The Impact of Medicaid Funding Cuts on Low-Income Workers and the Working Class

Recent legislative proposals in Congress threaten to deepen the healthcare disparities faced by low-income Americans, particularly those reliant on Medicaid. The Congressional Budget Office projects that approximately 7.8 million people nationwide could lose their Medicaid coverage if the current legislation, known as the One Big Beautiful Bill Act, passes. This includes an estimated 248,000 to 414,000 residents in Michigan alone, who would face significant barriers to healthcare access.

Many of these individuals are working Americans whose employment does not provide sufficient health insurance benefits or who are subjected to restrictive work requirements that complicate their access to coverage. These work requirements, previously blocked in Michigan due to high costs and questionable effectiveness, aim to incentivize employment but largely result in coverage losses without increasing employment opportunities. Similar policies implemented in Arkansas demonstrated that, despite the intended goal to boost employment, they mainly cause many eligible beneficiaries to lose coverage due to paperwork and administrative hurdles.

A critical issue is that many workers, especially in low-wage and part-time jobs, are unable to access comprehensive employer-sponsored insurance. This is exacerbated by high premiums and deductibles that make coverage unaffordable. As a result, millions remain uninsured, increasing their risk of poor health outcomes. Conversely, Medicaid provides a crucial safety net by covering those who fall through the cracks of employer-based plans. It is especially vital amid the growing gig economy and the rise of temporary employment, which often lack employer benefits.

The expansion of Medicaid under the Affordable Care Act significantly improved health coverage for low-income and working-class populations, reducing uninsured rates substantially. It also contributes positively to individuals' productivity and financial stability by ensuring access to necessary health services and reducing medical debt and bankruptcies.

However, despite its success, Medicaid faces challenges such as underfunding, low provider reimbursement rates, and limitations in access to healthcare providers, which are primarily driven by political and fiscal constraints. Nevertheless, Medicaid’s ability to serve as a stable, accessible, and flexible form of insurance has made it indispensable for millions of Americans.

The current push to cut Medicaid funding threatens to unravel these gains, leaving many vulnerable to poor health and financial hardship. An overhaul towards a more equitable and universal healthcare system—free from reliance on employment status—could provide comprehensive coverage for all Americans, regardless of their income, job type, or employment security.

States like Michigan have recognized the futility and cost-ineffectiveness of work requirements, choosing to eliminate such policies and focus on improving Medicaid’s reach and effectiveness. As policymakers debate future healthcare reforms, the priority must be to protect and expand Medicaid as a cornerstone of the nation’s health system, ensuring health equity for the working class.

Source: https://medicalxpress.com/news/2025-07-employers-class-medicaid-vulnerable.html