Red states likely to feel the pain of Medicaid cuts

Politico

11-02-2025

Presented by the Coalition for Medicare Choices
With Robert King
Driving The Day
UNEVEN MEDICAID CUTS — If Republicans move forward with deep cuts to Medicaid, the pain won't be spread evenly across states, Robert reports.
Advocates and experts say states with higher proportions of low-income and aging residents are likely to be hit the hardest. And many of them are red states.
'We operate a bare bones program,' Debbie Smith, campaign director with the advocacy group Cover Alabama, said. 'I would expect that people would be cut off from Medicaid and that benefits would be reduced. I would expect that hospitals would be in crisis.'
Republicans are searching for savings as part of a larger spending package to extend President Donald Trump's 2017 tax cuts, slated to expire after this year. Leaders have long targeted Medicaid as an area to extract savings, but any proposal could face blowback from local officials who don't want to pick up the slack from any cuts.
'I don't see how a governor, regardless of red or blue state, can possibly sit on the sidelines of this conversation,' Barbara Sears, a former director of Ohio's Medicaid program and former GOP state representative, said.
Medicaid is a joint state-federal program that offers insurance to low-income and certain other populations.
Republicans on the House Energy and Commerce Committee are considering installing a per-enrollee cap on state spending. The cap would likely change with medical inflation, which can blunt any impact on coverage or benefits, E&C Chair Brett Guthrie (R-Ky.) said.
'The overall thing for me is we have a $1.8 trillion budget deficit. It isn't sustainable,' he said. 'It's not cutting the program; we want to make it sustainable.'
But the impact won't be felt the same from state to state. For instance, a state that goes over the cap could deal with the gap by cutting payments to providers instead of cutting benefits or changing eligibility thresholds.
Advocates, however, say cutting payments could exacerbate issues with getting enough providers to take Medicaid patients. Cuts could also hit rural facilities especially hard, with many hospitals in such areas shuttered.
'It is like watching a train wreck happen again and again,' Michele Johnson, executive director of the advocacy group Tennessee Justice Center, said. 'These rural hospitals are the largest employers in that area.'
States might also have restrictions on raising taxes. Oklahoma, for instance, requires a three-fourths majority to get a new tax passed.
WELCOME TO TUESDAY PULSE. A new study is offering hope for people with peanut allergies: 32 children who consumed increasing amounts of store-bought peanut butter over 18 months — under the supervision of an allergist — were able to overcome their allergies. Send tips, scoops and feedback to [e-mail] and [e-mail], and follow along @Kelhoops and @ChelseaCirruzzo.
In the Courts
TRUMP NIH FUNDING CUTS TEMPORARILY BLOCKED — A federal judge on Monday temporarily blocked the Trump administration's cuts to health research grant money, POLITICO's Erin Schumaker and Shawn Zeller report.
Judge Angel Kelley of the U.S. District Court for the District of Massachusetts initially issued a temporary restraining order barring the administration from imposing the cuts in 22 states that earlier in the day sued to block the reductions. But early Tuesday morning, the judge broadened the order to apply to all research institutions nationwide.
The cuts, imposed Monday, target 'indirect funding' from the NIH, which can cover universities' overhead and administrative costs. The change will cap the funding at 15 percent — down from an average of nearly 30 percent, with some universities charging more than 60 percent. The move from the Trump administration is expected to send shock waves through universities and research institutions that rely on the agency's funding.
The cuts are expected to save about $4 billion annually, the NIH said.
JUDGE ORDERS TRUMP TO RESUME FUNDING — The Trump administration must 'immediately restore frozen funding,' including to the NIH, a federal judge ruled on Monday, POLITICO's Kyle Cheney reports.
U.S. District Judge John McConnell said the Trump administration has been violating his order to resume funding federal grants that the White House attempted to block with a blanket spending freeze last month.
'The broad categorical and sweeping freeze of federal funds is, as the Court found, likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country,' McConnell ruled. 'These pauses in funding violate the plain text of the [order].'
Key context: The order came after a group of Democratic state attorneys general accused the Trump administration of continuing to block spending that McConnell's order was intended to release. The Trump administration countered that it is attempting to root out fraud in the programs, but the judge said that reasoning is not sufficient to justify defying the order.
Late Monday evening, the administration asked for a stay of the spending freeze order.
In Congress
COLLINS PUSHES BACK ON NIH CUTS — Maine Republican Sen. Susan Collins, who chairs the committee in charge of all government funding, said Monday she opposes the Trump administration's decision to cut $4 billion in health research grant money, POLITICO's Erin Schumaker reports.
Collins said in a statement that the cuts, which target NIH grantees' 'indirect' overhead costs, violated the appropriations law Congress passed last March. The cuts 'would be devastating, stopping vital biomedical research and leading to the loss of jobs,' she said.
Collins, chair of the Senate Appropriations Committee, will oversee legislation due next month to fund the government.
Key context: Collins' noted in the statement that she spoke with Robert F. Kennedy Jr., Trump's nominee for Health and Human Services secretary, about her 'opposition to these arbitrary cuts in funding for vital research.' Kennedy promised that 'as soon as he is confirmed, he will re-examine this initiative that was implemented prior to his confirmation,' Collins said.
Collins told CNN on Monday night she plans to support Kennedy's confirmation.
RFK CLOTURE VOTE — The Senate is expected to end debate on the confirmation of Robert F. Kennedy Jr. early Wednesday morning, clearing him for a confirmation vote soon after.
According to the Senate Press Gallery, the Senate is expected to move to confirm Tulsi Gabbard to be director of national intelligence in the early hours of Wednesday, and a cloture vote on Kennedy's confirmation will immediately follow under Senate rules.
It's been all but certain that Kennedy will be confirmed as HHS secretary after Republican senators on the Finance Committee united to move his bid forward in a party-line vote. He's also unlikely to face much Republican opposition.
AROUND THE AGENCIES
NEW HRSA HEAD — Tom Engels has been sworn in to lead the Health Resources and Services Administration, POLITICO's Ben Leonard reports.
A person familiar with the situation, granted anonymity to speak about it, said Engels returns as HRSA administrator after serving in the role during the first Trump administration from 2019 to 2021. Engels also served on the White House's Covid-19 task force and helped implement the Provider Relief Fund, which provided financial help to health providers during the pandemic.
He was most recently sergeant-at-arms at the Wisconsin Senate.
Engels takes over from Carole Johnson, who ran HRSA for former President Joe Biden, and will oversee a broad health portfolio, including the 340B drug discount program, federally qualified health centers and the Federal Office of Rural Health Policy.
Names in the News
Sylvia Lee and Leandra Olson have joined AstraZeneca's federal affairs team. Lee joins from former Sen. Kyrsten Sinema's (I-Ariz.) office and will be AstraZeneca's director of tax, trade and workforce policy. Olsen joins from the HHS Office of the Secretary and will be AstraZeneca's director of enterprise policy.
WHAT WE'RE READING
KFF Health News' Michelle Andrews reports on how ambulances are rarely equipped to perform life-saving blood transfusions.
The Associated Press' Sean Murphy and Devi Shastri report on an outbreak of 15 confirmed measles cases in a small county in West Texas with one of the state's highest vaccine exemption rates.