# Medicaid The political core of **OMB budget function 550 (Health)** — the joint federal-state program covering low-income and disabled Americans, created by the [[Medicare and Medicaid Act]] of 1965 and vastly expanded by the [[Affordable Care Act]]. The full Health function ran **~$0.98 trillion in FY2025**; Medicaid is the largest piece. Unlike [[Medicare]], Medicaid is **means-tested**, which makes it the most politically vulnerable of the big health programs — and the recurring target of conservative spending cuts. ## Why it's the cut target - Means-tested programs lack the universal constituency that protects [[Social Security]] and [[Medicare]], so they are easier to cut politically. - Medicaid is jointly funded, so federal "savings" are often achieved by shifting costs to states — block grants, per-capita caps, reduced match rates. - **Work requirements** are the marquee mechanism: see [[Medicaid Work Requirements]]. The [[Big Beautiful Bill]] (2025) imposed the largest Medicaid rollback in the program's history through work requirements and eligibility restrictions. ## The OBBBA cut, and when it lands CBO scored the July 2025 reconciliation law as reducing **federal Medicaid spending by roughly $911 billion over ten years** — $990 billion across the individual provisions, less about $79 billion in overlapping interaction effects. That is roughly **14 percent** of projected federal Medicaid spending for the period, and CBO paired it with an estimated 10 million additional uninsured. The largest single components are work requirements for the ACA expansion group ($326 billion), a moratorium on new or increased provider taxes ($191 billion), a lower payment limit on state-directed payments ($149 billion), and more frequent eligibility redeterminations ($63 billion). Provisions applying only to expansion states account for $526 billion — over half the gross total. The timing is the political fact. **Over three-quarters (76 percent) of the ten-year reduction falls in the final five years, 2030 through 2034**, and the operative dates for the front-end mechanisms sit just past the 2026 election: six-month eligibility redeterminations from December 2026, the nationwide work-requirement condition from January 1, 2027. The law passed with no Democratic votes in either chamber; the coverage losses arrive after voters have been asked about it. See [[Big Beautiful Bill (2026 Issue)]]. *Figure reconciliation:* $911 billion is CBO's Medicaid-only federal spending reduction. Broader figures in circulation — around $1.02 trillion — cover Medicaid and CHIP together and are scored on a wider base; they are not competing estimates of the same quantity. ## The RWKB angle Medicaid is the clearest case of the **rhetoric-vs-outlays** asymmetry: it is denounced as "welfare" and targeted for cuts, while the far larger non-means-tested giants grow untouched. The CBO scores Medicaid cuts as real deficit reduction (because the beneficiaries can't defend the line politically), making it the default offset whenever a tax cut needs paying for. This is the budget mechanics behind the 2025 reconciliation fight. ## Related - [[Affordable Care Act]] · [[Medicare]] · [[Medicaid Work Requirements]] - [[Big Beautiful Bill]] · [[Big Beautiful Bill (2026 Issue)]] · [[Discretionary vs Mandatory Spending]] · [[Budget Functions]] - [[Project 2025]] · [[Economic Bill of Rights]] — the retrenchment agenda and the claim it reverses - [[Federal Budget FY2025]] · [[Budget Hub]]