Trump’s $1 trillion Medicaid cut: Who’s hurt most

Donald Trump and Senate Republicans have released a sweeping proposal to overhaul Medicaid, introducing deeper spending cuts than a House plan passed last month and sparking alarm among healthcare providers and policy experts.

Trump’s cuts

The legislation, unveiled by the Senate Finance Committee as part of a broader GOP effort to advance President Trump’s tax and spending agenda, would reduce Medicaid spending by as much as $1 trillion over the next decade. That is roughly $200 billion more in cuts than the House version, raising concerns that the plan could result in significant coverage losses and strain hospital systems nationwide. Healthcare analysts were taken aback by some of the provisions in the Senate draft, notably stricter limits on “provider taxes,” a key funding mechanism for state Medicaid programs. These taxes are levied on hospitals and other medical providers, allowing states to receive higher federal matching funds.

Hospitals

While critics argue that the system shifts too much cost to the federal government, hospitals rely heavily on the resulting payments to support care for low-income patients. “The text included some notable adverse surprises on Medicaid, posing problems for hospitals if maintained,” said Tobin Marcus, a policy analyst at Wolfe Research. “These are significant negative surprises,” he added, noting that even the House bill’s more modest cuts had drawn skepticism from several senators. The Senate proposal retains many reforms from the House bill, including a national work requirement for childless adults ages 19 to 64. By 2029, these Medicaid beneficiaries would need to prove they are working or engaged in other approved activities at least 80 hours per month to keep their coverage. Democrats and many policy experts have criticized this measure as a bureaucratic hurdle designed to reduce enrollment rather than encourage employment.

Criticism

Bobby Kogan, a former adviser to the Office of Management and Budget under President Joe Biden, called it a “work-reporting requirement” rather than a genuine work incentive. “They’ve instituted so much red tape that enrolling becomes impossible for many,” Kogan said, noting that most people who lose coverage under such requirements are, in fact, already working. The most controversial change in the Senate draft involves limiting provider taxes. While the House bill would ban new provider taxes while preserving existing ones, the Senate version would reduce states’ ability to finance Medicaid with these funds to just 3.5% of total spending by 2031, down from the current 6%.

Trump’s war on Medicaid

This could hit states that expanded Medicaid under the Affordable Care Act particularly hard, as many rely heavily on supplemental hospital payments funded through provider taxes. Rural and low-income hospitals, often in Republican-led states, face the greatest risk of financial instability if the Senate plan becomes law. “We anticipate significant pushback to the draft from Senators concerned about the impact of the Medicaid cuts on state budgets and rural hospitals,” said Spencer Perlman, director of healthcare policy research at Veda Partners. He expects opposition from governors and the hospital industry as well. Publicly traded healthcare companies could also be affected. Hospital operators like HCA Healthcare and Ardent Health, as well as managed-care insurers — including Centene, Elevance Health, UnitedHealth Group and Molina Healthcare — rely heavily on Medicaid revenue that could be destabilized by the proposed financing changes.

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