Oh, what a tangled web lawmakers have woven in Medicaid. Solutions for runaway Medicaid spending in President Trump’s “Big, Beautiful Bill (BBB)” — passed by the Senate Monday and now facing more deliberation back in the House — come with their own messy threads, especially in Washington state, where hospitals, providers and entire budget assumptions rely on Medicaid.
So yes, federal changes will hit Washington state’s health care system. That includes the people who provide care and those who pay for it.
But these reforms aren’t heartless or being sought to benefit billionaires, as some, even Gov. Bob Ferguson, allege. They’re an attempt to return Medicaid to its original purpose: a safety net for the truly vulnerable, not a forever entitlement for able-bodied adults, not a revenue scheme for state budget-writers and not a blank check from federal taxpayers.
Misguided eligibility policies in Washington state have ballooned taxpayer-provided health care here. Nearly 2 million Washington residents receive health care through Apple Health, the state’s Medicaid program. Thousands of undocumented immigrants also rely on a Medicaid-like program funded by state taxpayers. That program doesn’t look like it will be going anywhere. Some state lawmakers also hope to grow the program, which right now has an enrollment cap of 13,000. An additional 17,000 people are on a waiting list.
The BBB proposes requiring states to regularly check whether Medicaid enrollees still qualify. This could help with Washington’s concurrent Medicaid problem and ensure people who qualify for other insurance aren’t on the rolls.
The bill also imposes new work and engagement rules for able-bodied adults without dependents. This could help people get out of poverty and move some Medicaid recipients to employer-based plans, where deductibles, premiums and real-world tradeoffs matter. People could also obtain coverage through the Washington Health Benefit Exchange, where the majority of people insured receive taxpayer-subsidized coverage. Some even pay $0 premiums, thanks to combined federal and state subsidies.
Is that cruel? Only if you believe personal responsibility is cruelty.
The Congressional Budget Office (CBO) says the changes will reduce Medicaid rolls, but it’s worth asking who those individuals are. They are not low-income seniors or children or people with disabilities. The CBO confirms most would be able-bodied adults between the ages of 19 and 64 who have no dependents and who do not meet the community engagement requirement for participating in work or community activities at least 80 hours a month.
In Washington state where Medicaid now covers about one in four residents and Apple Health Expansion provides more free care to undocumented people, the changes would hit especially hard. Ferguson warns there could be hospital reimbursement losses of nearly $1 billion by 2031 due to various changes in the BBB, including limited provider taxes states use to fund more of their Medicaid budgets with federal money. He said in a recent press event, "These cuts would be cruel and, in my view, would be morally wrong for us as a country and as a state."
But are federal lawmakers being cruel? Or is the problem that Washington state will now have to justify who it covers, how it pays for them and how much it relies on federal dollars conjured through provider taxes and creative accounting?
Washington state lawmakers will need to raise taxes, limit services or reform the program itself. It should reform its program so it better fits with the less-generous federal contribution.
I worry hospitals will feel the pain first. Many need to rely on recycled provider tax dollars and inflated Medicaid rolls to stay afloat in a state with such low Medicaid reimbursement rates. Commercial insurers will feel it next, as providers shift costs where they can. And taxpayers, already stretched thin, will soon be told their state must “make up for the loss of federal cruelty” by raising revenue, even though that “cruelty” will be a return to reality.
Medicaid reforms in the BBB are hard. They will impact our state’s health care system. But the current structure — one riddled with gimmicks, overenrollment and a lack of financial transparency — is unsustainable.
If Medicaid is worth protecting, and the safety net is worth protecting, it’s worth running honestly. That means eligibility grounded in last resort and true need, a program that doesn’t rely on states gaming the system, and full payments to providers, rather than underfunding hospitals and caregivers and causing unacceptable cost-shifs to other payers.
There’s no pain-free way to untangle this knot. But the Medicaid-related provisions in this big bill begin the unweaving, forcing Washington state to stop weaving policy it can’t pay for.