Michael Kinnucan, a senior health policy advisor at the Institute for Fiscal Policy, discusses the implications of the One Big Beautiful Bill Act (OBBBA). This policy was framed around the idea that the federal government was misallocating funds by providing Medicaid to healthy adults. To address this issue, the OBBBA introduced work requirements for non-disabled adult Medicaid beneficiaries. This change could potentially leave between 1 to 15 million people without federal Medicaid coverage.
Interestingly, it turns out that most uninsured individuals already meet these new work requirements. In fact, many adult Medicaid recipients without disabilities are already employed. However, experiences from states like Georgia reveal that proving this status can be quite burdensome due to government regulations.
States theoretically have the option to cover those losing their federal Medicaid using state funds, yet, this approach faces significant reluctance—even in a predominantly Democratic state like New York. Governor Kathy Hochul has indicated that the state cannot manage to compensate for federal cuts adequately, leading states to consider reducing Medicaid coverage as a cost-saving measure.
This strategy, however, is flawed. The idea that cutting insurance would save money is misguided because while some people might be healthy and low-cost, many others are not, and without insurance, they end up in emergency rooms.
You can’t save money by denying healthcare to healthy people.
Denying services to healthy individuals doesn’t lead to savings. This principle applies to private insurance too—where a small percentage of individuals account for most of the costs. The same is true for Medicaid, where a large portion of spending goes toward the healthcare of those who are unwell.
Ultimately, enrolling someone in Medicaid incurs minimal costs, yet the real expenses arise when individuals need care. Emergencies, treatments, and the like are where most of the funds are directed. If healthy individuals aren’t using healthcare services, kicking them off Medicaid won’t significantly reduce state expenses.
If cost-saving is the goal, the focus should be on reducing care for those who are presently ill. However, denying treatment—like insulin for diabetics or chemotherapy for cancer patients—wouldn’t be politically viable. This brings back the common rule of thumb: 80% of healthcare expenses come from managing the 20% of the most seriously ill.
There are certainly ways for policymakers to save money, such as the unfortunate scenario where someone who loses Medicaid ends up in dire conditions. When a person arrives at an ER following an accident, society might take the stance that they are out of luck due to their paperwork issues. This “savings” approach masks the reality of costs that arise when individuals are not covered.
Nevertheless, this strategy is fraught with ethical concerns and practical challenges. It’s politically toxic and goes against established laws regarding emergency care obligations. As a result, politicians tend to seek alternatives to avoid facing these harsh realities. They require hospitals to treat uninsured people in emergencies—providing funding for such care. They might cut Medicaid for the healthy while crafting exemptions for those with severe medical conditions. In essence, they might say, “We cut Medicaid for healthy individuals,” but the reality is more complex—people cannot be left to suffer or die on the street.
However, no matter how it’s framed, money ultimately has to be allocated to provide care for the sick. Denying care can lead to fatalities, but providing it means expenses won’t decrease.
So, what does this mean going forward? Under the new administration following the OBBBA, we can expect a blend of outcomes. Some people will certainly face health crises after losing Medicaid, while others may receive care through the emergency system despite being uninsured. In some cases, their conditions might qualify them for Medicaid again. In the end, the state will still bear the costs of care.
This situation highlights a paradox in our political system, resulting in a process where individuals are kept off Medicaid until they fall ill. We set up hurdles that prevent people from accessing preventive care, leading to a rise in costly emergency hospitalizations.
In summary, while the idea of cutting healthcare for healthy individuals might seem attractive politically, it ultimately leads to complex, troubling consequences. If the goal is to save money, the unfortunate reality is that it would mean accepting the deaths of the sick. If we aim to prevent those deaths, we will have to find a way to fund their care.
