Though it has received scant attention in this year’s presidential campaign, Medicaid, the $600 billion-a-year federal program for lower-income people, could be in for big changes, depending on who is in charge at the White House and in Congress come January.
Some 81 million Americans are currently enrolled in Medicaid, a number that has expanded greatly since the 2010 enactment of the Affordable Care Act (ACA), which allowed states to expand Medicaid.
Medicaid enrollment also received a boost during the COVID-19 pandemic as Congress incentivized states to keep lower-income people covered in exchange for increased federal funding.
“Since March 2024, states have been ‘unwinding’ the continuous enrollment provision, leading to more than 21 million people losing Medicaid coverage as of August 2024,” the Commonwealth Foundation recently noted.
Differences Over Eligibility
About three-quarters of Medicaid recipients are Democrats, the KFF research organization estimates. This gives Republicans and Democrats vastly different perspectives on the program. In addition, Medicaid is the single biggest federal source of revenue to the states.
The two parties’ contrasting approaches to Medicaid eligibility are likely to drive change.
A Harris administration, with a substantial number of Medicaid recipients among its constituents, can be expected to try to expand Medicaid coverage and services. If this cannot be done legislatively (if, say, Republicans win control of the Senate), the White House could try to do this through the administrative rulemaking process, by, for example, loosening eligibility requirements for Medicaid enrollment.
Recent rulings by the U.S. Supreme Court, however, have curtailed the power of the administrative regulatory state, so any moves to expand the program beyond the language of the law could face a court challenge.
Federalism Alternative
A Trump administration would likely allow states to put stricter controls on eligibility and disenroll free riders who use programs they don’t qualify for, says Matt Dean, a senior fellow for health care policy outreach at The Heartland Institute, which co-publishes Health Care News.
“Trump’s first term emphasized fraud deterrence and private health care plans,” said Dean. “A second Trump term could embrace federalism in a much bigger way.”
The vice-presidential debate provided clues about Trump’s likely approach, says Dean.
“J. D. Vance outlined a shift to the provider side of the equation,” said Dean. “Vance proposed that states ‘experiment a little bit on how to cover both the chronically ill, but the non-chronically ill,’ highlighting Trump’s first-term success with waivers. Vance concluded, ‘It’s not just a plan. He actually implemented some of these regulations when he was president of the United States.’”
Allowing states to have a larger say in how they manage their Medicaid programs could be a centerpiece of a second Trump term, but these efforts too could face court challenges, as they did in Trump’s first term.
Possible Waiver Battle
In a September 12 blog post for KFF, Drew Altman, the CEO and president of the organization, says states may press for freedom from federal rules on Medicaid eligibility and other major elements of the program’s structure.
“The most likely result is a big debate and retreat to ‘Waiver-land,’” wrote Altman.
Medicaid section 115 gives the Centers for Medicare and Medicaid Services authority to allow states to change certain rules upon request. Waivers offer numerous though somewhat convoluted ways to restrict Medicaid eligibility, Altman says.
“Watch for waivers for time limits and work requirements (currently in place only in Georgia),” wrote Altman. “[Watch] for premiums for beneficiaries. And for time limits on Medicaid eligibility. Even potentially to block grant the program in a state. There would be legal challenges to these waivers, opening up a new battleground in the arcane, inside baseball world of waivers that can have huge implications for people and for policy precedent.”
Federal Government v. States
Innovative use of Medicaid waivers could do much good, says Gary Alexander, director of the Medicaid and Health Safety Net Reform Initiative at the Paragon Health Institute.
“For a new president, reforming Medicaid is essential to ensure sustainability for those most in need,” said Alexander. “Waivers like the 2009 Rhode Island Global Medicaid waiver proved that when states are given flexibility to manage their own programs, they can reduce costs while improving care.
“By capping federal spending and allowing the state to innovate, Rhode Island was able to streamline services, cut waste, and better meet the needs of Medicaid recipients. This model demonstrates that flexibility coupled with an aggressive cap can be a powerful tool for Medicaid to become more efficient and sustainable,” said Alexander.
Minnesota Model?
Minnesota provides a picture of what might be in store with a Harris administration, says Dean.
“Gov. Walz, now Harris’ running mate, reinstated a sick tax on health care providers in Minnesota—his Democratic predecessor Mark Dayton had killed the tax—to expand eligibility for public programs,” said Dean. “Walz also supported efforts for a ‘public option’ that would allow anyone to buy into taxpayer-supported health care plans and expanded access to public plans to some illegal immigrants, while slow-walking eligibility redetermination.
“Generally, Walz followed the traditional path of more people on public plans with fewer options and less accountability for fraud,” said Dean.
The election could also determine the fate of the separate but related issue of what to do about the enhanced Obamacare premium subsidies, which are set to expire at the end of 2025. Democrats favor extending the subsidies; Republicans generally do not.
Bonner Russell Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.
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