Medicaid Cuts Will Cause Chaos

State Budgets Cannot Absorb Cuts to Medicaid

In 1986, Trump brashly rebuilt Wollman Ice Rink in Central Park when the city was too incompetent to manage this task. This was Trump's defining moment. He was the hero of New York! He bested the Koch administration! Everything that Trump does today is an attempt to relive that special moment.

Now, I don’t blame Trump for his love of the 1980s. In 1986, I was dancing to Madonna and REM at college dorms and dance clubs in the Lower East Side. My hair was big, my skirts were short. But I’ve moved on. Trump hasn’t.

In his never-ending quest to relive his glory days, Trump gave Musk and his DOGE dogs free rein to eliminate waste in the federal bureaucracy. The goal was to create a surplus, which would result in a $4.5 trillion tax rebate to Americans. Convinced that private businessmen are the smartest and that government is corrupt, he thought he could pull off another Wollman Park miracle. It’s not working out.

Trump wants to hand out a fat tax rebate check to Americans and be adored like the good old days, but DOGE isn’t turning up the saving numbers that he expected. If Trump and Republicans want to hand out a tax rebate, they will have to cut big, important things. Republicans have proposed $880 billion in Medicaid cuts to make his projected numbers. Cuts to Medicaid will cause massive pain to beneficiaries and bring major chaos to state and local government.

What does Medicaid Do?

Let’s do some fun facts about Medicaid:

• Medicaid provides healthcare to 72 million poor and disabled Americans.

• It’s a shared federal and state program. The federal government gives the states a block grant (few strings attached) for Medicaid. The states add another ten percent to the funding and then administer the program.

• It’s the largest health insurance program in the nation, and the largest single source of funding for states.

• It provides health insurance for about two in five children and also covers about 40% of all births.

• It also covers more than 60% of nursing home residents and nearly 30% of non-elderly adults with mental illness, as well as about one in three people with disabilities. Plus, it pays for substance abuse treatment.

So, imagine that Medicaid goes away. Suddenly, 40 percent of pregnant women won’t know if the hospital will admit them, because they don’t have a credit card. An elderly couple won’t know where their son with severe developmental disabilities will go after they die. Junkies will die on the streets.

Medicaid isn’t optional. In a society with massive inequality, this program keeps people alive.

At the same time, Medicaid isn’t perfect. The intake process is insane. I know doctors who see Medicaid patients for free on weekends, because their hospitals and practices won’t accept Medicaid payments. Corrections should lean towards streamlining the system and increasing coverage, and certainly not towards cutting health access for poor and disabled people.

State Budgets Can’t Pick Up the Difference

The states cannot absorb a cut in federal funding of Medicaid. This week, Gov. Murphy of New Jersey proposed a $58.1 billion budget. However, this budget is contingent on Medicaid funding from DC. According to NJ.Com:

But that surplus still may not be enough to withstand billions of dollars in proposed Medicaid cuts, based on a plan by Congressional Republicans to slash the health insurance program for the poor and disabled. There is also deep uncertainty over other possible spending cuts from Republican President Donald Trump’s new administration.

“I think it’s safe to say that we are facing more uncertainty at the federal level than at any other point in modern history,” Murphy, a Democrat, said. “And this uncertainty has a direct impact on all of us, and most importantly, the people of New Jersey.”

The state estimates they would lose $5.2 billion in the proposed plan. Medicaid supports 1.8 million New Jerseyans, but 700,000 residents could lose coverage with new intake qualifications. The total cost of the program is $24 billion, with $10 billion funded by the state and $14 billion by the federal government.

All the states are losing their minds over these cuts. With balanced budget laws, they can’t run a deficit. To compensate for these cuts, states would have to take money from other pots, like education. Local school districts don’t have the reserve funds to compensate for any reduction in state funds and aren’t legally allowed to raise property taxes beyond two percent per year, so schools will go bankrupt.

The misery will be widespread, impacting every town and voting block. Republicans in Congress know this, and political fractures are forming.

Is the Economy In the Toilet?

Cuts in Medicaid will cause multi-system failure in society. No tax rebate can cushion the massive harm that will result. Trump will have to walk back this tax rebate promise. And Musk will be dust.

But even without touching Medicaid, the unchecked havoc in DC is already having a ripple effect in the economy. The federal government employs three million people, not including the military. There aren’t enough jobs in the private sector to absorb all the job losses. The downstream effects of cuts to federal programs are huge.

Sally, who was the research coordinator at Small Town University, walked out of the administration building with her coffee mugs in a box last week and is now collecting unemployment. After nine months of unemployment, she’ll need SNAP and Medicaid. Small Town University is the largest employer for 200 miles, so there are few alternatives.

Jeff, a vet with PTSD, has a job mopping floors at the Veterans hospital. Reluctantly, the Vet hospital lets him go when faced with budget cuts. A little slow on the uptake, Jeff can’t find a job elsewhere. So now he needs SNAP, Medicaid, and a housing voucher.

DOGE is trashing the system without regard to the ripple effects in employment or potential upheaval of state and local governments. Economists are pessimistic, and I’m hearing a lot of worry at the local level, too. Are you rejiggering your stock portfolio? Holding off on the bathroom remodel? Not planning a vacation this year?

Someone needs to tell Trump that the federal government isn’t a small ice skating rink in Central Park. It is not 1986. I’m no longer a size 1/2. Okay, he doesn’t need to know that. But without a reality check, Trump is going to unleash economic and political catastrophe. That simply can’t happen.

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Other Stuff

Last weekend, Steve and I were in snowy Vermont visiting our son at his autism college. When we came back, I learned that a local friend died suddenly — in mid-sentence during a phone call with her son. She was only 57, so we suspect an aneurysm or a stroke. Appreciate every day, people.

This weekend, we’ll be in West Palm Beach visiting family. With single digit temps in Vermont last weekend, we’re looking forward to 80 degrees in Florida. I am a little worried about getting on a plane this weekend, given the many recent plane disasters.

I ate too many French fries this weekend, so I’m back to daily walks/runs. This morning was a walking day, so I listened to podcasts, including the Prof G podcast and the Nate Silver/Paul Krugman live chat.

Watching: White Lotus, 1923 Season Two