Medicaid Cuts and Spending: Who Should Pay for the Uninsured?

The United States has long struggled with balancing efficiency with affordability in health care.

While expanding public insurance increases coverage, detractors inevitably accuse such expansions as being fiscally irresponsible and resulting in bureaucratic inefficiency. 

The most recent iteration of this debate is seen in proposed congressional Medicaid cuts under the Big Beautiful Bill (BBB). 

The Big Beautiful Bill: Key Medicaid Provisions

As it currently stands (as of the time of this writing on July 1), the BBB will institute Medicaid work requirements for childless adults. This (largely) targets those adults who gained Medicaid through the expansion under the Affordable Care Act.  

The primary goal of work requirements is to reward and encourage work.
However, the research also shows that work requirements may have unintended consequences. 

For example, a recent evaluation in Arkansas, the one state that has recently enacted work requirements, found no evidence that work requirements boosted employment among Medicaid recipients.

Instead, requirements led to declines in coverage: likely because the enrollees were unable to find work.

Insurance Coverage & The Economy

An ever-increasing US deficit, driven in part by spending on medical care, may no longer be sustainable.

 
This is seen in Moody’s downgrading of the US credit rating, which came as analysts saw no end in sight to the deficit, while high interest rates have made maintaining high debt levels expensive.

 
Likewise, Bond markets have been reacting to relentless US spending as well. 

As the government issues more debt the value of bonds falls if new investors aren’t drawn into the market. This will happen if international investors believe the risk of the US defaulting on its debt has increased.

Of course, the BBB itself is a major cause of these economic anxieties, it massively increases the total deficit in part through tax cuts to high earners.  

How can we learn more about the fiscal sustainability of Medicaid spending? 

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