Medicaid spending, effects on health care at heart of federal budget debate

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Medicaid spending remained a key part of debate on the nation’s budget with Republicans and Democrats split over the potential effects on health care, taxes, border security and more.

Rep. Chip Roy (R-Texas) gestures as he speaks about the One Big Beautiful Bill Act during debate of the House Budget Committee on May 16, 2025. This image was taken from the committee's webcast.
_{© House Budget Committee}

On May 16, the House Budget Committee met for a full committee markup on legislation known as the One Big Beautiful Bill Act, a 1,116-page spending plan for the nation. The House Budget Committee legislation would cut $625 million from Medicaid, according to deliberations of that panel. That figure was lower than an estimated $700 billion or more projected to be cut from the health insurance program.

Rep. Judy Chu (D-California) speaks about the One Big Beautiful Bill Act during debate of the House Budget Committee on May 16, 2025. This image was taken from the committee's webcast.
_{© House Budget Committee}

Even so, the legislation prompted harsh criticism from Democrats who argued the bill would harm Americans by depriving people of health care. Some Republicans also criticized some provisions within the bill and they pledged to continue tweaking the language to create an acceptable version.

Stopping improper payments

Democratic rhetoric makes it sound as though Republicans will Medicaid, Budget Committee Chair Rep. Jodey Arrington (R-Texas) said during motion debate.

Americans expect their representatives to be good fiscal stewards of their tax dollars. They also expect representatives will have a sustainable safety net for the most vulnerable Americans, but Medicaid is not sustainable, Arrington said. “The first place to start, the first place is to stop the improper payments,” which the Government Accounting Office pegged at more than $500 billion in the last 10 years, he said.

Arrington cited one tally that estimated the total cost of social services to people in the country illegally at $9,000 per illegal immigrant.
“That's more than we spend on American citizens who are in need of the safety net of Medicaid,” he said. “That is unconscionable.”

Medicaid also has not requirement that able-bodied people work, Arrington said.

Rural health at risk

The Medicaid cuts in the bill mean health care will suffer for people in rural areas, said Rep. Becca Balint (D-Vermont)

“Have you talked to your rural hospitals? Have you talked to your rural health care providers?” she asked.

“They are very, very concerned about cuts to Medicaid and how it will close rural health care facilities,” she said. “Rural health care facilities are reliant on Medicaid dollars to stay open, and those of us who represent rural areas, you know, health care outcomes for people who live in rural areas are the worst in the nation,” whether in rural Vermon, Kentucky, Indiana or elsewhere.

“So, I urge you to think carefully before you support this budget because you're hurting your own people back home and their access to health care,” she said.

Effects on health care

The American Medical Group Association (AMGA) published its response to the legislation as presented earlier this week to the House Energy & Commerce Committee. That version of the legislation would cut $715 billion from Medicaid, the largest in the program’s history, resulting at least 8.6 million more uninsured Americans by 2034.

Whatever the final number, AMGA members said substantial cuts will result in eliminating services for Medicaid patients, laying off workers and closing facilities.

“This plan represents an unprecedented rollback of federal support for Medicaid,” AMGA President and CEO Jerry Penso, MD, MBA, said in a statement. “Cuts of this size to Medicaid will reverberate throughout the healthcare system. If patients cannot access care through clinics or their primary care doctors, they’ll turn to our already overcrowded and stressed emergency departments. Every patient in the country, Medicaid patient or not, will be negatively impacted by this bill.”

AMGA published results of a member survey with “far-reaching consequences” across health care:

• 85% of respondents would be forced to eliminate services for Medicaid patients.
• 51% would reduce pediatric care, and 47% would cut maternity services.
• 41% would scale back behavioral health offerings.
• 72% anticipate layoffs or furloughs, including frontline clinicians.
• Nearly 50% of rural facilities foresee closures or restructuring.
• 25% would shut down telehealth programs, disproportionately impacting rural communities.

“Our members have made it clear — this is not the time to impose additional cuts on an already overburdened healthcare system,” Penso said. “Congress must come together in a bipartisan effort to strengthen and sustain our health care system.”

Energy & Commerce Committee

This week, House Energy & Commerce Committee Chair Rep. Brett Guthrie (R-Kentucky) praised Republicans for a historic step “to unleash American energy, bolster our technological leadership, and prioritize health care for the most vulnerable Americans and U.S. citizens.

“We make no apologies for putting Americans first, and we will gladly work through a 26-hour markup in order to pursue a more perfect union,” he said in a statement.