Overcoming Trump’s U.S. Health Care Wrecking Ball
It is critical to understand these cuts in the broader context of the already highly dysfunctional U.S. health care system.
Left Hook Economics
Overcoming Trump’s U.S. Health Care Wrecking Ball
It is critical to understand these cuts in the broader context of the already highly dysfunctional U.S. health care system.
4 min read
This is the first of a two-part series that covers President Donald Trump’s devastating cuts to the already dysfunctional U.S. health care system and the need for Medicare for All.
The Trump administration has been rolling out disasters on a near-daily basis since Trump returned to office 15 months ago, with the latest installment being, of course, his current war of choice in Iran. Amid this ongoing barrage, one can easily overlook the outrages that Trump and company inflicted only months ago, even as the effects of these earlier measures start to hit people hard, with worse to come.
One of the most consequential such measures affecting the daily lives of millions of people are the huge cuts in federal health care support enacted last July 4, when President Trump signed his absurdly named “One Big Beautiful Bill.” The bill featured cuts in health care spending that the Congressional Budget Office (CBO), a nonpartisan federal government agency, estimated would amount to between $911 billion and $1 trillion over 10 years. The most substantial cuts are for federal support for Medicaid, which is the largest health insurance entity in the United States. Medicaid provides coverage for 72 million mostly low-income people, amounting to 21% of the U.S. population.
These cuts to Medicaid, which are scheduled to begin in January 2027, will be implemented primarily through increasing the work and reporting requirements for eligibility. This is despite the fact that most Medicaid recipients under age 65 are already working without a requirement or face barriers to work. Moreover, in a 2023 analysis, the CBO concluded that a Medicaid work requirement would not have any meaningful impact on the number of Medicaid enrollees who work. The CBO reported that, when such policies were implemented at the state level in Arkansas, “many participants were unaware of the work requirement or found it too onerous to demonstrate compliance,” resulting in coverage loss. The CBO has estimated that, by imposing these stricter work requirements, along with other measures—including reducing the federal matching funds for state-level Medicaid support and restricting opportunities for legal immigrants to verify their status—about 10.3 million people will no longer be eligible for Medicaid.
The other area of large federal health care cuts is subsidies for purchasing private health insurance provided under the Affordable Care Act (ACA, or “Obamacare”). Similar to the approach to Medicaid cuts, the Trump bill eliminates automatic ACA insurance renewals, tightens the enrollment periods, and prevents a large share of legal immigrants from signing up for ACA coverage or accessing financial aid. The ACA subsidy cuts have already taken effect as of January. The CBO estimates that 1.8 million people will lose coverage under these measures.
In addition, Congress failed to renew the enhanced ACA subsidies enacted during the pandemic. As a result, premiums for enrollees are expected to more than double on average—pushing people out of the ACA marketplace and increasing the number of uninsured to 3.8 million by 2035, according to the CBO.
What will happen to health care in the United States as these cuts increasingly take hold? Speaking at a forum of the American Medical Association (AMA) last November, an AMA attorney Annalia Michelman observed that: “When patients lose coverage….it means delayed/foregone care, worse financial outcomes and financial hardship for families. For physicians, it means more uninsured and underinsured patients, less stability and safety net financing and growing pressure on already strained practices. That’s especially true in rural and underserved areas.”
A CNN report from March 6 describes the impact that the bill is already having: “In northeast Georgia, a hospital closed its maternity ward. In rural New Hampshire, a community health center shuttered. And in Iowa, a Des Moines hospital system laid off dozens of employees and closed a clinic….The legislation is expected to leave millions more Americans without coverage and to cut vital financial support for hospitals—a combination that could force already cash-strapped providers to pull care, particularly in emergency rooms.”
It is critical to understand these cuts in the broader context of the already highly dysfunctional U.S. health care system. Health care spending now consumes fully 17.2% of all spending (GDP) in the U.S. economy. By contrast, other high-income countries spend an average of 11.2% of their overall GDP on health care. For the United States, the difference between spending 17.2% versus 11.2 % of GDP on health care amounts to $1.8 trillion.
Despite this $1.8 trillion in extra health care spending, health outcomes in the United States are nevertheless much worse than those in all other high-income countries. For example, according to a measure of preventable death rates in OECD countries, the United States ranked 29th in the world as of the most recent 2023 figures, in between Costa Rica and Peru. Germany, France, the United Kingdom, and Canada had between 25–50% fewer preventable deaths than the United States.
A primary factor driving the poor U.S. health outcomes is that, even prior to the Trump bill’s insurance cuts, 8% of the population has no health insurance coverage and 44% are “underinsured.” The underinsured are people who do have insurance coverage but who nevertheless forego needed care—they don’t fill a prescription, skip a recommended test, or do not visit a doctor or clinic altogether—because their out-of-pocket costs are prohibitive.
By contrast with this U.S. situation, all of the other high-income countries guarantee universal health care coverage. In other words, details aside, they all provide some version of Medicare for All to their residents. Under the immediate U.S. circumstances, we certainly need to push back against and repeal all of the Trump health care cuts. But to create a health care system that is capable of delivering good-quality care to everyone while also saving hundreds of billions of dollars, the United States itself needs to transition to some version of Medicare for All.
But is Medicare for All, for the United States today, nothing more than an outlandish pipe dream? My one-word answer is “no.” In the next article in this series, I will explain why I am not just blowing smoke here.
Robert Pollin is a distinguished university professor of economics and Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts-Amherst.
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