Why Medicaid Cuts Endanger Our Children – and Our Nation’s Future

As Congress considers $880 billion in Medicaid cuts, the health and wellbeing of our children, and our nation’s future, perilously hang in the balance. 

Today’s episode explores how the proposed cuts would put young lives at risk. Defunding this critical safety net for Americans would threaten the health, development and future prosperity of the more than 37 million children who rely on Medicaid and the Children’s Health Insurance Plan (CHIP). It could force states to ration care; delay access to vaccinations, screenings, and other essential services; burden families with crushing medical bills; perpetuate cycles of poverty; and exacerbate children’s health disparities. 

The panel also highlights how the benefits of these public health insurance programs – for families and our society – exceed the costs to government. Babies and mothers are more likely to survive. Kids are less likely to have chronic conditions, preventable disease, and mental illness as they grow older, and more likely to attend college, to work, and to pay taxes as adults. Research clearly shows that investing in our children’s health not only improves the quality of life for the kids who depend on Medicaid and CHIP but also contributes to our nation’s economic growth and prosperity. 

Host Heather Howard, a professor at Princeton University and former New Jersey Commissioner of Health, is joined by two guests: renowned economist Janet Currie, a Princeton professor and co-director of the University’s Center for Health and Wellbeing, whose pioneering research in the economic analysis of child development has helped to shape public policy over the past several decades; and  Abuko Estrada, Vice President of Medicaid and Child Health Policy at First Focus on Children, who brings deep experience working on Medicaid and children’s health policy at the state and federal levels, inside and outside of government.

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Read related papers authored by Janet Currie: 

Administrative Burdens and Child Medicaid and CHIP Enrollments | NBER

What We Say And What We Do: Why US Investments In Children’s Health Are Falling Short | Health Affairs

Read more about the impact of proposed Medicaid and CHIP cuts on children’s health, from First Focus on Children: 

Prescription for Disaster: The Impact of Proposed Medicaid and CHIP Cuts on Children’s Health | First Focus on Children 

The Princeton Pulse Podcast is a production of Princeton University's Center for Health and Wellbeing (CHW). The show is hosted by Heather Howard, a professor at Princeton University and former New Jersey Commissioner of Health and Senior Services, produced by Aimee Bronfeld, and edited by Alex Brownstein. You can subscribe to The Princeton Pulse Podcast on Apple Podcasts, Spotify, or wherever you enjoy your favorite podcasts.

Transcript

Episode 17: Why Looming Medicaid Cuts Endanger Our Children – and Our Nation’s Future

SPEAKERS
Heather Howard, Janet Currie, Abuko Estrada

Heather Howard  00:02
Hi, and welcome to the Princeton Pulse Podcast. I'm Heather Howard, professor at Princeton University and former New Jersey Commissioner of Health and Senior Services. On campus and beyond. I've dedicated my career to advancing public health. That's why I'm excited to host this podcast and shine a light on the valuable connections between health research and policy.  

Our show will bring together scholars, policy makers and other leaders to discuss today's most pressing health policy issues, domestically and globally. We'll highlight novel research at Princeton, along with partnerships aimed at improving public health and reducing health disparities. 

I hope you'll listen in as we put our fingers on the pulse and examine the power and possibilities of evidence informed health policy.  

Welcome. As Congress considers $880 billion in Medicaid cuts, the health and wellbeing of our nation's children perilously hang in the balance. 

On today's episode, our panel discusses how the proposed cuts would put young lives at risk. Defunding this critical safety net for low-income Americans would threaten the health, development, and future prosperity of the more than 37 million children who rely on Medicaid and the Children's Health Insurance Plan [CHIP]. It could force states to ration care; delay access to vaccinations, screenings and other essential services; burden families with crushing medical bills; perpetuate cycles of poverty; and exacerbate children's health disparities.  

Today's show also highlights why slashing Medicaid would hurt our broader society. Study after study shows that investing in Medicaid, CHIP and other public health programs not only improves the quality of life for kids who depend on the programs, but contributes to our nation's economic growth and prosperity as well. 

With me in the studio is renowned economist Janet Currie, a Princeton professor and co-director of the University's Center for Health and Wellbeing. Professor Curry's pioneering research in the economic analysis of child development has helped to shape public policy over the past several decades. And joining us virtually is a Abuko Estrada, Vice President of Medicaid and Child Health Policy at First Focus on Children. He brings deep experience working on Medicaid and children's health policy at the state and federal levels, inside and outside of government. Professor Curry, Abuko, welcome to the show!  

Janet, tell us about your research focus and why you've chosen this area for your life's work.

Janet Currie  02:42
Well, I have chosen it because I think it's important. But my research focuses on the economics of investing in children and families. And when I say investing, I don't mean that in a rhetorical sense. I mean that in a literal sense, that when you put money in, you get more out than what you put in. So there's a real return on investment. And one of the biggest investments that we make as a society is health care for pregnant women and children. And so that's been a really important focus of my work. I was able to show, for example, that the original expansions of Medicaid and the introduction of CHIP in the 1990s greatly reduced the number of pregnant women and children without health insurance, and then had a positive effect on prenatal care, health at birth, and even adult health when those children grew up.

Heather Howard  03:44
Well, thank you. Abuko, you've worked for the state of New Mexico. You worked for the Centers for Medicare and Medicaid Services, but now you're at First Focus on Children. Tell us about what you're doing there, and why you're focused on this issue.

Abuko Estrada  04:00
Sure. I've been doing Medicaid and CHIP work for a dozen years now. So I guess my career is kind of in those pre-teen stages, where I've worked across several different roles, local, state advocacy, state and federal government, as you mentioned, and now federal advocacy, with First Focus on Children. And you know, I really come to the work with a personal connection to it. I was one of those kids who was on Medicaid and CHIP early on in my life. And without the coverage benefits that it provides, I don't know that I'd be sitting here talking to you today. And so, you know, being able to have that privilege of advocating for other families and children, just like me, to have that access to coverage is truly an honor and a privilege. And to be able to do it at an organization like First Focus, where we work across domestic and policy issue areas to make sure that children are at the forefront of federal and policy and budget decisions, is just a wonderful experience.

Heather Howard  05:10
Well, thank you for sharing that. I'm really looking forward to hearing more about what you're working on now, but let's start by laying the foundation and talking about Medicaid and CHIP. For our listeners, they're joint federal/state programs that provide health insurance for low-income people. They're entitlement programs with both federal and state funding, and that's going to become critical to our discussion today. There are federal minimums, I like to call them, that states can exceed, but the programs are managed by states. Medicaid was created in 1965. The Children's Health Insurance Program, or CHIP, was created in 1997, and the programs have grown significantly. Janet mentioned her research tracking their impact. But Abuko, can you start us off by telling us where we are now, what the current reach of these programs is, how many people they're covering?

Abuko Estrada  05:59
Sure, yeah. So in terms of kids, Medicaid and CHIP help provide over 37 million children with health coverage. Currently, that includes covering nearly all kids in foster care, about half of all kids with special health care needs, 80% of kids in poverty, and over 40% of births. Both programs are there to ensure that kids have access to the physical and mental health care that they need to grow and thrive into adulthood, whether that's intensive care as newborns, vaccines as a toddler, developmental screenings for school age children, or even mental health support as a teenager. Medicaid and CHIP are there to ensure that each stage of development is met with the right care. 

Heather Howard  06:49
Janet, 37 million kids, and we estimate today that there are about 80 million people in Medicaid. So who are the rest of [the people on] Medicaid? Although we're focusing on kids today, can you give us the bigger picture of who's in the Medicaid program? 

Janet Currie  07:05
Yeah, it's an interesting program because it combines a number of distinct groups. There are pregnant women, there are children, there are people with disabilities, and then there are elderly adults who are in nursing homes and have spent down their assets, so about 60% of people in nursing homes. One thing that's important to keep in mind as well, when they're trying to save money on Medicaid, is that children make up a big chunk of the people, but they're relatively cheap to cover compared to disabled people and especially people in nursing homes. A lot of the expense is actually on elderly people in nursing homes. So if they just end up doing things that make it more difficult for children to stay enrolled, that will affect many people very negatively and won't actually save that much money. 

Heather Howard  08:13
Let's go further there, where you're talking about how Medicaid has improved children's health. You've been doing this research now for decades. What are the top lines about how Medicaid impacts health outcomes for kids?

Janet Currie  08:28
The very top line is that the benefits, when you add everything together, exceed the cost to government. So what are the benefits? You have babies that are more likely to survive, mothers who are more likely to survive, and the babies that survive are less likely to be low birth weight. They're less likely to have chronic conditions as they grow up, including mental health conditions, which can be related to bad conditions around the pregnancy and birth. And then as adults, they're less likely to be disabled, more likely to be working, more likely to have some college, and they pay more taxes.

Heather Howard  09:17
Abuko, how does Janet's research and other research into the impact of Medicaid affect your work to promote children's health in the policy arena? 

Abuko Estrada  09:30
It greatly influences our work. All of what Janet just said is absolutely true. Kids are the ultimate return on investment, so investing in their health over their lifetime ensures that that we have a bright and healthy future for the nation.

Heather Howard  09:48
Janet, it doesn't just improve children's health. The Medicaid program is vital to state budgets. What has your research shown about that?

Janet Currie  09:56
Yeah, so Medicaid is about 30% of state budgets. That 30% is the largest chunk of state budgets, followed by education and then by prisons. So basically, if the states lose the federal funding for Medicaid, and the federal government is currently paying, depending on the state, between half and almost three quarters of the cost, that's going to be a really big hole in state budgets. And given that the other things that they spend money on are basically education and prisons, there's not really any way to make up that hole without raising taxes or cutting education or cutting prisons. Neither of those things are likely to happen. 

Heather Howard  10:54
And also, Abuko -- and I know this far too well, having worked at the state level -- states have to balance their budgets, right? Unlike the federal government, right? So when we talk about state budgets, what flexibility do states have? 

Abuko Estrada  11:11
Not a whole lot. Unfortunately, you know, with regards to Medicaid, as Janet points out, it's a huge part of state budgets. And so when you're talking about the magnitude of cuts that we're talking about from Congress right now, it would shift costs to states in a way that they're forced to either cut Medicaid and CHIP, raise taxes, or cut other important programs, such as K through 12 education or public safety, and very likely a combination of all three of those approaches.

Heather Howard  11:42
So, Abuko, I know you're closely monitoring what's happening in Washington. Can you tell us, at a high level, what's happening with discussions about Medicaid funding now in D.C.?

Abuko Estrada  11:57
Sure. Currently, Congress is working on a budget reconciliation package. Normally, to pass legislation, you need a simple majority in the House, but you need to have 60 votes in the Senate to get around the filibuster. Reconciliation is a process that allows the Senate to bypass the 60 vote threshold for certain legislation that impacts taxes and the budget. In order to unlock that process, both chambers need to pass what's called a budget resolution, and that budget resolution includes instructions to change how the government spends money, or how it takes in revenue, and that's where we're currently at in the process. Both chambers have passed a budget resolution, and interestingly, even though it's the Senate instructions that help control the reconciliation process, the budget resolution that was passed preserved the instructions to the House Energy and Commerce Committee that are asking the committee to cut $880 billion or more from the programs that are within the committee's jurisdiction, which include Medicaid and CHIP. And in fact, if you look at recent analysis by the Congressional Budget Office, when you exclude Medicare, 93% of what's under the House Energy and Commerce Committee jurisdiction is Medicaid. And then you add CHIP on top of that, and it's 96% of what's in the jurisdiction. So the vast majority of the $880 billion would include Medicaid and CHIP cuts.

Heather Howard  13:50
The context here, Abuko, is that the tax cuts from 2017 expire this year, right? What Congress is grappling with is how might they fund an extension of those tax cuts. And so they're looking at, as we've established, these health programs, which are a significant part of the budget. And you're mentioning, Abuko, that if you take Medicare off the table, what's left within the jurisdiction of these programs is Medicaid and CHIP. So these entitlement programs are where, as Willie Sutton said, where the money is. So if you're going to be looking to save money, Medicaid is where you're looking. Now this is where we're currently debating in 2025, but, Janet, you've got the benefit of a historical look back. This is not the first time we've been looking to Medicaid to fund tax cuts and other programs, right? 

Janet Currie  14:50
That's right. And a lot of the proposals that are on the table, like having a block grant to the states -- that's been discussed on and off since the 80s, things like reducing the federal share of Medicaid, various restrictions on other ways that states try to fund Medicaid -- like putting taxes on hospitals so you could restrict their ability to do that, which would tie their hands even further in terms of making up these cuts. All of these are proposals that have been around for a long time and never passed. So, for example, the block grant thing... it's been very difficult in the past to get any state, Democrat or Republican, to sign on to that because they understand that health care costs have been going up faster than inflation. So if you have a block grant that is only indexed at the rate of inflation, eventually it's going to really be inadequate compared to your health care costs. States are sort of on to that one, and have not been enthusiastic about it at all. 

Heather Howard  16:10
So, Abuko, Janet mentioned one proposed policy that might be considered, which is to cap federal funding, whether it's a block grant or per capita cap. What are some other ways? As you mentioned at this point, the legislative language is very vague. It just says, find the money. But we know Medicaid is the source. What are some other policy proposals that might get traction to cut federal funding? 

Abuko Estrada  16:39
In addition to the per capita caps and reducing federal match, certainly there's restricting provider taxes, as well as things like imposing work requirements on parents and caregivers, and doing things like even repealing Biden era protections that were put into place to help protect enrollment and access for kids and improve upon some of the gains that we've made over the past few years. And what I'd say is, really, regardless of what the policy is that's being put forward, all of them, in some form, really shift cost to states, and it would starve states of the resources that they need to help support children's health and the health care providers that provide them care. 

Heather Howard  17:30
Janet, Abuko has said these [proposals], especially the funding cuts -- whether it's the per capita caps or it's reducing the federal matching rates -- all sort of come together in the effect of pushing costs to states. Do you see any way states could make up those costs if the federal share reduces? 

Janet Currie  17:51
There isn't really. They would have to raise taxes, and I don't think any state would have the appetite to be able to do that, or even whether they could do that in a timely sort of a way. So I think what they would end up having to do is trying to essentially ration Medicaid by forcing some people off the program. 

Heather Howard  18:19
Abuko mentioned that there are the funding cuts, but there are also the policy changes that might increase administrative burdens, which has been an area of your research. Janet, can you talk about how administrative burden impacts enrollment in the program? 

Janet Currie  18:33
This general idea that there's people on these programs who don't really need to be on these programs is also one of those ideas that's been around for a long time. So states will sort of crack down on enrollment and do things like, you know, in 2018 Missouri had an income verification program. They were going to verify everybody's enrollment. They tried to do that by cross checking their records, but if they couldn't verify income, they sent people a letter, and then people had 10 days to respond, or they would get kicked off. So 70,000 enrollment enrollees got kicked off. Eighty percent of them were children, and then of those, 90% of them were still eligible, right? So they kicked off a whole bunch of eligible people. And the problem wasn't that they weren't eligible. The problem was that they couldn't meet the requirements for proving eligibility in time. Or the state sent them a postcard to whatever their last recorded address was and they didn't get the postcard. So they didn't respond within 10 days, and they just got booted off. So a lot of these burdens have this effect, where they don't actually get people who are not eligible, they get people who have trouble logging into the computer system or phoning, or answering the phone, or showing up during work hours to deal with a whole lot of paperwork. That's been an experience that a lot of people have had, so the Biden administration tried to reduce those types of disenrollment programs by saying to states that they couldn't do them. That's one of the things that's on the table to unroll, which would basically make it easier to kick people off the program.  

Heather Howard  20:57
So it’s not weeding out people who are ineligible. It's basically making it harder for eligible people to stay on.

Janet Currie  21:03
Yeah, like a lot of states, kids with incomes less than 150% of poverty or 200% of poverty are eligible. Their parents aren't suddenly earning a lot more money or something like that, just because they didn't get this postcard and respond to it, and so the kids are still eligible. And in fact, if they have an emergency and go to a hospital, for example, they probably will get treated, and the hospital probably will eventually get reimbursed by Medicaid, but what it means is that the kids won't get the preventive care that they need to prevent them from going to the hospital to begin with, like the kid with asthma won't have an inhaler, and so they'll end up going to the emergency room all the time, and Medicaid will end up paying for that anyway.

Heather Howard  21:59
Abuko, can you talk about where we are now in the discussion of work requirements? Janet mentioned that there's significant academic research [showing] that these administrative burdens end up actually kicking eligible people off. And you mentioned a Missouri example. Perhaps you could talk about Arkansas. 

Abuko Estrada  22:23
Yeah, Arkansas was the first state that really implemented work requirements in Medicaid. And what we saw there is very much that work requirements don't work to help people actually participate in work. Really, all they do is lead to coverage losses. Within the first six months of enactment of those work requirements in Arkansas, over 18,000 people lost their coverage. And you know, when we're talking about it today, within the context of reconciliation, it would have a significant impact on children's coverage as well. I think a lot of folks on the Hill are operating on sort of this false narrative that these work requirements would not impact children. But we know when parents lose their coverage, it's even more likely that there's going to be a chilling effect, and children could become uninsured themselves. As Janet mentions, you know, families facing administrative complexities, having to deal with caregiving responsibilities, childcare barriers, etc., really prevents some families from being able to navigate the enrollment and re-enrollment processes, which could lead to gaps for children's coverage. And those gaps, even if they're short, lead to delayed preventative care, unmanaged chronic conditions for kids, and avoidable emergency room visits, which end up creating long-term health and economic disparities for children.

Heather Howard  24:00
Really a cascading effect. Janet, have you seen that over the years? Have you been able to study the long-term impact on kids’ health when they lose that coverage. 

Janet Currie  24:11
I think there's less evidence about that, because just over the past several decades, the trend has been to increase coverage. We have studied a lot about what happens when children gain coverage, especially when they're very young, and that has long-term positive effects. It puts them on a better health trajectory. And so I guess what's at stake is losing those gains and going back to where we were, you know, in the 1980s when we had many uninsured children, many children who were not getting the services that they needed. And if you look actually, from 1990 to today, there's been a really dramatic reduction. It's not only in infant mortality, but also in child mortality at all ages, which I think reflects the fact that we have been doing a better job taking care of our children. 

Heather Howard  25:14
So in addition to the ominous signs from Washington on potential Medicaid cuts, there also is a potential recession on the horizon. Janet, can you talk about Medicaid's sort of counter cyclical role during economic downturns? Because it feels to me like that should be a more salient part of the conversation today, and we're not hearing that.

Janet Currie  25:44
Yes, that's a great point. Generally, what happens during a recession is you have people who are losing their jobs, so their income is falling. Some of those people, even if you just leave everything the same, will become eligible for Medicaid and qualify for Medicaid. So that even if they lose their job and lose their health insurance, they would still be able to get health insurance, and their kids would still be able to get health insurance. Also looking at it from the state budget perspective, if more people go on to the Medicaid program, they get more money from the federal government because of the matching aspect of the program. And historically, the federal government has often given a higher match to states, in the same way that they do for unemployment insurance, when we're in recession. It's what economists call an automatic stabilizer, in that even if you just leave everything the same, you tend to get more federal money flowing to the states for health care during recessions. 

Heather Howard  27:03
Abuko, we saw during the pandemic that Medicaid was really crucial to supporting the health care safety net. Congress reacted and gave states additional federal matching money to help support the program, recognizing that more people were going to need access to health care because of the economic impact of the pandemic, and the health care needs, right, Abuko? 

Abuko Estrada  27:29
That's absolutely right. In addition to that, funding ensured that children and others had continuous coverage in Medicaid during that pandemic era. And so when we're looking at cost reductions in Medicaid and CHIP right now, in general, it's a misguided strategy that leads to short-term savings that really don't outweigh the benefit. And so when we're talking about the potential of another recession, we really should be talking about making investments in children's health -- providing more money in Medicaid and CHIP rather than taking away funding that states rely on it in a time when they could be totally destabilized through an economic crisis, and Medicaid is the only program that would be able to help them respond to help provide health care for their residents.

Heather Howard  28:20
This has been a pretty dark conversation, but an important one, but I want to leave our listeners with some examples of hope, and I think there have been some in the Medicaid and CHIP program. Janet, you've mentioned the long-term trajectory. Can you say a little bit more about how the program has grown and what you've noticed in terms of the political support for expansions of coverage in Medicaid and CHIP?

Janet Currie  28:47
Yeah, I think the whole expansion is to the point now where about 40% of kids are covered by Medicaid or CHIP. I think you mentioned a number of times it was a low-income program. That's not really true anymore. If it's covering 40% of kids, 40% of pregnant women. This is a program that has substantial reach. And the process by which this happened was a completely bipartisan process where they had these budget reconciliation bills, and in each budget reconciliation bill, they would raise the bar a little bit that more people would be covered. And there was really, you know, bipartisan support for the idea that kids need health care. We need to invest in our kids. This is a good thing for society to be doing. So I hope we can get back to that perspective about who are the ultimate beneficiaries here, our children and our society.

Heather Howard  29:52
Abuko, over the last couple of years, there have also been really interesting actions at the state level to strengthen kids coverage. Janet mentioned her research on administrative burden, but there's a trend. Some states, including when you were in New Mexico, have been trying to keep kids covered. Can you talk about that trend, and why that's so promising?

Abuko Estrada  30:18
Absolutely. Beginning in 2024, all states were required to provide 12 months of continuous coverage to children through Medicaid and CHIP, but what states have been looking at -- like New Mexico, like Oregon, Washington and several others -- is to provide continuous enrollment and coverage from a child's birth all the way up until their sixth birthday, and that really has some great promise. We know that [during] those early years of a kid's life, their biological systems and their brains are developing at such a rapid pace, and those years influence their health over their entire lifetime. So ensuring that they have access to continuous, comprehensive health care coverage during their early years of development really sets the stage for their health, academic and economic future.

Heather Howard  31:15
Janet, another area where there has been exciting progress has been in postpartum coverage. Medicaid traditionally covered women only for 60 days after their delivery, but informed by our understanding of the research and our growing understanding of the risk to women's health after that 60 days, now 48 out of 50 states have expanded coverage postpartum up to a year. Can you talk about why that's so important, given what we understand about the maternal health crisis?

Janet Currie  31:52
Yes, as you mentioned, we've learned that a lot of maternal deaths occur after the initial pregnancy and delivery, and a lot of those causes are things that can be easily prevented. So, for example, people can die of high blood pressure related to pregnancy, eclampsia, preeclampsia, and that can occur months after the delivery. Another killer actually is postpartum depression, which, again, can be easily treated if people have health care. So this is a game changer in that it will result in women being screened for these common, preventable things that actually kill people.

Heather Howard  32:46
So I really appreciate that we are ending on a more positive note, and I want to give you both a chance to sort of reflect on your work. Janet, you've written about why investing in kids is a good investment, but you've also grappled with why, even given that evidence base, we don't do more of it. And Abuko, you and your colleagues at First Focus produce a fabulous children's budget and are tremendous advocates for investing in kids. Abuko, I'll start with you to reflect on why we should be investing more in kids, and how we ought to think about the value of that investment.

Abuko Estrada  33:30
You know, I think we've said it throughout this podcast that investments in children have the best return on investment for our future. Children, when we're thinking about budgets, really should be the framework. This question really reminds me of a quote that I hear often in the work -- that kids are over 20% of the population, but they're 100% of the future. And so when we're talking about budgets, we're talking about moral planning documents. They show what we value and the investments that we believe are critical for the future. So I'd say that every time a state or the federal government is crafting their budget, every policymaker should really be asking themselves, how do we craft this to improve the lives of children? What programs do we need to ensure that their health needs are met, to ensure that they have a safe place to sleep, and that they don't go to bed hungry? The bottom line is, child wellbeing must provide the framework for our most critical policy decisions.

Heather Howard  34:50
Janet?

Janet Currie  34:52
I think Abuko was talking about policymakers, but in a sense, policymakers tend to reflect what their constituents believe. And so I think some of the progress that's being made here is just educating the public about how important the early years of childhood are. Now, I think if you just talk to people on the street, most people would recognize it's really important to be healthy while you're pregnant. It's really important for your child to be healthy in the first couple of years. And so ultimately, that may help protect programs like Medicaid, which deliver those services that people believe in.

Heather Howard  35:45
Well, thank you both. This has been a really timely and compelling conversation, and I hope it can help inform the policy debates happening right now. 

Janet Currie  35:54
Well, thank you, Heather. 

Abuko Estrada  35:56
Yes, thank you.

Heather Howard  35:58
Thank you for listening to the Princeton Pulse Podcast, a production of Princeton University's Center for Health and Wellbeing. The show was hosted by me, Professor Heather Howard, produced by Aimee Bronfeld, and edited by Alex Brownstein. We invite you to subscribe to the Princeton Pulse Podcast on Apple Podcasts Spotify, or wherever you enjoy your podcasts.