This post has been republished from Professor Patricia McCoy’s Substack. Her new book, “Sharing Risk: The Path to Economic Well-Being for All,” is available from The University of California Press.
Millions of American families live in an economic sweat box, with heavy financial risks but not enough money to pay for basic living needs. Chief among those risks are high medical bills, as my new book, Sharing Risk: The Path to Economic Well-Being for All discusses. In fact, health care costs so much that over half of all U.S. adults ran up debt due to medical or dental bills between 2017 and 2022. Many of them couldn’t pay for medical care otherwise. A disturbing number went bankrupt or lost their homes due to late medical bills. Others put off needed medical care to avoid running up debt.
Last month, the U.S. House of Representatives passed a bill—called the One Big Beautiful Bill Act (I kid you not)—which would make things worse by slashing Medicaid in order to pay for tax cuts for the wealthy. In this week’s column, I discuss why that’s a really bad idea. But first, a little history.
Today, over twenty million more people have health insurance than in 2010, thanks to the Affordable Care Act (the ACA), which passed that year. But the dirty little secret is this: most U.S. residents have access to health insurance, but that does not mean they can afford it. Instead, tens of millions of people struggle with the cost, often due to high out-of-pocket expenses in the form of premiums, deductibles, coinsurance, or copays. Whether we are talking about Obamacare, workplace health plans, or Medicare coverage for senior citizens, for too many people, their out-of-pocket health care costs are stuck on high.
The most important exception to this cost squeeze is Medicaid, which has provided nearly free health insurance to poor and near-poor households since the ACA went into effect. Previously, most poor adults did not qualify for Medicaid, because eligibility was limited to the so-called “deserving poor,” in other words, low-income children, pregnant women, poor disabled adults, and severely destitute parents who fell well below the poverty line. Vast numbers of low-wage workers ended up uninsured.
In the ACA, Congress put high priority on reducing the number of Americans who were uninsured. One important way it did so was by expanding Medicaid eligibility. Today, most households and single adults making less than 138% of the federal poverty line qualify for Medicaid – so long as they live in one of the 40 states plus the District of Columbia that adopted Medicaid expansion. People who live in the ten states that rejected Medicaid expansion are only eligible for Medicaid under the old, narrow standards. My home state—Kansas—is one of them, and most of these other “opt-out” states are in the Deep South.
Medicaid expansion was highly successful in lowering the number of uninsured. Between 2010, when the ACA was passed, and early 2023, the number of uninsured dropped almost by half, from 48.3 million to 25.3 million people. Many of those newly insured residents got coverage through Medicaid expansion, according to the health thinktank KFF.
So who exactly is on Medicaid? While many Medicaid recipients aren’t technically poor, they are struggling to get by. This year, in 2025, single people can only get Medicaid if their incomes fall below $21,597 a year. For a family of four, that income limit is $44,367 a year. Even in a relatively cheap city like Kansas City, Missouri, these incomes are below a living wage. So many families are in this boat that over 71 million people were on Medicaid in January 2025.
And guess what? The vast majority of adults on Medicaid under 65 are working, even though they don’t have to to get Medicaid. According to a 2025 KFF report, almost two-thirds (64%) of Medicaid recipients were employed in 2023. Of the rest, all but 8% (for a total of 92%) were not working for legitimate reasons such as unpaid caregiving, disability, illness, or enrollment in school. Many Medicaid beneficiaries who work have employers who do not provide health insurance or charge more for health coverage than they can pay. So Medicaid’s real function is to provide a crucial safety net for hard-working low-wage families to obtain health insurance that they otherwise could not afford.
Partly due to Medicaid expansion, today our health coverage is the best it has ever been in this country. But the One Big Beautiful Bill Act would roll this accomplishment back through a number of sneaky cuts to Medicaid (and Obamacare plans as well). Today, I want to focus on one of those Medicaid cuts. Specifically, if the bill becomes law, many adult Medicaid applicants would have to produce written proof that they meet a new “community engagement requirement” to qualify. And let’s be clear: “community engagement” is double-speak for imposing a new requirement to work at least 20 hours a week (or perform community service or go to school).
Now, who cares about a work requirement, if most adult Medicaid recipients are already working, doing community service, or in school? In theory, under the bill, if you count the Medicaid recipients who are already working, doing community service, or attending educational programs, virtually no one should lose their benefits. But that’s not what occurred in Arkansas back in 2018. When Arkansas slapped a work requirement on Medicaid recipients, 18,000 people were kicked off of Medicaid, even though most of them were actually working or qualified for an exemption. But they couldn’t produce the paperwork to demonstrate it. And as the kicker, Arkansas’ work requirement did nothing to boost the number of low-income state residents who worked.
Instead, the real gist of the House of Representatives’ Medicaid provision is to increase red tape for workers who would otherwise qualify for Medicaid. The House did not cut Medicaid in any obvious way like reducing income caps. Instead, it attempted to fly under the radar by jacking up the paperwork requirements. Under the bill, for example, recipients would have to reestablish their community engagement eligibility every 6 months. But self-employed workers do not receive paystubs, and independent contractors may have to wait a full year or more to receive their Form 1099s documenting their work status. On top of that, beneficiaries would have to prove they worked the required number of hours. But they may not have had control over how many hours their employers assigned them to work (which is a big problem in the service industry). Plus, their pay documents might not have listed the number of hours they worked. Predictably, many people also might have trouble navigating state Medicaid portals or uploading documents (especially if they are trying to upload paper documents from their cellphones). Such red tape, according to the Urban Institute, would cut Medicaid enrollment by up to 6.3 million people ages 19 to 64. Many of them would go uninsured.
Bottom line, the bill would throw large numbers of low-wage workers and their families off Medicaid by making it hard for them to prove that they comply. And to what end? To finance hefty tax cuts for the rich. According to a Penn Wharton Budget Model forecast, families making under $51,000 a year would lose money outright under the bill, partly due to lost Medicaid eligibility. Meanwhile, the top 1% of earners would reap huge gains from tax cuts, averaging $41,010 apiece or more for 2026.
The One Big Beautiful Bill Act still must get through the Senate, where there are major obstacles to passage (at least in its present form). But if these Medicaid cuts survive, the country will go backwards, and deny many hard-working families a crucial safety net.
If the House of Representatives really wants to help working families, this is not the way to do it. Health insurance, including Medicaid, is the quintessential type of risk-sharing arrangement because it is more cost-effective to insure people as a group than for them to self-insure. Self-insurance—in other words, going uninsured—leads to worse health. It also destabilizes families financially by forcing too many of them into bankruptcy, depleting their savings, and causing them to defer homeownership or college. Health insurance helps avert these outcomes by enabling people to get the medical care they need and remain healthy, productive members of society.
Medicaid is a vital piece of this puzzle. Without it, low-wage workers who cannot afford private health insurance face an impossible choice: run up thousands of dollars in medical bills if health exigencies strike or put off needed medical care because they are uninsured. Medicaid is such a powerful force for good that a major study recently concluded that Medicaid expansion saved more than 27,000 lives. It further softens the blow to workers who lose their jobs in recessions. Meanwhile, Medicaid payments have a broader ripple effect by keeping many rural hospitals and community health centers afloat.
No wonder, then, that citizens value Medicaid highly. In fact, voters in several rural conservative states, including Idaho, Maine, Missouri, Nebraska, Oklahoma, South Dakota, and Utah, passed ballot measures to opt in to Medicaid expansion, over opposition from their home state legislatures. This sequence of events has caught the eye of many politicians—including some prominent Republicans in Congress—who know they can boost their chances of reelection by opposing Medicaid cuts.
The President won the 2024 election partly because so many voters were enraged about “feeling broke.” If members of Congress really want to listen to voters, they will refrain from making the rich richer by ordering Medicaid cuts.
This post has been republished from Professor Patricia McCoy’s Substack. Her new book, “Sharing Risk: The Path to Economic Well-Being for All,” is available from The University of California Press.
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