A recent report highlights the alarming economic consequences that potential cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) could pose nationwide. These proposed reductions could severely affect low-income families and the broader economy, leading to significant financial challenges.
This critical report was released on Tuesday by the Commonwealth Fund in collaboration with the George Washington University Milken Institute School of Public Health, shedding light on the possible ramifications of these funding cuts.
Currently, the U.S. House of Representatives has introduced a budget resolution that suggests slashing federal funding by at least $880 billion over the next decade for programs under the purview of the Energy and Commerce Committee, and an additional $230 billion for those overseen by the Agriculture Committee. A substantial portion of these proposed cuts would directly impact Medicaid and SNAP, the latter providing essential food assistance to families facing economic hardship. The specific details of these budgetary reductions will be determined in forthcoming legislative sessions.
The research indicates that these cuts could lead to the loss of approximately 1 million jobs, a staggering $113 billion decrease in states’ gross domestic products (GDP), and an estimated $8.8 billion reduction in state and local tax revenues by 2026 alone. Over the span of a decade, the total losses could reach a shocking $1.1 trillion.
As stated in the report, “While Medicaid and SNAP provide essential health coverage and food assistance to vulnerable Americans, it’s important to recognize that the direct beneficiaries of these programs also include healthcare providers—such as hospitals, doctors’ offices, pharmacies, and nursing homes—as well as grocery stores and other food retailers.” The report emphasizes that cuts to federal funding for these programs would diminish revenue for these businesses and their employees, creating a ripple effect that would impact other sectors and workers within their supply chains, including medical equipment suppliers, food producers, and farms.
In response to these funding cuts, businesses may be forced to reduce staffing levels and salaries, which would subsequently diminish consumer spending on goods and services. This chain reaction would further exacerbate economic challenges, leading to a more severe downturn, as highlighted in the report.
Focusing solely on the implications of Medicaid cuts, state economies are projected to experience a loss of $95 billion in GDP by 2026, resulting in the elimination of nearly 477,000 healthcare jobs. Additionally, another 411,000 jobs could be lost across various sectors, including retail, construction, and manufacturing, as the effects of these cuts extend to other industries. There would also be a projected $7 billion decline in state and local tax revenues due to the reduced business and individual income stemming from these job losses.
In terms of the anticipated impact from SNAP cuts, state GDPs are expected to decrease by $18 billion in 2026, resulting in the loss of 143,000 jobs. This includes 78,000 jobs within the food sector—covering grocery stores, agriculture, and food production—and 65,000 jobs in other industries adversely affected by decreased consumer spending, according to the findings of the report. Furthermore, state and local tax revenues are projected to decline by b.8 billion.
“Both Medicaid and SNAP are crucial for ensuring the health and well-being of individuals,” stated Joseph R. Betancourt, M.D., president of the Commonwealth Fund, in a compelling statement. “Reducing funding for these programs will undoubtedly worsen health outcomes for all Americans, particularly for those with chronic conditions who depend on Medicaid for ongoing medical care. Similarly, cuts to SNAP will thrust more families into financial instability, making it increasingly difficult for them to afford basic necessities.”
“The ensuing ripple effect will impact the entire healthcare system, affecting everyone—not just those enrolled in Medicaid—and it will ultimately lead to increased pressure on emergency services, further straining an already overwhelmed system,” he added.
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