For more than a decade during which Mississippi held out against expanding Medicaid to the working poor, there were two main reasons for the resistance. The first was the longstanding but paradoxical antipathy to anti-poverty programs in the most impoverished state in the country.
The second was the distrust among state leaders, particularly among Republicans, in the federal government. Time and again, those GOP leaders said they didn’t trust Congress to maintain the generous 90% federal match on the Medicaid expansion population, predicting that once the benefit was established, Congress would shift a greater share of the cost onto the states.
They were only half-right about this prediction.
Donald Trump’s recently enacted megabill of tax cuts and spending reductions leaves the 90% match unchanged. It does, however, fundamentally alter how Medicaid funding as a whole operates. The legislation intends to cut about a trillion federal dollars out of Medicaid over the next decade by reducing the number of beneficiaries, mostly through work requirements, and forcing the states to shoulder more of the cost of the government health insurance program.
Trump’s megabill also is designed to discourage Mississippi and the other nine holdout states from joining the 40 states that expanded Medicaid. The legislation eliminates the bonus created during the Biden era that would have been worth an estimated $700 million to Mississippi to get on the expansion bandwagon. It lets the non-expansion states keep at their current levels the taxes they have been charging hospitals to help pay for Medicaid, while the expansion states will see those provider taxes cut by as much as 40% by 2032. And while the megabill reduces the Medicaid supplement plans in all states, non-expansion states will see a smaller cut.
Thus, Medicaid expansion is not as sweet of a deal as previously. It’s also lamentable that Mississippi missed out on more than $10 billion in federal funding because of its stubborn resistance to expansion. This does not mean necessarily, however, that expansion no longer makes sense.
There’s still that 9-to-1 payoff, a return on investment that is hard to beat when looked at strictly as an economic development opportunity. For every $1 million Mississippi kicks in, it will get $9 million back from Washington that will create jobs in the high-paying health-care sector and shore up the finances of the state’s hospitals, whose existence could be made more precarious by the Medicaid cuts Trump’s megabill mandates. The Mississippi Hospital Association has estimated that the state’s hospitals could see about a billion dollars less over the next decade as a result of the legislation.
There’s also going to be a greater need for Medicaid among the working poor when the subsidies for health coverage through the private marketplace plans expire at the end of this year. Trump’s megabill did not extend those subsidies, which had made the private insurance plans affordable, and in many cases free, for those who would not have had enough income to pay for the coverage otherwise.
Furthermore, although Mississippi’s GOP leadership thought that Congress’ habit of changing its mind made Medicaid expansion a financially risky proposition for the first decade that the option existed, the opposite could be the case going forward.
As an article this week in Politico points out, Trump’s megabill is indeed bad news for hospitals in theory — a $340 billion cut over the next decade — but the worst of these cuts don’t start kicking in until 2028. That gives hospitals and their friends and lobbyists on Capitol Hill two and a half years to persuade Congress that it really doesn’t want to do this, especially not in a presidential election year.
That means Mississippi could expand Medicaid, have the work requirement on which state GOP legislators insisted, and suffer no real financial repercussions should Congress subsequently eliminate the Trump megabill’s disincentives to expansion.
Although that scenario is not guaranteed, it certainly sounds plausible.
