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May 23, 2017

Trump budget would cut Medicaid funds by 47 percent by 2027

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President Trump on Tuesday unveiled a $4.1 trillion budget for fiscal year (FY) 2018 that would include significant cuts to Medicaid and other programs for low-income U.S. residents.

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The proposal, called "A New Foundation for American Greatness," is viewed as an outline of the administration's federal funding requests. But Congress ultimately drafts and approves federal spending measures, which the president must sign into law—and both Democratic and Republican lawmakers already have sharply criticized many of the Trump administration's proposed cuts.

Proposed cuts to entitlement programs

The proposed budget would reduce federal Medicaid spending by $610 billion over 10 years, on top of the $839 billion in Medicaid spending reductions called for under the House-approved American Health Care Act (AHCA). According to Vox, the Medicaid funding cuts would grow over time, from nearly 10 percent in 2019 to nearly 50 percent in 2027. 

The proposal also calls for changing Medicaid into a block grant program or implementing per capita caps on federal Medicaid spending, and it calls for moving all Medicaid beneficiaries to the new system—a shift from the AHCA's approach, which would prevent states from moving elderly or individuals with disabilities into the new system.

The budget proposal also would cut $5.8 billion from CHIP, which it assumes would be reauthorized through 2019. According to the Post, those cuts would be achieved by doing away with the Affordable Care Act's 23 percentage point "funding bump" in federal matching rates and by limiting federal payments to children from families with incomes of 250 percent of the federal poverty level or lower.

Further, the proposal would cut the Supplemental Nutrition Assistance Program (SNAP), which provides financial assistance to help low-income individuals purchase food, by more than $190 billion over 10 years. About 44 million people received SNAP benefits last year, the Washington Post reports.

In addition, the proposal encourages Congress to give states greater flexibility to implement work requirements for able-bodied individuals enrolled in Medicaid and other programs for low-income individuals, such as SNAP.

According to the New York Times, the budget proposal also calls for more than $72 billion in cuts to benefits for U.S. residents with disabilities and $272 billion in reductions over 10 years across all welfare programs.

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Propose cuts to federal health care agencies

The proposed budget would provide HHS $69 billion for FY 2018, a 17.9 percent decrease from 2017 funding levels. Further, the budget would reduce funding for:

  • CMS by $636 billion over 10 years;
  • The Office of the National Coordinator for Health IT from $60 million in FY 2017 to $38 million in FY 2018; and
  • The Office of Minority Health by $10 million for FY 2018.

According to STAT News, the proposal also would reduce federal funding for FDA by $854 million for FY 2018. However, that funding cut would be offset by a projected $1.3 billion increase in FDA user fees, according to the proposal. The budget proposal also recommends reforms intended to speed up FDA's approval process. For instance the proposal includes language that would give medical device makers increased flexibility to communicate with payers about their devices before they are introduced to the market. According to Politico Pro, the language implies that drug or medical device manufactures would be able to communicate about off-label uses for their products.

Despite backlash from previous proposals to cut research funding, Trump's budget proposal would cut funding for NIH by 18 percent to $26 billion in FY 2018, including cutting:

  • The National Cancer Institute by $1 billion;
  • The National Institute of Allergy and Infectious Diseases by $840 million; and
  • The National Institute of Diabetes & Digestive & Kidney Diseases by $355 million.

The proposal also would eliminate funding for the Agency for Healthcare Research and Quality and, instead, provide NIH with $272 million to implement similar initiatives, Modern Healthcare reports. The proposal also calls for cutting CDC's budget by 17 percent to $6.3 billion in FY 2018, including a:

  • 28 percent funding cut for CDC environmental health efforts, which would get $157 million;
  • 18 percent funding cut for CDC's global health program, which would get $350 million; and
  • 17 percent funding cut for CDC's HIV/AIDS, sexually transmitted infection, and tuberculosis prevention programs, which would get $934 million.

The proposal also calls for a:

  • 19 percent funding cut for CDC efforts to prevent chronic diseases and promote health; and
  • 10 percent funding cut for CDC's immunization and influenza preparation efforts.

Other proposals include medical malpractice reform, extending Veterans' Choice Program

According to STAT News, the proposal also calls for $403 million in cuts to physician training programs, and it calls for reforming medical malpractice laws. For example, the proposal would limit the awards parties can receive for noneconomic damages at $250,000 indexed to inflation and implement a three-year statute of limitations on medical malpractice claims. The proposal estimates that the reforms would save the federal government $55 billion over a decade, including $31.8 billion in savings for HHS.

In addition, the budget calls for $29 billion in funding to extend the Veterans' Choice Program.


While some observers have said U.S. entitlement programs are in need of reform, lawmakers from both sides of the political spectrum have said the proposed cuts may go too far.

Senate Minority Leader Chuck Schumer (D-N.Y.) said the proposed cuts would pull "the rug out from so many who need help." He added, "This budget continues to reveal … Trump's true colors: His populist campaign rhetoric was just a Trojan horse to execute long-held, hard-right policies that benefit the ultra wealthy at the expense of the middle class."

Rep. Mark Meadows (R-N.C.), who chairs the conservative House Freedom Caucus, also indicated that some conservative Republicans could oppose some of the budget proposal's cuts. For instance, Meadows said cutting food assistance programs for older U.S. residents "may be a bridge too far" even for some lawmakers "who are considered to be fiscal hawks."

Further, some economists have taken aim at the administration's claim that the proposal will lead to balanced budgets. Robert Bixby, the executive director of the Concord Coalition, said, "You don't have to be an economist to know that that doesn't add up, and that's why there's a great deal of concern about the negative fiscal impact that this budget will have."

Ron Haskins, a senior fellow at the Brookings Institution, expressed skepticism about whether lawmakers will seek to implement the cuts Trump proposes. He said, "I don't think the Republicans on the Hill are going to feel a strong compulsion to follow the president."

Senate Majority Whip John Cornyn (R-Texas) said, "I think it's the prerogative of Congress to make [federal spending] decisions in consultation with the president," adding, "But almost every president's budget proposal that I know of is basically dead on arrival."

Next steps

Administration officials are scheduled to testify before Congress on the budget proposal later this week. According to the Wall Street Journal, lawmakers then will begin drafting federal spending legislation after they return from a recess scheduled to begin Friday.

(Hirschfeld Davis, New York Times, 5/22; Nicholas et al., Wall Street Journal, 5/22; Matthews, Vox, 5/22; Lee/Dickson, Modern Healthcare, 5/22; Weixel et al., The Hill, 5/22; Swan/Nather, Axios, 5/22; Cancryn, Politico Pro, 5/22 [subscription required]; Tahir, Politico Pro, 5/22 [subscription required]; Ehley, Politico Pro, 5/22 [subscription required]; Karlin-Smith, Politico Pro, 5/22 [subscription required]; Robbins, STAT News, 5/22; Paletta, Washington Post, 5/21; Wasson/Dennis, Bloomberg, 5/22; New York Times, 5/22; Nather, "Vitals," Axios, 5/22; Carter, The Hill, 5/21; Ehley, Politico Pro, 5/19 [subscription required]; AP/Modern Healthcare, 5/21; Swan, Axios, 5/21; Rubin, Wall Street Journal, 5/22).

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