How Trump's Health Budget Would Impact States

Medicaid, children's health insurance and chronic disease programs would be first to feel the weight of the president's proposals.

Budget Director Mick Mulvaney holds up a copy of President Donald Trump's proposed fiscal 2018 federal budget.
(AP/Andrew Harnik)
Just over one hundred days into Donald Trump's presidency, he has left health officials with more uncertainty than most have faced in years. A promise to repeal and replace the Affordable Care Act, one of the biggest overhauls of modern health care, hangs in the balance. Waivers to transform Medicaid, the health-care program for the poor, are pending. And the release of the president's budget on Tuesday makes it impossible to know how much federal funding they can count on. 

Trump’s budget, “A New Foundation for American Greatness,” slashes spending in almost every department except defense. While it has no chance of passing, health experts caution that it shouldn't be written off because it will still influence Congressional Republicans' spending bills.

“It’s hard to imagine that it’ll be enacted fully, but at a minimum, it reflects the priorities of the administration,” says Elizabeth Burak, senior program director at Georgetown University’s Center for Children and Families.

Most of the health proposals would directly hit the federal level, but many would trickle down and eventually be felt on the state and local level -- and there are a few changes that states would feel immediately.



President Trump is proposing to cut Medicaid spending by $600 billion over a decade. That’s on top of proposed cuts in the House's bill to replace Obamacare, called the American Health Care Act (AHCA), which the budget assumes will become law. If both were to pass, states would be looking at a more than $1 trillion reduction in Medicaid spending. 

The long-term goal of the Trump administration is to shift Medicaid from an entitlement program to a grant-based one. If enacted, governors would decide whether to get their Medicaid funds in the form of a block grant or a per capita cap in which states get a set amount of money for each Medicaid enrollee. 

Trump and his budget director, Mick Mulvaney, promise that the cuts, along with the switch to block grants and per capita caps, would grant states more flexibility in their Medicaid programs. But health experts say that with cuts that large, the only flexibility states would have is deciding who to cut off their Medicaid rolls.


Children's Health Insurance 

Trump also proposes cutting the Children’s Health Insurance Program (CHIP) by $6 billion, something the AHCA largely leaves untouched. His budget calls for capping CHIP eligibility at 250 percent of the federal poverty line, which would cause 24 states and the District of Columbia to lose federal funding because their eligibility for CHIP is above that.

CHIP covers around 8 million kids from low-income families. Burak, from Georgetown, says it’s hard to imagine a scenario where we don’t see the rates of uninsured children rise.

CHIP has always enjoyed bipartisan support. If Congress enacts Trump's proposed cuts to the program, “it signals a particular willingness to abandon the historically bipartisan commitment.”


Chronic Diseases

In the arena of public health, the president wants to create a $500 million block grant for states to combat chronic diseases, such as obesity and diabetes. At the same time, the budget proposes cutting $222 million from the chronic disease prevention programs at the Centers for Disease Control and Prevention (CDC).

Former CDC director Tom Frieden called the cuts “unsafe at any level of enactment.”

Georges Benjamin, executive director of the American Public Health Association, took it a step further, saying in a statement that the federal cuts for disease prevention “would be catastrophic, especially for our most vulnerable, including children, seniors and low-income Americans."

Nothing in Trump’s budget is set in stone, although that doesn’t make it any easier for state health officials and lawmakers to plan ahead. Congress still has to approve it, and right now they are mired in talks to repeal the Affordable Care Act. On Wednesday, the Congressional Budget Office released its analysis of the impact that the American Health Care Act would have: If it passed, 23 million Americans would lose their health insurance.

*This story has been updated to reflect the correct number of participants in the Children's Health Insurance Program.

Mattie covers all things health for Governing.