The landscape of Medicaid funding is undergoing dramatic shifts, with the U.S. House advancing deep, controversial cuts that threaten essential services for people with disabilities, while simultaneously introducing targeted legislation to bolster behavioral health, and states like North Carolina proactively stepping up with their own funding reforms.
In a period marked by significant legislative debate, the future of Medicaid—a cornerstone of healthcare for millions of Americans—is being shaped by divergent proposals in the U.S. House of Representatives. These proposals range from sweeping cuts aimed at reducing federal spending to targeted investments designed to address critical healthcare needs. The interplay of these federal initiatives, alongside proactive state-level reforms, creates a complex and often contentious environment for recipients, providers, and advocates alike.
A Tale of Two Futures: Medicaid Under Scrutiny
At the heart of the current federal debate are two contrasting legislative approaches that reflect a deeply divided political landscape concerning healthcare funding. One major legislative push, identified as the “One Big Beautiful Bill Act,” outlines significant reductions and structural changes to the Medicaid program, while another, the “Medicaid Bump Act,” proposes focused enhancements for specific services.
The House’s Divisive Medicaid Proposals: The “One Big Beautiful Bill Act”
The U.S. House of Representatives has passed legislation proposing billions in cuts to Medicaid. This bill, reportedly a key part of President Donald Trump’s domestic agenda, aims to implement new requirements such as work stipulations for many Medicaid beneficiaries and more frequent eligibility checks by states. Congressional Budget Office (CBO) estimates project that these changes could lead to $698 billion less in federal Medicaid subsidies between 2026 and 2034. These savings are intended to fund an extension of prior tax cuts and support other administration priorities, with proponents, like House Speaker Mike Johnson, R-La., arguing the measure will end “waste, fraud and abuse” and strengthen essential programs.
However, an independent report by Manatt Health, supported by the Robert Wood Johnson Foundation, offers a starker outlook on the “One Big Beautiful Bill Act.” Their analysis estimates that the bill’s provisions could lead to 8.7 million fewer people enrolled in Medicaid annually. The financial impact is even more substantial, with projected total cuts—including both federal and state funds—reaching $1.3 trillion or more over ten years (FFY 2025 to FFY 2034).
The Manatt Health report highlights several key takeaways from the proposed legislation:
- Major Losses in Coverage: An estimated 8.7 million fewer people would be enrolled in Medicaid on an average annual basis due to the modeled provisions.
- Vulnerable Populations Affected: The repeal of certain eligibility and enrollment rules is expected to result in 2.1 million fewer seniors, people with disabilities, and children receiving coverage.
- Significant Funding Reductions: Total cuts in Medicaid expenditures, combining federal and state funds, are projected to reach $1.3 trillion or more.
- Impact on Non-Expansion States: Even states that have not expanded Medicaid face substantial coverage losses and funding reductions.
- Hardest Hit: Expansion States: The 41 expansion states and Wisconsin face additional reductions from mandatory work requirements and six-month renewal requirements, leading to an average total funding reduction of 13%.
- Penalties for Immigrant Coverage: Expansion states covering certain immigrants face steep penalties, with federal matching rates potentially dropping from 90% to 80% for the expansion group, exceeding $100 billion over 10 years for 19 impacted states.
It is important to note that Manatt’s estimates understate the total impact as not all provisions could be modeled due to data limitations.
Advocates Sound the Alarm: The Human Cost of Cuts
Disability advocates strongly refute the claims that these measures strengthen Medicaid. Nicole Jor Wic, chief program officer at Caring Across Generations, warns that these are among the largest cuts in history, threatening disability service systems. Providers may close, wages for direct support professionals could decline, and disabled individuals risk losing coverage due to bureaucratic hurdles created by eligibility checks and work requirements.
The impact extends particularly to community-based services for people with disabilities. Elise Aguilar, senior director of federal relations at the American Network of Community Options and Resources (ANCOR), explains that these non-federally mandated services are especially vulnerable to funding reductions. Historically, during funding shortfalls, such services are often the first to be scaled back, restricting essential supports. This comes at a time when the system is already struggling, with over 700,000 people on waiting lists for Medicaid waivers, according to KFF, a nonprofit health policy research organization. Staffing shortages are also rampant among community-based service providers, leading many to decline new clients or close programs.
Lydia Nunez Landry of the disability rights group ADAPT emphasizes that these cuts are “draconian” and will force people with disabilities into institutions, potentially leading to tragic outcomes. Additionally, the increased frequency of eligibility checks and new work requirements are expected to create more paperwork and increase the likelihood of eligible individuals being inadvertently dropped from the program, as highlighted by Katy Neas, CEO of The Arc of the United States. States would also face the burden of allocating resources to establish systems for verifying these new requirements.
A Beacon of Support: The “Medicaid Bump Act” for Behavioral Health
In contrast to the proposed cuts, a bipartisan effort in the House focuses on bolstering a crucial area of healthcare. The “Medicaid Bump Act” (H.R. 4892), introduced by Rep. Paul Tonko, D-NY, seeks to provide a higher federal matching rate for increased expenditures under Medicaid for behavioral health services, including those related to mental health and substance use. This bill represents a recognition of the urgent need for enhanced support in these areas.
Under this proposed legislation, states would receive 90 percent of the increased amounts expended on behavioral health services beyond a baseline from 2019. To ensure accountability, states receiving these funds must use them to supplement, not supplant, existing state funds for behavioral health programs. Furthermore, the funds are intended for activities that increase the capacity, efficiency, and quality of behavioral health service provision, including through improved provider payment rates and measures to reduce staff turnover. The full text of H.R. 4892 can be reviewed on Congress.gov.
States Respond: North Carolina’s Proactive Medicaid Rebasing
Amidst these federal discussions, states are taking their own steps to manage Medicaid funding and services. In North Carolina, the House of Representatives recently gave unanimous approval to Medicaid rebase proposals. These proposals aim to adjust fiscal support to account for changes in costs and the volume of enrolled individuals.
The state House approved $190 million in nonrecurring funds and added $190 million for rebase, totaling $690 million in recurring appropriations. This funding, outlined in House Bill 491 (with companion Senate Bill 403, known as “Medicaid Rebase Funding”), and the Healthcare Investment Act (Senate Bill 405), aims to ensure Medicaid is fully funded until April. Speaker Destin Hall, R-Caldwell, emphasized that this action provides necessary funds, while also criticizing Gov. Josh Stein for what he termed a “manufactured Medicaid crisis.” Details of North Carolina’s legislative actions are available on NCleg.gov.
Additionally, the Healthcare Investment Act includes $49.2 million recurring and $34.4 million nonrecurring funding for Medicaid managed care. An extra $1 million is allocated to the state auditor’s office to review county-level Medicaid eligibility redeterminations and Department of Social Services performance, highlighting efforts to improve program oversight.
Connecting the Dots: The Broader Landscape of Medicaid
These recent legislative developments occur within the larger historical context of Medicaid, established in 1965 as part of the Social Security Act. It functions as a joint federal-state program, providing essential health coverage to low-income individuals and families. Over the decades, it has expanded significantly, notably with the Affordable Care Act (ACA), which allowed states to broaden eligibility.
The current debates underscore the inherent tension in the federal-state partnership that governs Medicaid. While federal funds are crucial, states bear a significant portion of the cost and responsibility for implementation. Proposals for federal cuts place immense financial pressure on states, often forcing difficult choices between essential services. Conversely, targeted federal investments, like the Medicaid Bump Act, can incentivize states to address specific public health crises, such as mental health and substance use disorders, aligning federal and state priorities.
From a community perspective, these legislative battles are more than just fiscal policy debates; they represent ethical dilemmas about access to healthcare, the dignity of individuals with disabilities, and the well-being of vulnerable populations. Advocacy groups consistently highlight the real-world consequences of policy changes, transforming abstract budget figures into tangible impacts on people’s lives.
Looking Ahead: Long-Term Implications and the Road to the Senate
The legislative journey for these proposals is far from over. The “One Big Beautiful Bill Act” now heads to the Senate, where it faces another round of intense scrutiny and potential modifications. The fate of the “Medicaid Bump Act” also rests on its ability to garner sufficient support across both chambers.
The long-term implications of these policy decisions are profound. Deep cuts could fundamentally alter the landscape of healthcare for millions, potentially increasing reliance on emergency services, exacerbating staffing shortages for essential support professionals, and creating greater inequities in access to care. Conversely, increased investment in behavioral health services could lead to better outcomes for individuals struggling with mental health and addiction, reducing societal costs in the long run.
The ongoing dialogue between federal policymakers, state governments, healthcare providers, and advocacy groups will be crucial in shaping the ultimate direction of Medicaid. As these discussions unfold, the focus remains on ensuring that the program continues to serve its vital role as a safety net, protecting the health and well-being of the nation’s most vulnerable citizens.
