Health care, social programs on the chopping block
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Hey everybody, I'm Rima Grace. Welcome back to Make Me Smart, where we make today make sense.

And I'm Kimberly Adams. Thank you, everyone, for joining us. It's Wednesday, June 18th. And as you know, if you've been listening all week, we are spending this week talking about the reconciliation bill. I'm not going to say the name again. I'm tired. Don't do it. But every day this week, we've been kind of looking into some different elements of the bill, trying to answer your questions along the way. Thanks to everybody who sent in questions. They're really good. We're going to try to get to as many of them as we can.

Yes, and today we are going to dig into how the reconciliation bill affects health care and social programs. So let's start off by listening to a question from Anne in Colorado Springs about how the bill's proposed cuts could affect her dad's care.

Hi, my name is Anne. I'm calling from Colorado Springs, Colorado. And my question is regarding the looming Medicaid cuts in the budget bill. What is going to happen to my father and thousands of other people like him who are in nursing homes, have run out of funds,

And Medicaid is paying the bill. Thank you so much. I love Make Me Smart. Have a great day. Appreciate that, Anne.

Yeah, and I hear the concern in your voice, Anne, and a lot of people are very worried about this because it's a real concern. The reconciliation bill does look to offset the cost of the tax cuts or extending the tax cuts with some pretty significant cuts to both Medicaid as well as SNAP, which I know we talked about already. But the Senate's version of the reconciliation bill would actually

cut Medicaid a bit more aggressively than even the House's version of the bill. What the legislation does in terms of cuts to Medicaid, it expands the Medicaid work requirement to include parents of older children. It would also be more strict on what are called Medicaid

provider taxes, which is kind of this tax maneuvering strategy states use to collect more federal money. So to break down the work requirement side a bit more, in the House version, they would require childless adults without disabilities who want Medicaid coverage

to prove that they had worked, volunteered, or attended school for 80 hours in the month before enrollment. And that, basically because it's a lot of paperwork to do, people who run the numbers on this kind of thing, including the CBO, estimate that that's going to cause about 5.2 million Americans to lose Medicaid coverage by the end of this decade.

In the Senate version of the bill, and remember, these two got to line up at some point. It also requires adults with children over the age of 14 to work or volunteer at least 80 hours a month. Dr. Adam Gaffney, who's a critical care physician and an assistant professor at Harvard Medical School, estimated that change would push up to 7.6 million Americans to lose health insurance and potentially lead to thousands of preventable deaths.

So that's just the work requirement side of it. Now then, moving on to that Medicaid provider tax.

When a Medicaid patient goes to a hospital or sometimes even a nursing home like Anne's dad, the federal and state governments share the costs and the federal government often pays about 60% of the bill. With provider taxes, the states pay the hospital more so the federal government also has to match that increase and then uses that separate provider tax on the hospital or the nursing home to effectively get some of that money back.

And the new federal money would cover the difference for the higher payment. The tax generates additional money for the states to pocket. A lot of Republicans don't like this system because they feel like it's states kind of

scamming the government almost to get higher payments. And so they're really going after these provider taxes in this legislation. But lots of hospitals, lots of nursing homes and all these other groups have built their whole financial models to

getting this money. And if that gets pulled back, it would have a major impact. And like Anne was saying, nursing homes in particular rely heavily, heavily on Medicaid to run themselves. And there's a lot of concern that it could kind of just pull the rug out from under a lot of these facilities. Yeah. Wow. You explained that really well, Kimberly. And the thing I think about when I heard her question is, yes, it means that

nursing homes, these kinds of facilities would have to rely on things like cutting staff or they just don't fill vacant positions, right? And that can lead to a whole set of other problems because when you've got fewer nurses and aides caring for more patients, that means less time spent with each person. That means longer waits. And it's also, this kind of work is emotionally and physically brutal on caregivers. Burnout is already really huge in this industry. And so I keep thinking about how

a lot of these jobs which are already low paid, high stress, already undervalued, you know, what's the demand for that going to be like moving forward when the facilities are underfunded?

anyway i will say one more thing and i'm looking at a skilled nursing news here this legislation is still in flux and one of the things that came out this week was this draft legislation from the senate finance committee and here in this report they point out that senate republicans are pushing the proposal to scale back the medicaid provider taxes

but that nursing homes and intermediate care facilities would be exempt from the cuts. Now, again, this is all draft legislation, and this is kind of reflecting the fact that people are raising the alarm about this. And I know it's easy to believe that, and it often feels like members of Congress don't listen to their constituents.

But they are hearing from people. They're hearing from lobbyists. The nursing home industry is raising the alarm about this. And so it looks like at least in one of these drafts, nursing homes and intermediate care facilities could be exempt. And on the topic of the impact of Medicaid cuts on rural hospitals, we got a message from Chris from Baltimore, and they wrote about their perspective on the ground on how the bill could affect the hospitals they work with.

They said, good morning. I am a clinician and I work with hospitals to improve their outcomes, like things like mortality, length of stay, readmissions, complications, as well as help them meet regulatory requirements. Many of the hospitals I work with across the country have 50% or more of their patients on Medicaid. They are very worried about the reconciliation bill and what it will mean for their bottom lines. You will see more hospitals close their doors, which most likely will be in areas that are already underserved, like rural areas. This

This is a healthcare crisis of administration's making, and we were already trying to rebound after the pandemic. Thanks for listening, and thank you for making us smart.

Really appreciate this email, Chris. So yes, the impact of the Medicaid cuts will likely be most deeply felt in rural low-income areas like the ones Chris mentioned. Last week, Democratic lawmakers released data from the University of North Carolina at Chapel Hill, which is also where I went to school, and they are saying that the cuts to Medicaid proposed in this legislation could, quote, "...place over 300 rural hospitals across the U.S. at disproportionate risk of closure, conversion, or service reductions."

And I saw some research over at the Center on Budget and Policy Priorities, and it says that some of their research looks into the impact of the legislation, and it says by shifting more of the costs of Medicaid to the states...

quote, including through new restrictions on how states can finance their share of Medicaid, it could lead states to cut back on healthcare services for seniors. So states that aren't able to backfill for those cuts might look to cut back on services they are not required to provide under Medicaid, including things like home and community-based care for older folks and people with disabilities, which is a thing we talked about last week as well. But yeah, lawmakers are saying that one of the goals for the Medicaid crackdown is

Is that it would get people who just don't want to work to do so. But I know, Kimberly, you've been looking into this. And what did your reporting find exactly? Yeah.

Yeah, you know, it's been an interesting narrative, this idea that you'll hear from Republicans about young, able-bodied adults and particularly young men playing video games who are using Medicaid when they shouldn't be. And this is sort of the narrative. But this is not backed up by data. And I spoke to Lelaine Bigelow about this. She's executive director of the Georgetown Center on Poverty and Inequality. And here's what she had to say about it.

A majority of the people who receive SNAP and Medicaid are already working, but most of them don't have full-time jobs because they are cobbling together work from multiple jobs and jobs that just don't pay enough. And so SNAP and Medicaid are really lifelines for people, and they help them get by and help feed their families.

And, you know, a lot of folks on Medicaid might be caregivers themselves. And so it makes it really challenging to work full time. But, you know, we've been talking about the potential ramifications of pulling back federal funding to Medicaid and other social programs. But I do really want to drill down on this idea of shifting more costs to the states, which is a big part of this legislation, that the federal government shouldn't be eating the cost of all these programs. If they can move more of those costs to the states, that will decrease benefits.

you know, the money that the federal government has to pay out, creating more revenue space for tax cuts. We got a question about this from TJ in Colorado Springs, who wrote in to ask, "How will the states absorb the costs the Trump administration plans to push back on them? Will some states be put into financial jeopardy?" This exact thing came up in a story I did a couple of weeks ago. And I talked to Chris Edwards at the Cato Institute, who told me that there are basically three ways that states can respond to these cuts.

Then the states really have three choices. They could raise taxes to cover the additional costs. They could cut other spending programs, or they could find efficiencies in these programs.

One thing that does make states different from the federal government is that almost all states are required to have balanced budgets every year. As in, you can't do the kind of deficit and debt spending that we do at the federal level. And so if they come up short, they really do have to find something else to cut or raise taxes.

Yeah, there's something from the Urban Brookings Tax Policy Center that I'm seeing here. And they crunched the numbers on what that would look like across the country. And they found that in 2026 alone, looking across all states, federal cuts of $88 billion for Medicaid and $23 billion for SNAP would amount to more than 3% of state spending, more than 7% of state taxes, $1.5 billion.

and nearly 11% of state personal income and general sales taxes. Right. So this idea that they would have to just either come up with 3% of state spending worth of cuts or raise state sales taxes by 7% or raise their income taxes by 11%, depending on what it is. And obviously it differs by state, but that's a pretty big revenue hit. That's a lot. Yeah, yeah.

And so this bill, it plans to cut off money to social programs like SNAP and Medicaid in part to fund tax cuts.

And some estimates say that the bill would actually add trillions to our national debt, which leads me to our next question about government spending on social programs. This one comes from Carrie Dunn in Travis County, Texas, who wrote in to ask, since Social Security is funded by contributions, why is it being blamed for government overspending? Same for Medicare. How much is the government spending above what we have paid into these funds?

That's a great question. It is a great question, but it's kind of a whole other conversation. We should probably do another deep dive on Social Security and Medicare. It's fascinating. But suffice it to say that...

that we are paying out more for both of these programs than we bring in in the relevant taxes for these programs. Because both of these programs have like dedicated tax streams, right? And we pay out more for them than we bring in. And so we fund them almost entirely with deficit spending, which contributes to the national debt. And yes, cuts elsewhere could definitely offset that in the military or anywhere else. But the math hasn't balanced out there for some time.

Now, when it comes to the reconciliation bill, it's interesting because Social Security is actually an area that is explicitly protected from changes under the rules of reconciliation. These rules that allow Republicans to pass this legislation by simple majority with no Democratic votes. There's actually a line in the Byrd rule that these changes cannot affect Social Security. So they really can't include anything related to Social Security in this bill.

Yeah. And then when it comes to Medicare, as opposed to Medicaid, there is not much targeted at the program in this legislation, but there are some knock on effects from other policy changes. So the Health Policy and Research Org, KFF, puts it this way. It says because the bill is projected to increase the deficit, CBO projects it would trigger about $500 billion in mandatory reductions in Medicare spending between 2026 and 2034.

including a 4% reduction in payments to hospitals unless Congress takes action to circumvent them, which Congress has historically done. So not a lot in there about Medicare. But it's a really good example of how it's such a big piece of legislation with such high dollar amounts attached to so many things. It's almost impossible for any portion of the government to remain untouched by some of these changes. Yeah, yeah. They've stuffed so much in there.

I think those are all of our questions, right? Yeah. Yeah. That's all the questions we can get to today. We are going to be off tomorrow because it is Juneteenth. I hope everyone finds a way to market that feels right to you. I hope you get the day off too. We are going to come back to this on Friday. Yes. So there is still time to send us your questions. You can send us a voice memo to makemesmartatmarketplace.org or you can leave us a voicemail at 508-UBSMART.

This episode of Make Me Smart was produced by Minju Park with help from Courtney Bergseger. Today's program was engineered by Justin Duller. Daisy Palacios is our supervising senior producer. Nancy Bregali is executive producer of Marketplace Shows. And Joanne Griffith is our chief content officer.

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