While the centerpiece of the “One Big Beautiful Bill Act” is tax cuts, it also includes historic reforms to welfare programs such as Medicaid. These changes have faced a torrent of criticism, and many dubious talking points have been baked into mainstream media coverage.
Five myths about Medicaid reform stand out as especially misleading.
The first Medicaid myth is that reforms are “deep cuts” or “slashing” the program. This relies on a misunderstanding of the weird way that Washington does budget math.
The Congressional Budget Office assumes that most federal spending increases every year, often at rates far exceeding economic growth. Any legislation reducing the rate of a program’s growth is then called a “cut” even if spending goes up every year thereafter.
This is the case with Medicaid. Following the passage of reconciliation bill, the program’s spending will still grow roughly 3 percent per year, in line with the broader economy. That is not even a cut, let alone a “deep” cut.
The second Medicaid reform myth is that bill will “take away” healthcare for vulnerable groups. While it is estimated that several million people would lose Medicaid coverage, this is due entirely to commonsense provisions.
The largest group losing Medicaid will be an estimated 4.8 million able-bodied adults who fail to meet “community engagement” standards. This involves just 20 hours a week of work, educational activity or volunteering — a generous standard.
Next, an increase in eligibility verification will prevent an estimated 2.2 million people who do not qualify for Medicaid from receiving benefits. Lax enforcement has fostered an astonishing amount of waste and corruption in the program, potentially costing taxpayers more than $100 billion per year. Perhaps most egregiously, 1.4 million illegal immigrants receive benefits directly or indirectly through Medicaid as a result of state governments using funding gimmicks. Trump’s bill will finally rein in this malfeasance.
The third Medicaid reform myth is that reforms will “devastate” rural hospitals. This talking point has been heavily promoted by hospital groups whose top priority is maximizing federal handouts. In reality, reforms to how the federal government reimburses states will have a negligible effect on rural hospitals, and the One Big Beautiful Bill Act’s $50 billion rural hospital fund will more than make up the difference.
The fourth Medicaid reform myth is that because the Trump coalition includes blue-collar or working-class households that sometimes use safety net programs, the changes are a “betrayal.”
This claim has it backward. The Medicaid reforms exemplify the values of working-class America. Implementing modest work requirements and shutting down various types of graft show respect for hard-earned tax dollars. Wanting blue-collar workers to pay the medical bills of able-bodied adults who choose not to work is the real betrayal of workers.
The final Medicaid myth is that the new budget reconciliation bill will “take life-saving care” from children, the disabled and pregnant women. Not only is this wrong, but it also ignores a growing problem facing the Medicaid system. The program, initially designed to help a handful of truly vulnerable groups, has been massively expanded over the last 16 years. As a result, many medical practices are unable to take on new Medicaid patients, causing recipients to wait longer and travel further for the care they need.
The One Big Beautiful Bill Act’s Medicaid reforms will allow the program’s resources to be focused on the vulnerable, giving them better access to medical care.
Don’t believe the myths. Removing waste, fraud and abuse from Medicaid will make it more affordable for taxpayers and more effective for those who need it most.
David Ditch is senior analyst in fiscal policy at the Economic Policy Innovation Center.
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