What do potential Medicaid cuts mean for families in Pennsylvania?

Children’s Hospital of Philadelphia is circulating form letters to federal lawmakers that warn of how potential funding cuts to Medicaid and research funding would harm families, and asking staff and patient families to sign them in opposition.

Efforts by Republicans and the Trump administration to cut taxes while curbing spending has set a bull’s-eye on Medicaid, the federal- and state-funded health insurance program for low-income individuals, children, and people with disabilities. At $606 billion, the federal government’s share of the program makes Medicaid one of the largest and only places to cut funding, because there may be far more backlash in trying to cut programs like Medicare and Social Security.

Congress is considering budget proposals that could cut up to $880 billion from Medicaid over the next 10 years, though no deal has been approved.

”We, as CHOP employees, patients, and families, implore you to maintain federal investment in the Medicaid program and do everything in your power to stop the proposed limits and cuts,” CHOP’s letter reads, calling the changes under discussion “devastating for kids.”

In Pennsylvania, total Medicaid spending topped $41 million in 2024, analysts have said. Families rely on the program for low-cost health care, and hospitals count on Medicaid to support a large share of the care they provide.

CHOP’s form letter push shows one way health systems are responding to mounting uncertainty. About 50% of CHOP’s patients are covered by Medicaid.

“Part of our charge at Children’s Hospital of Philadelphia involves advocating to ensure all children have a chance for a healthier future,” Lindsay Torriero, a spokesperson for CHOP, said in a statement. “Cuts to benefits or to the legal financing structures for the programs would impose additional barriers in providing preventive and essential services to patients who need health care.”

Patient advocates say the people most at risk of losing health care through Medicaid cuts are those who qualified when Pennsylvania expanded eligibility under the Affordable Care Act. The 2010 law, often called Obamacare, expanded eligibility for Medicaid as a way to offer more people access to health insurance.

Under the law, anyone whose income is below 138% of the federal poverty rate — an annual income of about $21,500 for an individual — can qualify for Medicaid. Previously, only people whose income fell within 100% of the federal poverty rate qualified.

Roughly 3 million Pennsylvania residents — about 23% of the state’s population — are covered by Medicaid. About 750,000 of them fall within the so-called “expansion group,” according to the Pennsylvania Department of Human Services.

This group is considered most vulnerable to funding losses because the federal government pays a much greater share of the cost for people in the expansion group — 90 cents for every 10 cents the state spends. States would need to find a way to make up the budget gap if the federal government cut back its contribution.

States and the federal government share the cost for the rest of Medicaid more equally.

“That’s a lot of low-wage workers — school bus drivers, day-care workers, bartenders — it’s a huge group of folks who are working but aren’t able to get employer-sponsored coverage,” said Antoinette Kraus, executive director of Pennsylvania Health Access Network, a nonprofit that helps people sign up for coverage. “It’s a lifeline for hardworking individuals who can’t get coverage anywhere else.”

A Medicaid cut could lead to a rise in the number of people who are uninsured. Many would no longer be able to pay for medical bills, ratcheting up financial pressure on hospitals in Pennsylvania, Nicole Stallings, CEO of the Hospital and Healthsystem Association of Pennsylvania, wrote in a February letter to Pennsylvania lawmakers.

Pennsylvania hospitals receive about 82 cents for every dollar it costs for care for Medicaid patients, with rural hospitals receiving less. That represented a shortfall of $1.9 billion in fiscal 2023, according to HAP.

“Reducing Medicaid reimbursement in any way jeopardizes hospitals’ ability to keep their doors open to care for everyone in their communities,” Stallings wrote.