Inside the GOP’s Medicaid Cuts—and What They Mean for Pennsylvania
Summary
As we continue our coverage of Congress and the federal budget process, one of the biggest stories this week is a sweeping Medicaid funding bill that just got a cost estimate from the Congressional Budget Office—and the numbers are massive. The legislation could slash as much as $880 billion from Medicaid over the next decade if passed.
While both Speaker Johnson and President Trump have publicly stated their opposition to cutting Medicaid benefits, the current legislative actions by the party suggest a shift in policy that contradicts these assurances. This discrepancy is raising concerns among moderate Republicans and Democrats, who fear the potential impact on vulnerable populations relying on Medicaid for healthcare coverage. Already, debates are happening in the House regarding the cuts. Reassurances from leadership are useful soundbites but when the legislative text moves in the opposite direction, it’s a reminder that in policymaking, intentions aren’t binding. Language is.
That’s not just a federal line item. These cuts will ripple down to Pennsylvania and Philadelphia, affecting hospitals, jobs, children’s health coverage, and the state’s budget. In Philadelphia and across the Commonwealth, the effects of healthcare underfunding are already visible—regardless of what’s happening in Congress. Hospitals like Hahnemann University, Crozer-Chester Medical Center, Taylor Hospital, and Jefferson’s Cedar Campus have closed or significantly downsized in recent years, citing financial strain and unsustainable operating costs. If federal Medicaid funding is slashed, this trend will only be exacerbated, particularly in rural and underserved areas where healthcare access is already hanging by a thread.
Here’s a breakdown of the bill’s contents, how it could impact Pennsylvanians, and what state lawmakers are doing in response.
What’s in the Federal Medicaid Bill?
The legislation is part of a larger budget reconciliation package pushed by House Republicans and the Trump administration. Dubbed informally by President Trump as the “ONE, BIG, BEAUTIFUL BILL,” it’s designed to reduce federal spending by $1.5 to $2 trillion.
The Medicaid portion of the bill lays out significant cuts to spending in the sector. According to the Congressional Budget Office (CBO), the proposed changes would reduce federal Medicaid spending by $870–$880 billion over 10 years. You can read the full CBO summary here: Politico coverage.
Significant proposed changes include:
Work Requirements: Adults must prove they are working or meet specific exemptions to remain eligible for Medicaid. Requirements like these have been shown to result in coverage losses even among people who are eligible but struggle with paperwork.
Eligibility Checks: The bill proposes more frequent and rigorous checks to confirm that Medicaid enrollees still qualify.
State Funding Changes: States often use “provider taxes” (fees on hospitals reimbursed through federal matching funds) to fund Medicaid. This bill would freeze or limit those taxes, cutting off a key funding source.
According to independent analysis, if the bill becomes law, between 8.6 and 10 million people could lose Medicaid coverage by 2034.
What This Means for Pennsylvania and Philadelphia
Pennsylvania has about 3 million residents enrolled in Medicaid, and cuts of this magnitude would hit hard. Here’s how:
Jobs at Risk: A projected 42,000 jobs could be lost in Pennsylvania by 2026 if the Medicaid cuts take effect, about half of those in healthcare. That estimate comes from the Hospital and Healthsystem Association of Pennsylvania: HAP’s full report.
Kids’ Health Coverage: Over 1.2 million children in Pennsylvania are insured through Medicaid. Coverage disruptions due to stricter eligibility enforcement or state budget strain could significantly increase the number of uninsured kids.
Economic Fallout: Cuts to Medicaid and SNAP (food stamps) could shrink Pennsylvania’s GDP by $5.3 billion and lead to nearly $9 billion in lost state and local tax revenue by 2026.Hospital Funding Strain: Especially in Philadelphia, where many hospitals already operate on tight margins, losing federal Medicaid dollars could lead to service cuts or closures, particularly in low-income or underserved communities.
What Pennsylvania Is Doing
With budget talks heating up in Harrisburg, state lawmakers are moving to shore up protections at the state level in case federal funding is slashed.
Medicaid Transition Support
Senate Bill 58, introduced back in January, proposes a new “Care Transition Program” for Medicaid patients to reduce emergency room reliance. The idea is to improve follow-up care and lower costs in the long term.
ACA Protections in State Law
The PA House recently passed four bills in March that mirror protections from the Affordable Care Act. These bills would:
Allow young adults to stay on their parents’ health insurance plans until age 26.
Require coverage of preventive care services.
Ban lifetime limits on insurance coverage.
Prohibit denial of coverage due to pre-existing conditions.
These passed with bipartisan support.
The PA State Budget
Governor Josh Shapiro’s proposed $51.5 billion budget, introduced in February for 2025–2026, includes major new spending on public education, human services, and infrastructure.
However, if the federal government significantly reduces Medicaid funding, it could blow a hole in the state’s healthcare budget. Pennsylvania relies on federal matching dollars to fund Medicaid, and if those shrink, the state will either have to make up the difference or make cuts.
The governor has proposed raising new revenue through policies like:
Raising the minimum wage to $15/hour,
Legalizing recreational cannabis, and
Expanding investments in job training and mental health.
What’s Next
Healthcare leaders across Pennsylvania are speaking out against the federal proposal. CHOP, for example, said the changes would be “devastating for kids.” Secretary of Human Services Dr. Valerie Arkoosh has also warned that the cuts would increase the number of uninsured Pennsylvanians and worsen outcomes across the board.
Advocacy groups like the PA Health Law Project and PA Partnerships for Children have been rallying to protect funding and raise public awareness.
Final Thoughts
Congress is making big moves that could fundamentally reshape how healthcare is funded in this country, and states like Pennsylvania are bracing for the fallout. If you’re a policymaker, provider, or advocate, now is the time to pay attention. What happens in Washington will determine what’s possible in Harrisburg—and what kind of healthcare Pennsylvanians can count on.
We’ll continue tracking both the federal and state budget conversations in the coming weeks, especially how they impact access to care and economic stability here in the Commonwealth.
Read More
