GOP and Koch Groups Want to Slash Medicaid to Pay for Trump’s Tax Cuts

In launching a $20-million campaign last month to persuade Congress to extend President Trump’s first-term Tax Cuts and Jobs Act of 2017 (TCJA), Charles Koch’s astroturf group, Americans for Prosperity (AFP), boasted about making the largest investment of any other conservative group in support of Trump’s second-term legislative agenda.

AFP makes no mention of how Congress will pay for the extension and expansion of tax cuts that are expected to increase the federal deficit by between $3.42 trillion and $4 trillion over 10 years, according to estimates from three nonpartisan policy organizations. And that’s without including Trump’s further reduction in the corporate tax rate — to 15% instead of the 21% that has been in place since 2017 — a move backed by AFP.

But as House Republicans look to slash $2 trillion from the federal budget, they are clearly targeting Medicaid, the program that covers health care costs for low-income Americans, as their primary source for budget reconciliation.

AFP maintains an extensive lobbying operation with chapters in 38 states to move forward Koch’s agenda to promote his corporate interests and oppose public sector unions, expanded health care, and environmental safeguards. Its budget, which is mostly bankrolled by the Koch-funded Stand Together Chamber of Commerce, was $168 million in 2023.

“Lowering the corporate tax rate to 15% for all corporations would reduce revenue by about $460 billion to $675 billion through fiscal year 2034,” according to the nonpartisan Committee for a Responsible Federal Budget. If Congress were to pass Trump’s proposal to lower the corporate tax rate only for companies that make products in the U.S., the loss in revenue would drop to about $200 billion.

Slashing Medicaid to Pay for Tax Cuts

To reconcile the budget and pay for these corporate and other tax cuts, House Republicans want to radically reduce Medicaid expenditures, despite Trump’s claims to “love and cherish” the program. 

Republicans are looking to save $900 million over the next 10 years by capping Medicaid spending per capita, reducing federal cost-sharing for Medicaid expansion under the Affordable Care Act (ACA), and imposing a work requirement to qualify for the program.

One in five Americans relies on health insurance from the Medicaid program, which was established in 1965 to provide quality and affordable health care to low-income individuals and families. In fiscal year 2023, Medicaid cost the federal government $606 billion and the states $274 billion.

AFP has been working for years to keep states from raising the income level to allow more people to qualify for Medicaid. At the state and federal levels, AFP also promotes work requirements as a precondition to receiving Medicaid.

In recent years this effort has centered on generating letters from its four million members, holding town hall meetings, and running digital ads in any state where the legislature is considering an increase in the income level for qualifying for Medicaid. 

Since the ACA was enacted in 2010, 41 states and the District of Columbia have expanded Medicaid under the law’s requirement that the federal government pay 90% of the cost of expansion, leaving states responsible for only 10% of the cost.

The Center for Media and Democracy (CMD) has chronicled AFP’s efforts in recent years to prevent Medicare expansion in Missouri, Kansas, and South Dakota. The group’s failures in Missouri and Kansas resulted in hundreds of thousands of people in both states qualifying for and gaining access to health insurance through the Medicare program.

ALEC Also Plays Its Part

AFP is not the only Koch group fighting against Medicaid. The American Legislative Exchange Council (ALEC) has also activated its legislator members to resist state expansion of the program. 

ALEC is the secretive organization where corporations and state legislators meet to adopt cookie-cutter legislation to curtail government spending on health care, privatize education, eliminate environmental regulations, and weaken labor unions.

ALEC has opposed Medicaid expansion since it first took effect in 2014 in 26 states and the District of Columbia, providing state legislatures with a “model bill” that requires legislative approval before states raise the income limit for receiving Medicaid benefits.

Both AFP and ALEC also want to impose work requirements on Medicaid recipients to free up money to extend personal tax cuts and lower the corporate tax rate even further this year.

A state requirement that a Medicaid recipient must work currently requires a waiver from the federal government since that condition was not part of the original Medicaid legislation.

ALEC pushed states to apply for these waivers when Trump was elected to his first term, and applauded when the federal Department of Health and Human Services (HHS) granted waivers to 13 states in 2018.

AFP joined ALEC in praising HHS, saying, “Federal and state research shows that work requirements are one of the most effective ways to lift people out of poverty and reduce government dependence, while also ensuring the safety net exists for those who truly need it.”

Of the 13 states receiving waivers to impose work requirements, only Arkansas fully implemented the program before the courts struck them down or the Biden administration began rolling back the waivers.

Despite AFP’s argument that work requirements and quality care are compatible, the nonpartisan health care policy group KFF concluded that “available implementation data from Arkansas suggests that these requirements were confusing to enrollees and result in substantial coverage loss, including among eligible individuals.”

A work requirement for the entire nation could put the health care coverage of 36 million people at risk, according to the Center on Budget and Policy Priorities.

KFF’s review of the work requirement in Arkansas showed that “nearly two-thirds of adults ages 19–64 covered by Medicaid were working and nearly three in ten were not working because of caregiving responsibilities, illness or disability, or due to school attendance, reasons that counted as qualifying exemptions from the work requirements under previous policies.”

In other words, it’s questionable how much money could be saved if states impose a work requirement for Medicaid. What is known is that if Medicaid is abolished or its funding significantly reduced, state governments will likely face increased costs as individuals without access to affordable health care utilize expensive emergency room services or delay necessary care until they get very sick and doctors and hospitals turn to the government to cover the cost of caring for the uninsured.