There’s a Lot for Catholics to Unpack About Medicaid Cuts| National Catholic Register

The U.S. Senate is debating a multi-trillion-dollar budget bill — known as the One Big Beautiful Bill — that could bring sweeping changes to the Medicaid program, including cutting federal funding by hundreds of billions of dollars.

The bill has dominated debate on Capitol Hill for the past six months and is a centerpiece of the agenda for the Trump administration and Republican leadership in Congress, particularly efforts to extend expiring tax provisions and create additional tax breaks.

The bill narrowly cleared the House of Representatives in late May, and senators are now debating the extent to which they will alter the bill. While the legislation’s ultimate fate remains to be determined, the ongoing debate about the scope of Medicaid and other social support programs, like nutrition aid, is pertinent to faithful Catholics.

Established 60 years ago in tandem with Medicare as part of President Lyndon Johnson’s Great Society agenda, Medicaid is the federal entitlement program that provides health coverage to people with low incomes.

Over the years, the program has grown significantly, covering nearly 94 million people in fiscal year 2022 — driven largely by COVID-19 emergency policies that broadened eligibility — and close to 80 million people at the end of 2024, according to the Kaiser Family Foundation. Total program spending is approaching $900 billion, with the federal share at more than $600 billion.

Core constituencies of Medicaid have been pregnant women, the disabled and children — the latter covered by Medicaid and the related Children’s Health Insurance Program (CHIP).

In recent years, most states — incentivized by a 90% federal matching rate — have expanded their Medicaid programs to cover able-bodied adults with incomes up to 138% of the federal poverty level (FPL), or slightly more than $44,000 annually for a family of four in 2025.

It is the growth in the program as well as the complexities in how it is funded that have led to calls for reform. Unlike Medicare, which is financed by the federal government through payroll taxes and other funds as well as beneficiary cost sharing, Medicaid is a joint program of the federal and state governments. This means that, aside from a federal baseline, states have wide flexibility in how they establish eligibility for their programs, services they cover and how they finance their state share. For example, in fiscal year 2022, California spent the most on Medicaid (nearly $38 billion), while Wyoming spent the least ($263 million).

On the eligibility and benefits side, there is significant variation between states — from those with broad eligibility criteria and more generous benefits to those operating at or near the federal minimums in terms of both the population covered and benefits offered.

Complications also arise in program financing and how much each state contributes to its program. While originally envisioned as a 50/50 partnership, across its many categories Washington on average covers about 70% of the program, with many states heavily reliant on those federal dollars.

Another financing factor is that Medicaid is an open-ended entitlement program: the more states spend, the more they can draw from the federal government. Additionally, most states impose a complex tax or fee on health-care providers to generate their state share — dollars they ultimately pay back to those same providers.

Conflicts With Church Teachings

Medicaid can be vexing for Catholics for several reasons. A longstanding provision of federal law, known as the Hyde Amendment, prohibits federal Medicaid funds from being used to pay for abortions except in cases of rape, incest or when the life of the mother is at risk — but 20 states use their own funds to cover abortion more broadly, according to the Kaiser Family Foundation.

Medicaid programs also cover many forms of contraceptives, and several states have included transgender health services. A provision in the bill that passed the House would prohibit any federal Medicaid funds from being used to pay for transgender services, though states would still be permitted to cover them using their own funds.

On the flip side, the program provides access to health care for a growing segment of the population, helping to reduce a major barrier to overall health and well-being. The essential role Medicaid plays for many has led the U.S. Conference of Catholic Bishops (USCCB), Catholic Charities USA and the Catholic Health Association (CHA) to oppose changes that would limit funding — such as moving from an open-ended entitlement to a more limited block grant or per-capita allocation model, or by imposing requirements that beneficiaries work, pursue work or be involved in some form of “community engagement,” which could ultimately create additional burdens.

In a communication to lawmakers last month, the bishops’ conference expressed particular concern about an increase in the uninsured population and the use of safety-net programs to fund expanded tax cuts, calling the provisions “unconscionable and unacceptable” and urging legislators to reconsider them.

Another reality of Medicaid is that the program’s reach extends far beyond the provision of what many think of as traditional health care for the indigent. For example, Medicaid is the primary payer of Home and Community-Based Services (HCBS), which enable people with disabilities to live in their own homes or other non-institutional settings. It is also the major payer for long-term nursing home stays.

Additionally, many states have adopted Medicaid policies to help families with disabled children keep them at home — even if the family wouldn’t otherwise qualify for Medicaid based on income — thereby helping to keep families together.

As a payer, Medicaid is of high importance to health-care providers — including Catholic hospitals, nursing homes and other institutions in underserved and economically disadvantaged areas that serve a disproportionate number of Medicaid beneficiaries. Additional cuts to an already strained system could lead to further challenges, including reductions in service offerings or facility closures.

Medicaid is often a less-than-desirable payer compared to private insurers and even Medicare. As a result, access challenges already exist — and will likely worsen if funding for the program is reduced.

The Policy Path Forward

The bill that cleared the House was less aggressive than many advocates of the program had feared. But it still contains provisions that the Congressional Budget Office (CBO) estimates could result in 7.8 million people losing coverage over the next decade and would reduce federal Medicaid expenditures by hundreds of billions of dollars during that period.

A focal point of the Senate debate will be whether these provisions in the House bill will be loosened or tightened.

For some Medicaid advocates, the message is simple: Congress should do nothing, despite the program’s sizable growth in recent years, its rising share of resources, and its contribution to the national debt — all of which raise valid questions about its focus and financing. But ignoring a festering sore will only result in an even greater infection.

Congress can do more than either turn a blind eye or gut the program. Instead, legislators should revisit the original intent of the Medicaid program — now 60 years after its inception — and examine how it ought to be financed. That review should include a willingness to identify areas in need of reform — including expanded eligibility criteria that may need to be cut back, benefits packages that may need to be trimmed and financing policies that may need to be overhauled — as well as the consequences associated with any changes.

I am not optimistic that the current political climate provides a real opportunity for a serious review and reform of the Medicaid program. But if —or rather, when — that time comes, the following principles could help maximize the likelihood of success.

1. Focus on outcomes and values.

Many on the political left object to any reductions in funding for an entitlement program or to a decrease in the number of beneficiaries. But this can overlook the reality that some changes may be necessary — and that reducing enrollment because people no longer need assistance should be seen as a success, not a failure.

At the same time, many on the political right criticize increased public spending even if it’s well-justified. Yet there are many compelling arguments for expanding access to Medicaid for able-bodied adults and families, particularly to address factors, known as social determinants, that affect overall health. When access to health care is less of a concern, people can better focus on landing and holding jobs, completing schooling, providing for their families and contributing to their communities.

Expanded access to health-care services also leads to earlier well checks and sick visits, potentially catching problems before they escalate into more intensive — and expensive — care, such as emergency room visits. Focusing on goals and outcomes and avoiding political constructs will lead to smarter policy.

2. Prioritize protecting the most vulnerable while recognizing the value of more expansive offerings.

Ensuring that at its core the Medicaid program is supporting the most vulnerable it was originally intended to protect — particularly pregnant women, children and the disabled — makes sense. Doing this may require some changes in how the entitlement is funded and how states manage their respective programs.

One major concern with shifting Medicaid to a block grant or per-capita cap model instead of an open-ended entitlement is the potential loss of protections ensuring that funds reach their intended recipients. Any reform in that direction should prevent the diversion of resources from the most vulnerable and also account for the inevitable outlier or high-cost cases that arise.

Health care is complex, and the last thing Catholics should support are policies that risk furthering a throwaway culture.

3. Recognize that health care costs money.

One of the greatest criticisms of Medicaid is how it’s financed — particularly through provider taxes and fees. But these financing models are rooted in the need to supplement the underpayments that lie at the heart of Medicaid. Eliminating them would only lead to greater budget shortfalls and, likely, new financing gimmicks to cover them.

One way to address this problem would be to increase the federal share of Medicaid funding, while also limiting states’ reliance on provider taxes and other models to draw down additional federal dollars. Health care has changed dramatically in the 60 years since Medicaid’s creation. Policymakers should modernize the program with care, to avoid causing massive disruption overnight.

4. Protect taxpayer dollars and conscience rights.

For nearly 50 years, the Hyde Amendment has prohibited federal funding from paying for abortions except in limited circumstances. Pro-abortion politicians have long sought to reverse the Hyde Amendment as a means of expanding funding for abortion. Rather than end Hyde, the provision could be a model for addressing other morally contentious issues — both those being navigated today and those that may arise in the future.

The Medicaid program — and the politics surrounding it — are complex, and it is easy to fall into one side or the other of this debate. But as Catholics concerned about the common good, we should look at this topic holistically, focusing on those most in need and, ideally, helping many eventually move beyond the need for this safety net.

Nick Manetto is a federal health-care policy consultant who works with a variety of organizations including faith-based providers. He writes from Herndon, Virginia.

National Catholic Register