Healthcare, May 20.
- Catholic health systems warn of program closures, higher premiums if Medicaid cuts pass, Anastassia Gliadkovskaya, Fierce Healthcare, May 20.
- House Republican Bill Would Cut Medicaid Funding to States Providing Own Health Coverage to People Who Are Undocumented, CBPP, May 19.
- Who Gains and Who Loses under a Tax Cut Extension with Medicaid and SNAP Spending Reductions, Urban Institute, May 13.
