Dive Brief:
Funding cuts to Medicaid and the Supplemental Nutrition Assistance Program, which provides food benefits to low-income families, could damage state economies and result in job losses, according to a report published Tuesday by the Commonwealth Fund.
If funding reductions pitched by congressional Republicans are implemented, state gross domestic products would fall by $113 billion next year — outstripping the $95 billion in savings for the federal budget, according to the analysis.
Businesses and healthcare providers that receive these funds could cut workers. More than 1 million jobs could be lost due to Medicaid and SNAP cuts in 2026, including 477,000 roles in the healthcare sector, Commonwealth projects.
Dive Insight:
Republicans are searching for at least $1.5 trillion in reductions over the next decade to balance out President Donald Trump’s promised tax cuts, as well as increases in defense and border control spending.
In late February, House Republicans passed a budget blueprint that called for the Energy and Commerce Committee, which oversees healthcare programs like Medicare and Medicaid, to find $880 billion in cuts.
The resolution also instructs the Agriculture Committee, which manages SNAP, to cut funding for programs under its purview by at least $230 billion.
Though details about spending reductions would come in future legislation, SNAP and Medicaid are likely targets for cuts. Indeed, Republicans would be unable to meet their budget goal without touching the safety-net insurance program, the Congressional Budget Office said earlier this month.
And, cutting both SNAP and Medicaid could have significant economic impacts, Commonwealth said in its latest analysis. It would reduce funds to businesses like grocery and other food stores, as well as healthcare providers like hospitals, doctors’ offices and nursing homes.
In response, providers and affected businesses could cut staff, reduce salaries or limit purchases of other goods and services. Workers who lose their jobs would have to reduce their spending, lowering the amount states and local governments could collect in taxes.
“Slashing these programs will worsen health outcomes for all Americans, and particularly for people with chronic conditions who rely on Medicaid for ongoing care. Similarly, cutting SNAP will push more families into financial distress, making it harder for them to afford basic necessities,” Joseph Betancourt, Commonwealth president, said in a statement. “The ripple effect will hit the entire health care system and impact everyone — not just those with Medicaid — driving more people to emergency rooms and further straining an already overburdened system.”
If Medicaid is cut by $880 billion over a decade, states would receive nearly 12% less in federal government funding. If cuts are spread evenly across 10 years, more than $72 billion in funding would be lost in 2026 alone, according to the analysis.
State economies would lose $95 billion in gross domestic products next year due to Medicaid funding reductions alone. About 888,000 jobs would also be cut in 2026 — more than half of which would come from the healthcare sector — and some rural healthcare facilities could close their doors, according to Commonwealth.
The potential cut to SNAP would reduce funding to states by nearly 21%. State gross domestic products would decline by $18 billion next year due to the cuts, and around 143,000 jobs would be lost across the country, according to the analysis.
