One legislative priority of the Trump administration and the Republican-led Congress is to keep taxes low for the richest households and corporations. To help pay for tax cuts for the rich and corporations–by extending the 2017 Tax Cuts and Jobs Act (TCJA)—the Republican House on February 25 passed a budget resolution that calls for $2 billion in spending cuts. Based on previous proposals from House Budget Committee Republican leadership, at least $880 billion in cuts are anticipated to come from the Medicaid program, which provides health insurance for low-income Americans. President Trump endorsed the House plan the week before the February 25 vote, despite vowing a day earlier to not cut Medicaid.
This blog synthesizes information from two national think tanks on the likely impact of these proposals. An Economic Policy Institute blog looks at the combined impact on low-income and rich households of the House budget resolution’s cut to Medicaid benefits and of extending the Trump tax cut’s expiring provisions. An article published by the Center for American Progress (CAP) estimates the cuts in Medicaid funding and health care enrollment by Congressional District, which are shown in the table at the end of this blog.
As the chart below shows, EPI finds that the lowest-income 40% in the United States would be much worse off because of the Medicaid cuts plus extending the TCJA. Proposed cuts to Medicaid would reduce incomes for the lowest-income 20% by 7.4%, 12 times as much as extending the TCJA would boost their incomes. Proposed cuts to Medicaid would reduce incomes for the second-poorest 20% by 1.7%, nearly twice the income gain of 1% from extending the TJCA. The negative impacts of Medicaid cuts on Pennsylvania families would be similar to but slightly bigger than those on U.S. families: the poorest fifth of Pennsylvania families would see their incomes decline by 8% and second-poorest-fifth families by 1.8%. Meanwhile, the TCJA boosts the incomes of the top 1% by 3.9%, while these households do not rely in any way on Medicaid.
The CAP estimates of the negative impacts of Medicaid impacts by Congressional District are shown in the table below. Statewide, Pennsylvania would lose an estimated $34.36 billion in funding and 799,000 in enrollment in Medicaid plus the Children’s Health Insurance Program (CHIP). While City of Philadelphia CDs would see the biggest funding and enrollment drops, four Republican Districts would see enrollment declines of more than 50,000: PA-15 (Glenn Thompson; NC Pa); PA-16 (Mike Kelly; NW PA including Erie); PA-08 (Rob Bresnahan; NE PA); and PA-13 (John Joyce; rural SC PA).
The impacts above sharply underestimate the full damage to the bottom 40% of families from extending the Trump tax cuts because the full $880 billion in Medicaid cuts would only pay for about 20% of that extension. Other cuts and economic damage falling on non-rich families stemming from tax cuts for the rich would be necessary.