Here at the Blog, we do our best to keep readers informed about issues related to retirement and aging. We also seek – in an intensely politicized environment – to avoid partisanship. We recognize that “retirement planning” is a bipartisan exercise, and we know that our readers and radio listeners represent the full range of American political views.
With that in mind, we’re sharing this article to make you aware of an important policy development that could affect millions of seniors. At a time when members of the Trump Administration are diving deeply into the machinery of U.S. government agencies in search of cost-cutting measures, their eye has now focused on Medicaid. If you or someone you know relies on Medicaid for important health-related services, you need to know that changes may be coming. This is not yet a cause for alarm, but it certainly makes us all pay closer attention.
The information in this article comes from a recent policy alert sent to Life Point Law by NAELA – the National Academy of Elder Law Attorneys. The organization has a nationwide membership of over 4,200 and is dedicated to education and advocacy in areas of concern to elders and their families, areas including Medicaid.
NAELA Watching Closely in the “Year of Cuts”
The policy email to members begins, “As the new Congress and administration get underway, NAELA is monitoring events closely and is committed to keeping you informed of new developments as they arise.” The reason for heightened scrutiny is clear: budget cuts threaten to upend the operation of many federal programs, Medicaid among them.
“The word of the year in Washington may be ‘cuts,’” says NAELA, “as the White House and Republican members of Congress look to cut at least $2 trillion in current government spending as a way to pay for tax cuts. If enacted, these cuts would impact programs that have already been authorized by Congress and that many organizations now rely on to serve older adults and people with disabilities.”
NAELA’s message to members acknowledges that President Trump has vowed to leave Medicare and Social Security untouched. However, those in the administration believe Medicaid can be made more “effective” and that any money saved can help fund those tax cuts.
DOGE Budget Squad Visits CMS Headquarters
NAELA asserts that, in recent weeks, “representatives from Elon Musk’s Department of Government Efficiency [DOGE] were at the Centers for Medicare and Medicaid Services (CMS) headquarters” to examine these mammoth programs. (Medicaid alone serves over 79 million Americans.)
The report on the visit of Musk’s team to CMS came from this article published February 5th by The Hill. As the article states, CMS “spent more than $1.5 trillion in 2024, around 22 percent of federal spending. Lawmakers often say the massive amount of spending on health care programs is rife with fraud and abuse, though bipartisan efforts to curb Medicare spending over the years have been met with political backlash.”
Musk seemed to echo the assertions of fraud, says The Hill. He posted on social platform X that Medicare was “where the big money fraud is happening,” without offering evidence.
One Path to Savings: The Return of Block Grants
NAELA’s policy document explains that Medicaid costs could be trimmed by returning to a spending device employed in the past – a block grant, which is a set amount of federal money paid to states for them to manage. (Medicaid programs are largely controlled at the state level.)
A related idea, says NAELA, is to abandon the current system in which federal matching dollars flow to the states in a largely open-ended manner, replacing it with a set amount of money per capita. Payments would be based on prior-year spending and would be adjusted according to medical inflation.
Cutting Federal Costs Shifts the Burden to the States
Block grants aren’t the only tool DOGE could recommend to trim Medicaid costs. NAELA warns that the share of a state’s Medicaid expenses paid for by Uncle Sam could be reduced. The federal government could also reduce or eliminate the taxes health care providers pay to fund a state’s Medicaid expenses.
But despite the seeming logic of these plans, shortfalls are highly likely. “If this happens,” NAELA argues, “states would have to cover any amount above the cap set by the federal government, making it hard for Medicaid to keep pace as enrollment grows or health care costs rise.” As federal funds decline, states will face “tough choices between Medicaid and other funding priorities, such as education,” the organization warns. Programs such as home and community-based services now funded by Medicaid could be trimmed or dropped.
“Again,” says NAELA, “this could force states to dip into their general funding and roll back Medicaid coverage and benefits. Republican members of Congress are considering each of these items as they prepare a budget resolution and seek to fund the government past the March 14 deadline.”
Medicaid Recipients Could Face the Return of Work Requirements
Another revenue-enhancing idea being reconsidered is to tie Medicaid benefits to work and reporting requirements. Representative Brett Guthrie (R-Ky), who chairs the House Energy and Commerce Committee, which has jurisdiction in the House over Medicaid, told reporters this week that he favors work requirements.
Two Republican Senators, John Kennedy (R-La) and Eric Schmitt (R-Mo), have introduced a bill “[requiring] able-bodied adults without dependents who receive Medicaid benefits to work or volunteer for at least 20 hours per week. This change could save taxpayers more than $100 billion over 10 years.”
Requiring those receiving Medicaid benefits to work or volunteer is not a new idea, says this analysis by KFF.. Many states had experimented with similar laws during the first Trump Administration, but these regulations were largely rescinded by the Biden administration. NAELA argues that work requirements “place a burden on Medicaid recipients and could reduce the number of beneficiaries able to access the program.” Moreover, says the KFF report, roughly 91 percent of Medicaid recipients medically able to work are doing so already.
NAELA is Urging Members Toward Greater Advocacy
The policy email from NAELA represents a call to action. Without strong advocacy, says the organization, “programs such as the Older Americans Act and the Elder Justice Act that are not currently authorized or funded could be harder to fund again in a cost-cutting environment.” NAELA is fighting for continuation of these and related federal programs.
Beyond that, NAELA is urging members to contact members of Congress to make their views known – something any of us can and should do when government issues affect us so directly.
One suggestion from NAELA that we followed up on is to find out just how many Medicaid enrollees there are right here where we live. To do that, NAELA directed us to a fascinating website called the Congressional District Health Dashboard, which allows a state-by-state or Congressional district-by-district search of a wide range of health-related criteria.
Here in the Pacific Northwest headquarters of the Blog, about one-fourth of the residents of Washington State – 24.3 percent – were enrolled in Medicaid in the 1st quarter of 2024. Even in metropolitan Seattle, with lower than average enrollment, Medicaid still serves roughly one resident in 7, or about 14 percent. That’s a lot of our friends and neighbors facing uncertain times when it comes to Medicaid funding.
Here at the Blog, we’ll keep a close eye on this story as it develops.
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(originally reported at the website of NAELA)