Dr. Sarah Miller: Medicaid cuts
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A budget reconciliation bill (the One Big Beautiful Bill Act) passed by the U.S. House would cut $600 billion or more from Medicaid and reduce enrollment by millions of people over the next decade.
On June 10, 2025, SciLine interviewed: Dr. Sarah Miller, an associate professor of business economics and public policy at the University of Michigan. See the footage and transcript from the interview below, or select ‘Contents’ on the left to skip to specific questions.
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Introduction
[0:00:19]
SARAH MILLER: My name is Sarah Miller. I’m an associate professor in business, economics, and public policy at the Ross School of Business at the University of Michigan, and I’m an economist. I study healthcare markets and government programs that affect people’s health, like the Medicaid program.
Interview with SciLine
What is Medicaid, and how many people are enrolled, and how do the federal and state governments jointly fund and administer it?
[0:00:40]
SARAH MILLER: It is a program for low-income people in the U.S., and so it covers some of our most vulnerable populations. It covers kids in poor households. It covers low-income, pregnant women, it covers the disabled, and in some states, it also covers people who are in poverty. So, it’s a huge program—over 90 million people are enrolled in Medicaid—and it’s a very costly program. The government pays about $890 billion every year for the Medicaid program. Now that cost, as you mentioned, is shared between states and the federal government. So, it’s a jointly funded program where states put some money in and then the federal government matches that money. So, a state might put in $1, and then the federal government will also put in $1 or $2 or $3, depending on the state and the population covered. So, states administer the program, they contract with providers or with other companies that help administer the program, and they can make some state-specific decisions about what gets covered. And the federal government contributes money and also sets some parameters on the program, like who needs to be covered. What services need to be covered? So, it’s a joint effort between the federal government and the state government.
What is CHIP?
[0:01:42]
SARAH MILLER: CHIP is the Children’s Health Insurance Program. So, this is—you can almost think of it as an expansion of the Medicaid program to cover additional children. This happened in the 90s. Medicaid traditionally covered children under the federal poverty level, and lawmakers wanted to extend that up the income distribution, so states had the option of having these state children health insurance programs, and it was a way to get basically more kids to get health insurance coverage, but people often talk about CHIP and Medicaid together since they are kind of similar programs.
How does Medicaid impact health outcomes for enrollees?
[0:02:34]
SARAH MILLER: I and my co-authors and other researchers have looked at how different expansions of Medicaid eligibility to different populations has affected their use of health care and their health in the end. And what we found consistently is that—and this is not going to surprise you—but if you’re uninsured and you don’t have a lot of money, it can be hard to get medical care that you need. It can be hard to afford prescription drugs, and as we would expect, Medicaid has very little cost sharing. So, once you get Medicaid coverage, you’re able to use these services at a much lower out-of-pocket price, or zero out-of-pocket price. And so, when people get coverage, they’re more likely to go to the doctor, they’re more likely to get prescription drugs, they’re more likely to use medical care. When we look in surveys, we see people saying things like, “Oh, they’re less likely to say I skipped needed medical care because I just couldn’t afford it, “or “I skipped picking up my prescription because it was too expensive.” And so, we see a lot of movement in terms of people’s access to medical care and their use of medical care. And again, not a super surprising result. We know that medical care is effective. It’s how you treat diseases and illnesses. And so, what we see is that they get more medical care, and then they’re healthier in the end. And there’s been many researchers showing that expanding Medicaid eligibility, getting more people covered, lowers the mortality rate, and it can lower the mortality rate pretty significantly for the populations that gain coverage, between 20 and 30%, depending on the exact study design and the exact sample that’s being looked at.
Can you tell us how Medicaid supports specific populations?
[0:04:10]
SARAH MILLER: So, Medicaid traditionally covered certain groups of low-income people you couldn’t get on Medicaid just for being poor. These groups that were especially served by Medicaid and continue to make up a big part of the Medicaid program today are kids in poor households, pregnant women who are in low-income households or families, and the disabled. So, one in three people with a disability is on the Medicaid program. Also, people in long-term care facilities that need extended care—many of them are covered by Medicaid. So, these are really interesting, different populations. More recently, the Medicaid program has expanded to cover just people in households who are in poverty, who are low-income, but it sort of is serving our most vulnerable populations, the kids example, is kind of an interesting one to think about, since a lot of these policies that expanded eligibility to kids happened, you know, a while ago, researchers have been able to look at those kids that gained Medicaid coverage and sort of follow them forward through their life and see how getting Medicaid coverage and being able to get medical care when you’re seven years old, six years old, affects your health and your different measures, different outcomes of adult self-sufficiency and well-being when you’re an adult. So, I have some research with co-authors where we look at kids who got Medicaid coverage early on, and we find that when they’re adults, they have fewer hospitalizations, fewer emergency department visits, and they’re just in general and better health. So, a lot of economists look at these investments in these programs for kids, is actually investments, investments that pay off in terms of higher tax revenues in the future, rather than just expenses that the governments take on.
Are there undocumented immigrants enrolled in Medicaid?
[0:05:58]
SARAH MILLER: So, this program I just described to you—where the federal government and the state government work together and fund a program together to support vulnerable people who need health care—does not allow undocumented immigrants to enroll in it. There are no undocumented immigrants in that joint federal state effort. Now, there are some states who, through their own state budgets, their own state coffers, have decided that they want to provide health care to certain undocumented populations in their state. So, the most common one is kids. There’s 14 states that have medical care programs for kids who have been brought to the country and who do not have legal status to allow them to access medical care in their state. And again, this is not part of the state, federal government funded Medicaid effort. This is a state-funded effort. So, a lot of times this looks very similar to Medicaid, and it could even have the same program name, but it’s different in the sense that it is fully funded by the state, and that’s something the state has opted to do.
What is known about rates of waste, fraud, and abuse in Medicaid?
[0:07:05]
SARAH MILLER: Yeah, so Medicaid, like any other insurance program or any other government program, probably has some fraud. Unfortunately, that’s the world we live in. There’s always some dishonest people that are trying to steal money or defraud programs for their own personal gain. I know that the Medicaid program has a lot of measures to ensure program integrity. So, for example, all states are required to have a Medicaid Fraud Control Unit which looks for fraud and prosecutes fraud when they find it, and the federal government is required to support them in this effort. The federal government also conducts annual audits of the payments that are made to make sure that the payments are made properly and to identify fraud in cases where it happens. The last audit that was conducted, 95% of Medicaid payments were made properly, so they didn’t have any concern about those claims that were submitted to the Medicaid program. 5% were considered improper payments, but I want to be careful here to highlight that improper payments are not the same thing as fraud. Improper Payments—about 80% of them—are situations where there was not enough documentation submitted or there was an administrative step that was skipped. So, I don’t know if you’ve ever had an experience where you’ve gone to the doctor, you’ve gotten a prescription or if you got some kind of treatment, and you find out later the insurance is saying they’re not going to pay for it, and you’re like, what’s going on? Maybe you have to call the insurance company or the doctor, and it’s something like they didn’t write down the right diagnosis code on your claim, or they didn’t submit the right paperwork with your claim. So, 80% of these improper payments are like that, not necessarily attempts to defraud the government, but a paperwork error. Of course, some of the improper payments probably do reflect fraud, and as I said, states make an effort to uncover this fraud and prosecute it. I don’t think we really know what the true rates of fraud are in any program, because fraud is illegal, but I don’t think we have any reason to believe that rates of fraud are higher in Medicaid than they are in Medicare, which is another government health insurance program, or in health insurance that’s administered by private companies.
What are the potential ripple effects of Medicaid cuts on people not enrolled in the program?
[0:08:37]
SARAH MILLER: Yeah, I think there’s a lot of reason to think that cutting Medicaid could have broader effects on our health care system, even for people that aren’t directly disenrolled as a result of some of the Medicaid changes. So I live in Michigan—I’m at the University of Michigan—and one of the big reasons that we adopted a Medicaid expansion under the Affordable Care Act, despite having a Republican governor, Republican State House, is that the hospital systems really made the business case that Medicaid is important for their bottom line, especially in an era where we see a lot of rural hospital closures, a lot of hospitals with very thin profit margins. If you have a lot of uninsured people in the area that you’re operating because you’re required to treat patients with emergencies, regardless of their ability to pay, you might end up providing a lot of what’s called uncompensated care—care that you provide to patients and you never actually get revenue for. So, Medicaid actually can help hospitals have higher revenue and help them cover their operating costs, and, you know, in some cases, might be able to keep them afloat. So, I think there’s kind of a broader impact on the health system through that, and then, as I mentioned before, when I talked about Medicaid and kids, there are effects that are broader, that you might not feel the first year of the cuts, but that manifest over a longer time period. I think we’re better off when we have a healthier population, a population that’s more able to work, engage with the labor market, get better education, because when they were kids, they didn’t have asthma that went untreated or other chronic illnesses that went untreated that were challenging to them.
