At the beginning of 2025, many points are at play that would have an effect on Medicaid protection, financing, and entry to care. Medicaid is the first program offering complete well being and long-term care to 1 in 5 low-income Individuals. Whereas Medicaid was not mentioned a lot on the marketing campaign path, there are expectations that large adjustments will doubtless be proposed by govt actions by the Trump administration and as a part of a tax and spending debate in Congress. Even with out Congressional motion, the Trump administration could make important programmatic adjustments by administrative motion (together with state demonstration waivers, rules, and different steering). Different areas to observe with Medicaid implications embody state budgets and long-term care workforce challenges.
Federal Funding Cuts and Financing Reforms
Essentially the most important adjustments to Medicaid in 2025 might embody federal funding cuts and financing reforms. Based on paperwork reported on by Politico, Home Republicans are contemplating $2.3 trillion in Medicaid cuts from coverage adjustments that embody: imposing a per capita cap on federal Medicaid spending, decreasing the federal authorities’s share of prices for the Reasonably priced Care Act (ACA) growth group, imposing Medicaid work necessities, decreasing the minimal federal matching price for Medicaid expenditures, altering the match price for the District of Columbia, and repealing the motivation for states to newly undertake the Medicaid growth that was handed within the American Rescue Plan Act. These coverage adjustments would essentially alter how Medicaid financing works and federal spending reductions of this magnitude would put states at important monetary threat, doubtless forcing them to chop the variety of folks coated, cowl fewer advantages, and minimize cost charges for physicians, hospitals, and nursing houses. If the Home and Senate move a funds decision with a $2.3 trillion goal for Medicaid, Congress might want to provide you with detailed legislative coverage proposals to hit that concentrate on by the funds reconciliation course of.
Below present regulation states are assured federal matching {dollars} with out a cap for certified companies offered to eligible enrollees. The match price (the share that the federal authorities pays, referred to as the federal medical help share or “FMAP”) varies throughout states primarily based on per capita revenue. States obtain the next match price for some companies and populations, most notably, the 90% enhanced match for the ACA growth inhabitants, and typically, Congress adjusts the match price upwards throughout financial downturns.
Work Necessities
With a second Trump administration and Republican management of Congress, work necessities are more likely to be again on the agenda—by federal laws or state Medicaid waivers. Throughout the first Trump administration, 13 states obtained 1115 waiver approval to situation Medicaid protection on assembly work and reporting necessities. Solely Arkansas applied work and reporting necessities with penalties for noncompliance; nonetheless, the waiver led to 2019 when a federal courtroom discovered the work requirement approval illegal. 18,000 folks misplaced protection in Arkansas, primarily resulting from failure to often report the truth that they have been working or doc eligibility for an exemption. These approvals have been both rescinded by the Biden administration or withdrawn by states, and Georgia is the one state with a piece requirement waiver in place (following litigation over the Biden Administration’s try and cease it). A number of states have continued to pursue work requirement waivers regardless of knowledge exhibiting that almost all Medicaid adults are working or face obstacles to work. Amongst adults with Medicaid who’re underneath age 65 and don’t have Medicare or Supplemental Safety Revenue (SSI), 91% are working, or should not working resulting from an sickness, caregiving tasks, or faculty attendance. A Congressional Funds Workplace evaluation of a latest work requirement proposal reveals that the coverage would cut back federal spending resulting from reductions in enrollment and improve the variety of folks with out medical insurance however wouldn’t improve employment.
Different Waivers and Administrative Adjustments
Past work necessities, the earlier Trump administration’s Part 1115 waiver coverage emphasised eligibility restrictions and capped financing. Eligibility restrictions included allowing states to cost premiums and lock out enrollees who’re disenrolled for unpaid premiums. Waiver priorities shift throughout presidential administrations and the brand new Trump administration’s waiver priorities will doubtless differ considerably from these of the Biden administration; nonetheless, it’s unclear how the Trump administration will deal with sure waivers promoted and authorized by the Biden administration, resembling these targeted on addressing health-related social wants, multi-year steady eligibility primarily for kids, and leveraging Medicaid to assist people leaving incarceration transition to the neighborhood. The Trump administration might select to not approve waivers that stay pending, rescind current waiver steering, and withdraw authorized waivers, though a few of these waivers, significantly these which might be utilizing Medicaid to help with reentry from incarceration, have been pursued by each Republican and Democratic governors.
Trump administration might delay implementation of recent rules or problem new guidelines or steering associated to entry, managed care, and enrollment processes. The Biden administration finalized a lot of main Medicaid rules designed to advertise high quality of care and advance entry to care for Medicaid enrollees in addition to to streamline eligibility and enrollment processes in Medicaid and the Youngsters’s Well being Insurance coverage Program (CHIP). These guidelines are complicated and are set to be applied over a number of years. Congress could contemplate laws to overturn these guidelines, with out laws, the Trump administration might delay implementation of sure provisions or might problem new rules that will undo these ultimate guidelines. (Guidelines associated to long-term care are mentioned beneath). Lastly, the Trump administration might problem steering and implement coverage to make it harder for folks to acquire and keep protection, which would cut back enrollment and spending. Beforehand, the Trump administration sought to cut back Medicaid enrollment by encouraging states to conduct eligibility verification processes in between annual renewal intervals.
State Funds Constraints and Priorities
State fiscal situations remained steady at the start of state FY 2025, however the long run fiscal outlook is much less sure. Heading into FY 2025, income collections had begun to stabilize and states have been returning to extra “regular” state funds environments, following a number of years of excessive income and spending development in addition to pandemic-related volatility and unpredictability. States appeared to be in a steady fiscal place, although there’s variation throughout states. Based on FY 2025 enacted budgets, most states anticipated income development would proceed to flatten and state basic fund spending development would sluggish. Whereas states have made a lot of Medicaid investments in recent times, together with to develop entry to behavioral well being companies, enhance Medicaid reimbursement charges (significantly for long-term care), and to make use of Medicaid to assist tackle social determinants of well being, and scale back well being disparities, expectations of decreased income collections past 2025 could dampen enthusiasm for additional investments in Medicaid and will even immediate spending reductions. Decreased state revenues could also be tied to implementation of state tax cuts, the expiration of pandemic-era federal funding, and different macroeconomic uncertainties Any reductions in federal Medicaid spending would put additional strain on state budgets and result in program cuts.
The Lengthy-Time period Care Workforce
It’s unknown whether or not new administrative actions will undermine efforts to bolster the long-term care workforce. There are additionally longstanding challenges discovering sufficient employees to supply long-term take care of individuals who want such companies, and the COVID-19 pandemic exacerbated these points significantly. As of February 2024, employment ranges in most long-term care settings remained beneath pre-pandemic ranges. The Biden Administration finalized two guidelines supposed to handle these challenges and improve entry to companies. The Administration finalized a rule that will create new staffing necessities in nursing amenities, require state Medicaid businesses to report on the % of Medicaid funds for institutional long-term care which might be spent on compensation for direct care employees and help employees, and supply funding for people to enter careers in nursing amenities. The rule will improve the variety of employees in lots of nursing amenities, but in addition improve Medicaid spending. The Administration additionally finalized a rule aimed toward guaranteeing entry to Medicaid companies, which included a number of provisions aimed particularly at residence care, which is long-term care offered in residence and neighborhood environments. The “entry” rule requires states to spend least 80% of complete funds for sure residence care companies on compensation for direct care employees. It’s unknown whether or not the Trump Administration will implement these guidelines or revise them, and it’s potential Congress will overturn them.
Cuts to Medicaid and adjustments in immigration coverage could exacerbate workforce challenges, scale back cost charges for long-term care employees, and erode helps to household caregivers. In response to workforce challenges, many states have adopted cost price will increase for nursing amenities and residential care suppliers with the purpose of boosting staffing ranges. All states have additionally created helps for household caregivers, recognizing that caregiving might be very demanding, significantly when there are shortages of paid caregivers. These initiatives could also be unattainable to maintain if federal help for Medicaid is decreased by one third. Past decreasing Medicaid assets, President Trump’s deliberate crackdown on immigration could additional pressure the long-term care workforce, which depends closely on foreign-born employees.
What to Watch
The problems recognized on this coverage watch might have main implications for Medicaid protection, financing, and entry to care. As these points play out, the next key questions will probably be on the forefront:
Federal funding cuts and financing reforms: Will Congress enact main cuts to federal Medicaid funding and adjustments to how the Medicaid program is financed? What’s going to federal cuts in Medicaid imply for folks enrolled in this system, states, and suppliers? How will the affect of any federal coverage and funding adjustments fluctuate throughout states?
Work necessities: Will Congress move laws to permit or require work and reporting necessities in Medicaid? If Congress doesn’t embody work necessities in laws, which states will pursue work and reporting requirement waivers underneath a second Trump administration? How will such insurance policies have an effect on protection?
Different waivers and administrative adjustments: Past work necessities, what waivers will probably be inspired and authorized underneath the second Trump administration? Will the administration withdraw any authorized waivers or rescind Biden administration waiver steering? What’s going to occur with main entry and eligibility / enrollment rules finalized underneath the Biden administration? How will different administrative steering have an effect on protection?
State funds constraints and priorities: What are present projections for state income development? How will adjustments in state fiscal situations have an effect on states’ capacity to proceed to pursue and keep latest investments in Medicaid for behavioral well being, long-term care, reimbursement charges, social determinants of well being, and efforts to cut back disparities? How will federal Medicaid coverage adjustments have an effect on state budgets?
The long-term care workforce: Will Congress or the brand new Trump administration overturn ultimate guidelines that will bolster nursing facility staffing, wages for long-term care employees, and cost transparency? How will broader adjustments in Medicaid have an effect on states’ capacity to retain increased cost charges for long-term care employees and helps for household caregivers? How will adjustments in immigration insurance policies have an effect on the direct care workforce?
