As House Republicans work to meet the $5.8 trillion budget framework laid out by President Donald Trump, attention has turned to Medicaid, the costly federal healthcare program that now consumes nearly $900 billion annually. With the Energy and Commerce Committee required to find $880 billion in spending cuts over the next decade, the Congressional Budget Office estimates that $581 billion will need to come from Medicaid alone.
This has led some lawmakers to explore shifting more of the financial responsibility to states—many of which are already struggling under expanded eligibility introduced during the Biden administration. Under Biden, Medicaid enrollment swelled beyond traditional groups like seniors, children, and low-income families to include able-bodied, childless adults, raising federal costs by 20%.
Brooklyn Roberts of the American Legislative Exchange Council (ALEC) says this budget cycle is a rare opportunity to examine Medicaid’s long-term sustainability. ALEC isn’t endorsing specific national reforms but is highlighting successful state-led strategies to reduce costs without compromising essential care. “States are the laboratories of democracy,” Roberts said, “and they can innovate if we just give them the freedom to do so.”
Roberts pointed to Indiana’s newly passed SB2 law, which strengthens eligibility verification to root out fraud and ensure only qualified individuals receive benefits. Other reforms under discussion include transitioning to managed care systems, like in Idaho, and implementing work requirements for certain recipients, as Arkansas has done.
Despite widespread voter opposition to Medicaid cuts—reflected in The Center Square’s Voters’ Voice national poll—supporters argue that reform does not have to mean reduction in coverage. Instead, it can mean smarter spending, stronger oversight, and tailoring services to those who genuinely need them.
With Medicaid consuming nearly a third of most state budgets, Roberts warns that inaction will leave states unprepared for any future shifts in federal policy. “They need to be looking at what types of services they’re providing and making sure that coverage is going to the people who truly need it,” she said.
Even if Congress cuts federal Medicaid spending by $880 billion, the program will still grow—just at a slower rate. For Republican leaders trying to extend the 2017 Trump tax cuts while balancing the budget, trimming waste and tightening program integrity may be one of the few politically viable paths forward.
