5 Myths About Medicaid Improvements in the One, Big, Beautiful Bill

This morning, in a huge victory for the American people, House Republicans passed the One, Big, Beautiful Bill (OBBB) Act. The bill will now move to the Senate, where it will face more scrutiny.

Unfortunately, Democrats have made it their mission to lie about the reforms made in the OBBB, specifically regarding its Medicaid improvements.

This bill would implement reasonable work requirements for able-bodied adults, more frequent eligibility checks, eliminate illegal immigrants from the program (with an FMAP reduction for states who use funds to provide healthcare to illegals), impose a moratorium on new/increased provider taxes, and bar Medicaid funds from being used for abortion or gender transition procedures.

In this piece, we set the record straight in a (non-exhaustive) list of myths being repeated by elected Democrats and the mainstream media:

Myth #1: “Medicaid funds are primarily spent on children, disabled people, elderly people, and pregnant women.”

Myth #2: “Medicaid fixes are unpopular.”

Myth #3: “Work requirements will affect the most vulnerable Medicaid recipients.”

Myth #4: “Republicans are cutting Medicaid to cut taxes for billionaires.”

Myth #5: “The OBBB will leave 13.7 million people uninsured.”

In reality, the Medicaid improvements in the OBBB will ensure the health of the program for those who need it most.

Myth #1: “Medicaid funds are primarily spent on children, disabled people, elderly people, and pregnant women.”

Democrats, via the Affordable Care Act, expanded Medicaid eligibility to include any adult earning 138 percent of the federal poverty level (FPL) and below. Suddenly, in the 40 states (and DC) who have adopted Medicaid expansion, able-bodied adults of working age were eligible for a program designed to help the neediest among us.

As Nina Owcharenko Schaefer with the Heritage Foundation explains, between 2013 and 2021, 20 million able-bodied adults were added to the Medicaid program. At the same time, only 2.5 million children were added, 1.2 million elderly people, and 400,000 disabled people.

According to the Foundation for Government Accountability (FGA), 69 percent of the increased federal Medicaid costs since 2000 can be attributed to Obamacare enrollment increases. A plurality of Medicaid spending has now been diverted to able-bodied adults, with the breakdown as follows:

35.9% of spending on able-bodied adults
31.4% of spending on individuals with disabilities
19.9% of spending on seniors
12.8% of spending on children

In 2000, there were 6.9 million able-bodied adults on Medicaid. Today, there are 34 million of them. To make matters worse, most are not working. As FGA notes, “Across 23 states with responsive records, a whopping 62 percent of able-bodied adults on Medicaid had no earned income, meaning they were not working at all.”

Myth #2: “Medicaid fixes are unpopular.”

For a long time, Medicaid fixes have been treated as radically unpopular and politically “untouchable.” In reality, Americans are receptive to commonsense reforms designed to weed out waste, fraud, and abuse and ensure the program works for those who need it.

According to a Paragon Institute survey, the support for work requirements is high:

Do you support or oppose requiring able-bodied adult Medicaid recipients to work in order for them to continue receiving Medicaid benefits?

TOTAL SUPPORT: 81%
- Strongly support: 44%
- Somewhat support: 37%
TOTAL OPPOSE: 19%
- Strongly oppose: 9%
- Somewhat oppose: 10%

Further, 67 percent of voters agree with the following statement:

“Medicaid should be a temporary safety net, not a long-term entitlement for those who are able to work. Encouraging this population to work would improve their personal situation and help get them off Medicaid, saving money that could be directed toward those who need it most – children, seniors, and people with disabilities. Other public assistance programs like Food Stamps have work requirements and Medicaid should be no different.”

Myth #3: “Work requirements will affect the most vulnerable Medicaid recipients.”

The work requirements language passed by the House explicitly applies to able-bodied adults, ages 19 to 64, with no dependent children.

Further, it only requires that these recipients spend 80 hours per month working for a wage, doing community service, participating in a work program or an educational program, or some combination of these.

There is simply no reason a 28-year-old, able-bodied man, for example, cannot devote 20 hours a week to one or some of these endeavors. If he refuses, there is no reason taxpayers should subsidize his lifestyle.

The bill includes several exceptions for those in precarious situations that may prevent them from finding work. For example, pregnant women are excluded, as are newly released incarcerated individuals. The bill also allows states to make exceptions for those experiencing “short-term hardship events,” which include those actively receiving medical or psychiatric care and those who reside in counties in which there was an emergency/natural disaster and/or has an unemployment rate higher than 8 percent (or 1.5 times the national employment rate).

Myth #4: “Republicans are cutting Medicaid to cut taxes for billionaires.”

It seems Democrats cannot escape the same talking points that have been debunked time and time again. This reconciliation package delivers on President Trump’s campaign promise of across-the-board income tax cuts for ALL income groups.

By passing this bill, Republicans are protecting taxpayers from the largest tax increase in American history by extending the 2017 Tax Cuts and Jobs Act (TCJA) while building upon their success with additional pro-growth tax relief.

Without the extension of the Trump tax cuts, low- and middle-income families would be the hardest hit:

The standard deduction, currently claimed by 90 percent of tax filers, would be cut in half.
Forty million families would see their current Child Tax Credit cut in half.
A family of four earning $80,610 on average would see a $1,695 tax hike.
More than 26 million small business owners would be hit with a 43.4 percent tax rate.

Ironically, when the TCJA was passed, the beltway media did eventually admit that Democrats lied about it being a simple “tax cut for billionaires”:

New York Times:
“Most people got a tax cut.”

Washington Post:
“Most Americans received a tax cut.”

CNN:
“The facts are, most Americans got a tax cut.”

CBS News:
“Most Americans will get a tax cut.”

Axios:
“Cut income taxes for most American families.”

Further, most of the policies added on top of the TCJA extension are specifically targeted to working class Americans. The OBBB includes No Tax on Tips, No Tax on Overtime Pay, savings accounts for newborn babies (Trump Accounts), and an enhanced deduction for seniors of $4,000.

Finally, while Medicaid fixes are being passed through the same vehicle as tax cuts, they are not included simply because we need to “pay for” tax cuts. Current Medicaid spending levels are unsustainable. The program has become overrun by able-bodied, unemployed adults who cost the program a lot of money and divert care away from those who need it the most. Without the improvements made in this bill, the benefits pregnant women, elderly people, children, and disabled people receive from Medicaid are at high risk.

Myth #5: “The OBBB will leave 13.7 million people uninsured.”

On its face, this claim is false. In reality, the CBO’s preliminary estimate on coverage changes estimates 7.6 million people would go uninsured under the bill’s Medicaid changes.

Of course, this estimate is itself misleading and, at best, in desperate need of context. Of the 7.6 million, 1.4 million of these recipients are illegal immigrants who would be kicked out of the program and 1.2 million are those who are simply ineligible for the program (as current law stands).

The CBO also, mistakenly, assumes non-expansion states will eventually pass Medicaid expansion, so hundreds of thousands of the estimated “loss” in coverage is based on unfounded, anticipated growth of the program. Finally, the remaining 4.8 million people “losing” coverage are able-bodied adults who choose not to work.

This, of course, assumes that these folks will not start working in light of the policy change. In reality, where Medicaid work requirements have been tried, like in Tennessee and Arkansas, there were sharp increases in employment, labor force participation, and, most promising, private insurance coverage. In fact, people are better off when they are active members of their community, making money, and receiving employer-provided health insurance.