Proposed Medicaid, SNAP cuts could trigger job losses in healthcare

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Deep cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) could have devastating economic consequences across all 50 states, according to a report from the Commonwealth Fund and the George Washington University Milken Institute School of Public Health.

The analysis warns more than 1 million jobs could be lost, state GDPs could shrink by more than $110 billion in 2026 alone, and state and local tax revenues could fall by $8.8 billion.

“These cuts are not just line items – they translate directly into people losing jobs and patients losing access to healthcare and food,” Dr. Leighton Ku, lead author of the report and professor at the Milken Institute School of Public Health, told HealthcareFinanceNews.

The proposed reductions come as part of the U.S. House of Representatives’ budget resolution, which outlines plans to reduce federal funding by at least $880 billion over the next 10 years for programs under the jurisdiction of the House Energy and Commerce Committee – including Medicaid – and $230 billion from programs under the House Agriculture Committee, which includes SNAP.

He said if the cuts are as deep as they are now being proposed by the House, roughly 477,000 jobs could be lost in healthcare, including hospitals, doctors’ offices, clinics, pharmacies and nursing homes.

The report projects Medicaid cuts alone would result in a $95 billion hit to state economies in 2026, while SNAP reductions would shrink GDP by another $18 billion. 

The job losses would not be limited to the health and food sectors.

“The large size of the potential budget cutbacks means that the harm, which will begin in healthcare and food-related businesses, will ripple out to other sectors of states’ economies, such as retail, construction and service industries,” Ku said.

Of the more than 1 million jobs that could be lost, just under half are outside the health and food-related sectors.

The report said the healthcare impact is particularly alarming, given that Medicaid supports not only care for low-income families, but also a large portion of the elderly population and those with disabilities.

Reduced funding would force many providers to scale back services or close altogether, particularly those that serve high numbers of Medicaid patients.

“This would greatly limit access to healthcare, particularly at facilities that serve Medicaid patients, but would also affect access for those on Medicare and private insurance as well,” Ku says.

SNAP cuts would lead to a similarly wide-ranging impact: The report estimates that 143,000 jobs would be lost nationwide due to reductions in SNAP, including 78,000 in food-related sectors like grocery stores and agriculture.
The projected drop in tax revenue – estimated at $7 billion from Medicaid cuts and $1.8 billion from SNAP cuts – would leave state and local governments with difficult choices.

“State and local governments are already having a hard time balancing their budgets, and the proposed budgets could cause them to lose about $9 billion in tax revenue next year,” Ku says. “Depending on their political choices, they will be forced to raise tax rates, cut services or both, since almost all states are required to balance their budgets every year.”

Ku suggested more balanced alternatives exist for controlling healthcare costs without undermining critical safety net programs.

“There are responsible approaches to containing healthcare costs, such as by bolstering primary care services and support for community health centers, and containing needlessly high prescription drug costs,” he said.

Ku added these programs are deeply embedded in the economic fabric of every state.

“Cutting them will hurt far more than just the people who rely on them directly,” he said.
 

Email the writer: SMorse@himss.org