Proposed Medicaid Cuts Would Have Big Impact in Vermont

U.S. House Republicans passed a multitrillion-dollar budget bill last week that would significantly slash Medicaid, the government-sponsored insurance program for people with low incomes or disabilities.

The bill now heads to the U.S. Senate, and while it could look much different by the time it lands on President Donald Trump’s desk — if it gets there at all — Vermont officials say they’re already bracing for impact.

“If this were to become law, it would really dramatically change what health care looks like in the state of Vermont,” said Ashley Berliner, the state’s director of Medicaid policy.

Berliner has been tasked with following the One Big Beautiful Bill Act through its many legislative gyrations and spent most of last week trying to wrap her head around a flurry of eleventh-hour changes. Speaking to Seven Days last week, she broke down the potential impacts into a few broad categories.

The first is perhaps the most concerning: “People are going to lose insurance,” Berliner said. That’s because the House bill will make it much more difficult for people to maintain coverage due to increased eligibility checks and a new strict work requirement.

The legislation specifically targets what’s known as the “expanded” Medicaid population, or people who became eligible for the state-run program under the Affordable Care Act. In Vermont, that’s about 60,000 people.

The bill would strip benefits from working-age adults who do not have children unless they can prove that they’re working at least 80 hours a month.

Proponents say the measure is meant to encourage participation in the labor force and prevent freeloaders. Yet research has shown the majority of people on Medicaid nationally already meet the proposed work requirements.

Vermont nevertheless estimates that half of its ACA expansion group — some 30,000 people — would, at least temporarily, lose insurance upon the bill’s passage.

Why? In a word: paperwork.

People with lower incomes are more likely to change addresses and work irregular hours, which can make them difficult to reach. When Arkansas briefly imposed work requirements for Medicaid during Trump’s first term, 18,000 people lost coverage within months — though the vast majority were later deemed to be victims of red tape, according to the Center on Budget and Policy Priorities, a progressive think tank.

Vermont’s Medicaid program has a 50 percent response rate whenever it needs to ask for paper records, according to Berliner.

“Paperwork really becomes an overwhelming barrier, and we have decades of experience to be able to say that definitively,” Berliner said.

The rate of “churn” — the phenomenon of people losing and regaining insurance — would be “set on fire” under the House version of the bill, Berliner said, since states would be required to check eligibility every six months instead of every year.

More people getting punished for failing to fill out forms will lead to higher costs and worse outcomes, Berliner said. People without insurance, afraid of the costs, will routinely delay tests or treatment, allowing their conditions to deteriorate until they need more expensive, emergency care. Those bills often go unpaid when there’s no insurance to pick up the tab. A spike in uncompensated care would hurt cash-strapped rural health care providers.

Meanwhile, fewer people on Medicaid means fewer federal dollars flowing into Vermont. The feds fund about 90 percent of what Medicaid reimburses providers for care to the ACA expanded population. Losing half of that group would translate to a loss of about $200 million, Berliner said.

That would come on top of the loss of enhanced tax credits that have helped tamp down cost hikes on private insurance plans. Those credits, which represent about $120 million, are set to expire later this year.

The House bill also seeks to limit states’ ability to use Medicaid to fund care that the GOP finds morally objectionable. It would effectively limit Medicaid payments to Planned Parenthood, which serves about 12,000 patients in Vermont annually. And it punishes states that provide coverage to undocumented immigrants by threatening to withhold 10 percent of all federal payments.

Vermont began providing Medicaid coverage to undocumented immigrants in 2022. Continuing that program, which uses about $1.1 million in state funds to insure roughly 330 people who are either pregnant or under the age of 19, would allow the feds to withhold $26 million.

Berliner likened it to a bureaucratic Sophie’s choice: Either the state stops covering these vulnerable populations, or it loses a bunch of federal money.

Republicans in the Senate will soon face their own choice: whether to support a bill that would drastically cut a program that many of their constituents rely on. Early reports suggest the bill may have to undergo major changes to clear the chamber — a process that could jeopardize its fate back in the House, where it initially passed by just a single vote.