Economist Details How GOP Medicaid Cuts Would Be Disastrous for Everyone—Except the Super-Rich

The impacts of congressional Republicans' proposed Medicaid cuts would be most destructive for those directly impacted—the millions of people who would be forced to pay more for coverage, subjected to onerous red tape, or kicked off benefits entirely.

But economist Josh Bivens observes in a new analysis that the damage caused by the GOP's assault on Medicaid would be far-reaching, hitting local economies throughout the United States and forcing rural hospitals to close.

"Even during times when the national unemployment rate is low, tens of millions live in weaker local economies with higher county unemployment rates and far less ability to weather sharp spending shocks like a Medicaid cutback would provide," wrote Bivens, the chief economist at the Economic Policy Institute (EPI), in a Tuesday post. "In fact, a disproportionate share of the House bill’s Medicaid cuts would almost surely fall exactly on these weaker local economies."

EPI estimates that if the more than $700 billion in Medicaid cuts included in the House-passed GOP reconciliation package become law, the impact on local spending could kill 850,000 jobs.

Bivens noted that the bill, which is currently before the Republican-controlled U.S. Senate and supported by President Donald Trump, "would lead to healthcare providers losing $770 billion in payments over the next decade."

"Because the [Affordable Care Act's] Medicaid expansion was so crucial to keeping rural hospitals afloat in the past decade, a sharp rollback would inevitably force shutdowns and cutbacks at medical providers and hospitals, particularly in these rural regions," he added.

"The damage from the House bill's cruel and logic-free cuts to Medicaid and other health services will fall mostly heavily on the 15 million who will lose health insurance. But the damage won't be contained there."

Bivens cited recent analyst estimates that as many as 15 million people could lose health insurance due to changes pushed by Republican lawmakers. On Wednesday, the nonpartisan Congressional Budget Office released an updated analysis estimating that the number of people without health insurance would rise by 10.9 million under the GOP bill.

No matter the precise figure, Bivens warned that large-scale loss of insurance "could raise costs for all."

"The rise of uninsurance stemming from the House bill will cause a flood of uncompensated care—healthcare delivered in places like emergency rooms that the patient themselves cannot pay for because they're uninsured," he wrote. "State and local governments will foot the bill for much of this uncompensated care. Some of it might be passed on to higher prices generally for healthcare, pushing up premium costs and out-of-pocket costs for even those who remain insured."

The only group that would be immune from the cascading effects of Republicans' Medicaid cuts, Bivens argued, is the super-rich, who are poised to receive massive tax breaks if the measure becomes law.

"The damage from the House bill's cruel and logic-free cuts to Medicaid and other health services will fall mostly heavily on the 15 million who will lose health insurance," Bivens wrote. "But the damage won't be contained there—nearly everybody else in the U.S. will feel the harms of less efficient healthcare and labor markets, higher needs to pay for uncompensated care, closures and cutbacks in healthcare providers and hospitals, and even damage to entire local economies that are reliant on this health spending."

"For the very rich who will see enormous tax cuts from this bill, it all might end up being a good deal," he added. "For everybody else, it will not."

Bivens' blog post was the latest assessment of the broad-based consequences of the GOP's effort to gut Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

Earlier this week, as Common Dreams reported, a group of Nobel laureate economists wrote in an open letter that the House-passed reconciliation package "addresses none of the nation's key economic challenges usefully and exacerbates many of them."

"The combination of cuts to key safety net programs like Medicaid and SNAP and tax cuts disproportionately benefiting higher-income households means that the House budget constitutes an extremely large upward redistribution of income," the economists wrote. "Given how much this bill adds to the U.S. debt, it is shocking that it still imposes absolute losses on the bottom 40% of U.S households."