Gutting Medicaid to give tax breaks to the wealthy isn’t a smart choice, especially for Wyoming

Republicans have targeted Medicaid funding for decades and it appears the party’s leaders, axes anxiously in hand, finally have it on the chopping block.

But the GOP doesn’t have to make huge cuts to a program that provides health insurance to 79 million low-income Americans. Even in a state as red as Wyoming, there should be pushback from voters, especially once people realize how much it will hurt access to health care for people of all ages and the risks it poses to rural hospitals and the economy.

U.S. Rep. Harriet Hageman, R-Wyoming, certainly doesn’t want her constituents to know how close Congress is to cutting Medicaid. In her March 2 “Wyoming Round-up” email, Hageman wrote such claims are “simply untrue” because a budget resolution she supported is just “a roadmap for future budget considerations and steps.” 

The resolution would extend provisions in President Donald Trump’s signature 2017 tax cuts for the wealthy that are due to expire. The $880 billion in cuts over the next decade that Hageman and all but one House Republican voted for can only come from programs the House Energy and Commerce Committee has jurisdiction over. 

“The math is conclusive: Major cuts to Medicaid are the only way to meet the House’s budget resolution requirements,” according to the Kaiser Family Foundation, a nonpartisan health policy research organization.

However, there are many paths the House and Senate can take as they try to reach an agreement on ways to cut Medicaid so Trump can have what he’s called his “big beautiful bill” with tax cuts for the rich. Wyoming GOP lawmakers who fought Medicaid expansion tooth and nail over the past dozen years — and turned down about $1.4 billion in federal funds in the process — need to look at how much of Medicaid’s cost will be dumped into the state’s lap by their own party.

Wyoming and the federal government now split the cost of providing Medicaid for nearly 64,000 residents, 35% of whom are  children. About one-third of Wyoming births are paid by Medicaid, and the program pays for more than 70% of nursing home stays.

The Center on Budget Policy and Priorities, a progressive think tank, says Wyoming is one of 10 states that would face a massive cost shift if Congress removed the current “floor” on the federal match rate of 50%. But even if the rate was reduced to 40% rather than being eliminated, Wyoming would see a cost shift of $58 million this year, a 13% increase in state Medicaid costs.

“Faced with increased cuts of this magnitude,” the Center on Budget Policy and Priorities warns, “Wyoming could cut people from Medicaid to reduce enrollment, roll back benefits considered optional under Medicaid — such as home- and community-based services for seniors and people with disabilities — or shrink payment rates to health care providers.”

It’s not difficult to see Wyoming lawmakers making those choices, especially when the state is still losing mineral severance tax revenue and needs to spend more on education after losing a lawsuit for failing to properly fund public schools. But it won’t be popular, or easy to explain, when legislators go back home and get an earful from voters.

The vast majority of non-elderly adults enrolled in Medicaid either work or would likely qualify for work requirement exemptions due to having a disability, caring for family members, or attending school. But the Center on Budget Policy and Priorities says some Republicans are pushing to cut Medicaid by taking away coverage from people who do not meet a work requirement. 

In Wyoming, according to the organization, 13,000 people would be at risk of losing coverage under one version of this proposal.

Another idea to reduce Medicaid expenses is for the federal government to set a fixed per-person spending limit instead of covering a percentage of actual patient costs. This would shift financial risks to the states while saving an estimated $900 billion over 10 years.

In Wyoming, capping Medicaid costs could result in pregnant women, children, seniors and disabled people losing their benefits or coverage. Because of Wyoming’s aging population, the state would quickly exceed the funding cap.

The feds could also switch to a block grant approach, giving states fixed lump sums and leaving them responsible for covering any shortfalls.

Many rural hospitals are struggling, and nearly 200 have closed or significantly scaled back their services in the past 20 years. Rural hospitals have significantly lower operating margins than others and rely disproportionately on payments from Medicaid to remain in business. 

In Wyoming, Medicaid cuts could hit rural hospitals with a double whammy, thanks to the uncertainty about how the state’s new 25% property tax cut will impact the state’s 15 hospital districts that rely on such revenue. 

Wyoming has eight hospitals at risk of closing, according to a recent Center for Healthcare Quality and Payment Reform report. Every one of Wyoming’s 19 “Critical Access Hospitals” — small, rural hospitals with 25 or fewer beds located at least 35 miles from another hospital — operated at a loss in 2023. Reducing tax revenues while simultaneously cutting Medicaid reimbursement rates will just increase the chances that rural Wyoming hospitals may close.

If there’s a silver lining, it’s that Medicaid is still a very popular program. A new survey by the University of Maryland found that Republican voters across the country, including in states like Wyoming that haven’t expanded Medicaid, widely support keeping or increasing federal spending on the program.

So, why is Congress about to spend the next several months locked in a bitter partisan battle over Medicaid cuts? Part of it is the untested notion that the GOP is so committed to preserving Trump’s $4.5 trillion tax overhaul from his first term — known as the Tax Cuts and Jobs Act — that it’s a done deal.

It’s not. Consider this: The U.S. Treasury’s Office of Tax Analysis estimates that the top 0.1% of earners would get a tax cut of $314,000 under a full extension of the individual and estate tax provisions. The total cost of those tax cuts would amount to $4.2 trillion between 2026 and 2035.

Even gullible Americans who believe the rich will spend all of their tax savings to create jobs — instead of stock investments or stuffing it in offshore bank accounts — might think twice about giving the wealthy such huge tax breaks at the expense of vulnerable Medicaid recipients.

What happens when Americans realize that an $880 billion cut to Medicaid means their aging family members won’t be eligible for nursing home care?

The Economic Policy Institute says cutting Medicaid to pay for low taxes on the rich is a terrible trade. The institute notes Medicaid cuts that deprive children of access to health coverage could actually increase the federal budget in the long term because these children will not only be less healthy, they’ll grow up to earn less in wages, pay less in taxes and be more likely to receive other public benefits.

The Republicans’ margins in both the House and Senate are razor-thin. Last week, a group of 12 House Republicans sent a letter to House Speaker Mike Johnson, R-Louisiana, that stated, “We cannot and will not support a final reconciliation bill that includes any reduction in Medicaid coverage for vulnerable populations.”

It would only take peeling off a few GOP members in either chamber to change the dynamic of this entire Medicaid conversation. Once the tone shifts and public pressure builds to preserve Medicaid, maybe those tax breaks for the fat cats will stop being seen as a fait accompli, and their backers will be on the hot seat.