The Medicaid Ecosystem in a 2nd Trump Administration – What’s at Stake for Medicaid’s Future
In a recent webinar hosted by Agilian, industry experts came together to discuss the far-reaching implications of potential Medicaid budget cuts. Moderated by Jamey Harvey, CEO of Agilian, the discussion featured two distinguished thought leaders:
John Gorman, Founder and Chairman of Nightingale Partners, an expert in social determinants of health and Medicaid policy.
Dr. Wade Horn, Managing Director at Deloitte Consulting, who leads strategy for human services in state and local governments.
Together, they explored the possible outcomes of looming federal budget cuts, the likely policy shifts at the state level, and strategies for payers and providers to navigate these uncertain times.
Here is the link to The Medicaid Ecosystem in a 2nd Trump Administration for your viewing!
Key Takeaways from the Discussion
1. The Reality of Proposed Medicaid Cuts
John Gorman outlined the severity of potential Medicaid funding reductions. According to KFF estimates, proposed legislation could lead to cuts as high as $2.3 trillion over the next decade, equating to roughly 31% of the federal Medicaid budget. While not all proposed measures are expected to pass, even a fraction of these cuts could have devastating effects on beneficiaries, providers, and payers.
The impact of these cuts could be felt most acutely in safety-net hospitals, rural healthcare facilities, and skilled nursing providers, many of whom already operate on razor-thin margins. With Medicaid covering a substantial portion of dual-eligible beneficiaries, any significant cuts could also disrupt Medicare Advantage plans that rely on Medicaid funding for duals.
2. Federal vs. State-Level Responses
Dr. Wade Horn provided an in-depth look at how the reconciliation process in Congress determines which budgetary measures will move forward. While major changes require legislative approval, some policies—such as Medicaid work requirements—could be implemented through waivers granted by CMS.
State governments will also play a crucial role in shaping how these cuts are distributed. States with higher federal match rates may be more insulated from immediate impacts, while those with lower federal Medicaid funding, like California and New York, could see disproportionate losses.
Furthermore, some states are exploring drastic measures to offset funding shortfalls. As John Gorman noted, private sector takeovers of Medicaid administration are now being discussed in some states, potentially leading to fully privatized Medicaid systems.
3. The Potential for Medicaid Mergers & Acquisitions
A wave of Medicaid mergers and acquisitions could be on the horizon as health plans look to scale operations in response to funding pressures. While major national players like Centene and Molina face potential regulatory hurdles, regional Medicaid plans may consolidate to remain competitive. Gorman predicts an uptick in acquisitions similar to the recent Kaiser-Geisinger partnership, where regional plans seek greater financial stability through increased market share.
4. Work Requirements and Eligibility Changes
Dr. Horn emphasized that work requirements, often framed as “qualifying activity requirements,” are among the more likely policy shifts. Many states could require Medicaid enrollees to participate in work, education, or community service to maintain coverage. States should begin scenario planning to assess how such policies would affect their Medicaid populations, administrative infrastructure, and IT systems.
What’s Unlikely to Change?
While much remains uncertain, Gorman and Horn agreed that certain aspects of Medicaid are likely to remain intact:
Federally Qualified Health Centers (FQHCs) enjoy broad bipartisan support and are unlikely to face major funding reductions.
The Opportunity Zone Program, which has been instrumental in directing private investment into underserved communities, is expected to be spared from significant cuts.
Looking Ahead
As policymakers debate the future of Medicaid, state leaders, payers, and providers must prepare for multiple scenarios. Budget cuts—whether modest or severe—will demand innovative strategies to protect coverage stability and maintain health outcomes.
To assist organizations in navigating these changes, Agilian has released the FMAP Cuts Edition of the Agilian 2025 Medicaid Playbook, which offers analysis and strategic recommendations on potential funding shifts.
For those seeking tailored guidance on Medicaid policy changes and operational strategies, Agilian stands ready to assist. Stay informed, stay engaged, and prepare for the evolving Medicaid landscape.