State Officials and Practitioners Share How Federal Medicaid Funding Cuts Congress is Considering Would Have Far-Reaching Consequences 

CHICAGO — A new report from the Institute for Responsive Government explores how federal funding cuts to Medicaid would create insurmountable deficits in state budgets that would decimate the program’s ability to function – even for Medicaid recipients lucky enough to retain coverage after changes to eligibility requirements. The findings come as Congress considers hundreds of billions of dollars in cuts to federal Medicaid funding. 

The report, Unbalanced Ledger: Why States Can’t Afford Deep Medicaid Cuts, draws on Responsive Gov’s expertise in government efficiency and administration, finding that maintaining funding for Medicaid is essential for enabling states to provide high-quality service to enrollees while maximizing the efficiency and security of the program. Analysis was grounded in insights from state officials and practitioners with experience administering and funding the Medicaid program, gathered in interviews conducted by Responsive Gov in March 2025.

“By proposing extreme cuts to the Medicaid program, Congress is delivering a major blow not only to the millions of Americans who depend on Medicaid for critical health care, but also to states around the country whose budgets rely on Medicaid funding,” said Sam Oliker-Friedland, executive director of the Institute for Responsive Government. “Instead of promoting government efficiency, service delivery, or accountability – which should be the end goal of any elected representative – we know that the cuts Congress is proposing to Medicaid will only undermine state flexibility, strain local economies, and leave everyday American taxpayers to foot the bill in the long run.” 

Regardless of the specific form that these cuts would take, states ultimately are estimated to lose up to almost a third of the income to fund their total state budgets over the next ten years. The report found that associated impacts would include:

• States unable to modernize or automate program administration; 
• States unable to run programs that prevent waste, fraud, and abuse in the program;
• An overall decrease in the efficiency of program administration;
• Limitations on states’ flexibility to meet the needs of their population; and
• States taking taxpayer money away from other critical services in order to cover uncompensated care, job loss, and increased reliance on public benefit programs.

This new report is the latest resource from Responsive Gov on the importance of maintaining federal funding for Medicaid. Earlier this year, Responsive Gov released an analysis exploring how cross-sector innovation – such as utilizing learnings from election technology – could help cut costs and improve efficiency within the Medicaid program.

To speak with Sam Oliker-Friedland about threats to Medicaid funding, please contact dan@responsivegov.org. 

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The Institute for Responsive Government is a nonpartisan nonprofit dedicated to ensuring state and federal governments work effectively for the very people they serve. The Institute for Responsive Government  provides data, research, and expertise to elected officials in order to find practical policy solutions that make government systems more efficient, accessible, and responsive.