On February 25, House Republicans narrowly passed a budget resolution that requires the House Energy and Commerce Committee to find $880 billion in spending cuts over the next 10 years. Budget realities—including the fact that only about $280 billion of the spending directed by the committee is unrelated to healthcare—make it a mathematical certainty that these downsizing efforts will adversely affect Medicare or Medicaid, or both.[1] Political realities make it likely that Medicaid will be the first to face the knife. The specter is unsettling for 72 million Americans who currently receive coverage through Medicaid, as well as for the thousands of healthcare providers who serve them.

Oregon and Washington follow national trends with respect to enrollment in Medicaid and the Children’s Health Insurance Program (CHIP), which provides coverage to low-income children. The percentage of the U.S. population on Medicaid/CHIP is about 21%;[2] percentages for Oregon and Washington are 23%[3] and 21%[4], respectively. In 2024, these percentages translated to about 1.43 million Oregonians and 1.85 million Washingtonians.

Many current beneficiaries could see their coverage revoked or reduced if downsizing occurs. Some ways the government could attempt to trim the Medicaid budget might include:

1. 1. Reducing inappropriate enrollment. Under policies advanced by the Biden administration, states are allowed to verify a patient’s Medicaid eligibility only once every 12 months. The Trump administration could amend these policies to allow more frequent checks. The result could be a reduction in the number of Medicaid enrollees, since some patients’ incomes will increase during the year to the point where they might no longer be Medicaid-eligible.

1. 2. Imposing work requirements. Pursuit of this option would mean requiring adults without disabilities or children to work in order to continue receiving Medicaid. Currently, the percentages of Medicaid beneficiaries who work in Oregon and Washington are 58% and 59%, respectively.

1. 3. Modifying or eliminating hospital tax programs. Medicaid is jointly funded by the state and federal governments. The latter meets some of its funding responsibilities by matching state spending on Medicaid. Many states maximize the amounts they can spend—and, in turn, the amounts of the federal matching funds they draw down—by channeling revenues into the Medicaid program generated by taxing hospitals, nursing homes, and other providers on their net patient revenues. Reductions of provider taxes can therefore be doubly consequential. In Oregon and Washington, where provider taxes have been levied for years, the resulting losses for the Medicaid programs could run into the billions of dollars.

1. 4. Reducing the federal match for standard Medicaid or expanded Medicaid. As explained above, the federal government matches state contributions to standard Medicaid, which covers individuals who earn up to 133% of the federal poverty level (FPL). But under the Affordable Care Act, the federal government more than matches state contributions to expanded Medicaid, which covers individuals whose income exceeds 133% of the FPL. If the federal government decides in light of the proposed budget that it is no longer in a position to fund 50% of standard Medicaid or 90% of expanded Medicaid, then Oregon and Washington will be forced to consider resizing their Medicaid programs. The result would almost certainly jeopardize the coverage received by roughly 760,000 Oregonians and 810,000 Washingtonians who currently depend on the Medicaid expansion program.

Ripple Effects of Medicaid Cuts

Medicaid pays notoriously low reimbursement rates. In fact, the American Medical Association estimates that in 2020, Medicaid covered only 88 cents of every dollar spent (not charged) by hospitals that care for Medicaid patients.[5] But Medicaid is nevertheless a big and often essential source of funding for hospitals and other healthcare facilities. A study published by Definitive Healthcare in 2024 suggests that about 8-8½% of total revenue for an average Oregon or Washington hospital comes from Medicaid.[6]

Still, Medicaid payments are better than none at all. And since many uninsured patients pay nothing on their medical bills, the provider community is understandably concerned about the financial implications of patients who could lose their Medicaid coverage. These concerns are amplified for providers who work in rural areas or serve a disproportionate share of indigent patients.

A recent report suggests that about 46% of rural hospitals have negative operating margins, with 418 hospitals being “vulnerable to closure.”[7] Fortunately, none of the hospitals in the latter category are in Oregon or Washington. But the financial challenges of running a rural hospital in the Northwest remain formidable—and Medicaid spending reductions would serve only to increase the level of the challenge.

Medicaid cuts would also have an outsized impact on minority populations. The March of Dimes estimates that Medicaid covers 42% and 35% of the white population in Oregon and Washington, respectively.[8] The corresponding percentages for the black population (67% and 54%) and the American Indian/Alaska Native population (72% and 63%) are substantially higher. The threat of Medicaid downsizing for these groups may be exacerbated by the recent federal rollback of Diversity, Equity, and Inclusion (DEI) and similar initiatives aimed at reducing barriers to their access and improving their relative healthcare outcomes.

The Bottom Line

Oregon spent about $13 billion on its Medicaid program in 2024[9], Washington about $22 billion.[10] Reduction by even 10% would translate into billions of dollars of lost revenues for Oregon and Washington hospitals and healthcare providers. The damage would be compounded by the fact that patients without medical insurance often delay or forestall care, which means they are likely to arrive sicker and in need of more costly care than patients who are covered. It would be compounded further by the fact that Medicaid cuts tend to affect certain types of patients (e.g., minorities and people living in rural areas) more acutely than others.

The government understands the dire consequences of Medicaid cuts. Healthcare providers can expect to hear promises of increased fraud and abuse enforcement action. Targeting alleged wrongdoers is much more politically palatable than slashing healthcare programs that help the sick and needy. But even massively increased recovery of overpayments will not get the government anywhere close to achieving its $880 billion reduction goals. Only cuts to federal healthcare programs can generate that level of savings. The unfortunate bottom line for most healthcare providers in Oregon and Washington—and the patients they serve—is that, yet again, they will have to find a way to do more with less.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.

[1] See Margot Sanger-Katz and Alicia Parlapiano, “What Can House Republicans Cut Instead of Medicaid? Not Much.” New York Times (Feb. 25, 2025).

[2] See https://files.kff.org/attachment/fact-sheet-medicaid-state-US

[3] See https://files.kff.org/attachment/fact-sheet-medicaid-state-OR

[4] See https://files.kff.org/attachment/fact-sheet-medicaid-state-WA

[5] See https://www.aha.org/system/files/media/file/2020/01/2020-Medicare-Medicaid-Underpayment-Fact-Sheet.pdf.

[6] See https://www.definitivehc.com/resources/healthcare-insights/hospital-payor-mix-state. This percentage translates to about 21% of total patient volumes for an average hospital. See https://www.aha.org/system/files/media/file/2020/09/fact-sheet-billing-explained-0820.pdf.

[7] See https://www.chartis.com/insights/2025-rural-health-state-state

[8] See https://www.marchofdimes.org/peristats/data.

[9] Supra n. 2.

[10] Supra n. 3.