Trump's New Budget Plan Guts Medicaid. Here's What You Need to Know

The Trump Administration's 2018 budget request, unveiled Tuesday, includes deep cuts to Medicaid, the insurance program for low income, elderly, and disabled Americans. Medicaid covers nearly one in four Americans and accounts for $1 out of every $6 spent on healthcare in the country.

The budget outline assumes that the American Health Care Act, the Republican replacement for the Affordable Care Act, will take effect in its current form. That's far from assured, but if it does, Medicaid funding will be slashed by around $839 billion over the next decade, as payments to the states would be capped and eligibility would be narrowed. (For more on the AHCA Medicaid cuts, read Money's primer on the bill.)

But the budget proposal—which Congress still has to approve—assumes an additional $610 billion in Medicaid cuts because it allows states to restructure their Medicaid programs, by switching to per capita caps (a set amount of money per enrollee per year) or block grants (a set amount of money each state would receive from the federal government each year).

Currently, Medicaid will cover all the costs necessary to provide coverage to everyone who is eligible—there are no caps in spending. According to Loren Adler, associate director of the Schaeffer Initiative for Innovation in Health Policy, the cuts equate to almost half of Medicaid's funding over the next decade.

What Medicaid Does

As Money has outlined before, the cuts put coverage for 74 million Americans at risk. Switching Medicaid to a per capita system or block grant would likely mean that fewer people would be covered, and benefits would be cut; experts say there simply would be less money to go around. And the proposal notes that the states would be able to institute guidelines that require "work, promoting personal responsibility," which would also likely lead to coverage loss, as some current enrollees wouldn't meet whatever new requirements the states come up with.

But Medicaid reaches far beyond able-bodied adults out of work, despite the proposal's rhetoric. The elderly and disabled account for around 60% of Medicaid's expenditures, with the disabled, including the mentally ill, accounting for a full 42% of spending.

The program is the country's largest funder of long-term care expenses, covering 40% of the costs, as well as more than 60% of all nursing home residents. For Baby Boomers nearing or past retirement age, these funds are crucial: As Money has previously reported, nursing homes for the elderly cost an average of $80,000 annually, and those expenditures aren't covered under Medicare, the health program for seniors over 65. In fact, because Medicaid absorbs high healthcare costs of people with expensive conditions like dementia, it has kept private insurance around 7% lower than they would be.

Slashing funds also disproportionately affects women and children: one-half of births in the U.S. are covered by Medicaid (that varies widely by state—in Louisiana, 65% of births are covered by Medicaid, according to the Kaiser Family Foundation). The Children's Health Insurance Program, which covered more than 8.4 million children in 2015, would also see its budget significantly reduced, according to Joan Alker, Executive Director of the Georgetown Center for Children and Families. Medicaid also provides essential health coverage for low income women, particularly women (and children) of color.

Also, because the ACA allowed states to expand Medicaid eligibility, millions of people qualified for health coverage. In fact, the Medicaid expansion accounts for the majority of the health insurance gains made since Obama's health law went into effect. If the proposed budget and the AHCA were to pass as they are, millions of people could potentially lose coverage over the next decade.

Other Healthcare Cuts

The proposed budget does not allow reimbursements to organizations that provide abortions, like Planned Parenthood and severely cuts funding for science and public health agencies, including a $1 billion cut to the National Cancer Institute.

Notably, the National Institute of Health's budget would be slashed from $31.8 billion to $26 billion. The Center for Disease Control and Prevention would face cuts of more than $1 billion, including a $222 million decrease in funding to the chronic disease prevention programs, which help people with conditions like diabetes, heart disease, and obesity. The National Science Foundation would face a decrease of $776 million.