Six Facts You Should Know About Medicaid

New research reveals the coming consequences of the One Big Beautiful Bill Act

On the 4th of July this year, Donald Trump signed into law a $1 trillion reduction in Medicaid spending over the next decade.

While Congress was rushing to hit that deadline, I was crunching the numbers with my colleagues Dan Flaming and Patrick Burns at the Economic Roundtable. Our new study, released just in the nick of time, projects the consequences of these spending cuts.

Here are six facts we uncovered in our analysis:

1. Medicaid Insures Over 40 Percent of America’s Young Children

“The most frequent Medicaid patients are babies who are just entering the world and their mothers,” our analysis found.

2. The Most Prevalent Use of Medicaid Is Paying for Childbirth

Medicaid is a crucial support for American families. Overwhelmingly, the number-one reason why Medicaid patients wind up in the hospital is childbirth. It pays for the babies, and it pays for the mothers.

It’s also the number-one reason why Medicaid patients wind up in the emergency room. Medicaid pays for over half of all pregnancy-related ER visits in the United States.

3. A Dollar of Medicaid Spending Grows the Economy by Two Dollars

Medicaid doesn’t just pay for doctors and hospitals. It pays for nurses and medical products, prescription drugs and home health care, retirement care and dental services, medical equipment and laboratories. Its spending ripples all the way through the medical supply chain, from real estate to food services to electric power utilities to manufacturing and trade. It creates demand for dozens of industries.

By our estimate, every dollar of direct Medicaid spending generates $2.20 in total output for the economy — and so, every dollar we cut will reduce economic output by the same amount.

This isn’t surprising to anyone who’s been working in health economics. Of all our federal government’s programs, Medicaid has one of the highest “marginal value of public funds” (MVPF), meaning it improves its beneficiaries’ well-being so much that it generates far more income than just the dollars it pays to providers.

4. Entire Regions of the United States Are in Danger of Losing All Access to Hospital Care

My previous research has shown that Medicaid is a crucial lifeline to hospitals on the brink of financial distress. Without it, many hospitals would be forced to close.

Much of the United States can’t afford such a loss. They’re already hanging onto few hospitals — and few hospital beds — as it is.

In California, for instance, 2 counties have no general acute care hospitals at all, 14 counties have only one hospital, and 12 counties have only two. A single bankruptcy could eliminate all hospital care in many of these counties — or force patients to negotiate with a high-cost monopoly if the competition is wiped out.

By international standards, we already have a low bed capacity. The highest-capacity county in California — San Francisco County — has 3.3 acute care hospital beds per 1,000 residents.

Compare that to the European Union, where hospitals have 5.5 beds per 1,000 residents, or Japan, where it’s 12.7, or South Korea, where it’s 12.8.

And 3.3 is the best we have to offer. Everywhere else in California — and most of the United States — is worse off.

5. The New Work Requirement Is a Waste of Time for 95 Percent of Enrollees

The new “work requirement” — forcing every state to prove that every enrollee is engaged in work, community service, or education if they aren’t exempt — is supposed to prevent people from “gaming the system.” But only 5 percent of enrollees can possibly fit into that category.

The rest — 95 percent — are either exempt, working, or in school.

But they will still have to jump through the hoops to prove it. The work requirement is a lot of, well, work. Especially for the states administering the program.

6. States Have Big Backlogs of Medicaid Renewals Every Month — and They’re Going to Get Worse

The administrative system for Medicaid is already overloaded. Every month in California, for instance, the Department of Health Care Services has approximately 945,000 “redeterminations” to process. That’s 945,000 people who need to know if their enrollment will be renewed or not.

But 80,000 to 250,000 don’t get an answer. They get postponed to the following month.

With an estimated 1.21 to 1.38 million Californians projected to lose their Medicaid coverage, this backlog is going to grow. The system is going to slow down. People are going to get frustrated. States are going to divert resources from other programs to try to process all the new redeterminations. Other institutions — far removed from the health care industry — are going to suffer.

A very painful process has begun.