There is much talk these days about Medicaid. Its importance, its cost, its controversy.
The dramatic cuts in Medicaid included in the so-called “Big Beautiful Bill” budget bill now before Congress have raised this debate to priority status across the nation.
Let’s begin with some basic facts to start the conversation.
Medicaid was established in 1965 as part of the Great Society. Medicaid and Medicare were established as partner programs, Medicaid to serve children, very poor parents, disabled persons, and poor elderly persons, Medicare to serve the elderly and some disabled persons.
Over the years Medicaid was expanded, not in big dramatic ways but in many small ways.
In time it became dozens of separate focused programs, for example, a specific program that served women with breast cancer.
Prior to the Affordable Care Act Medicaid continued to serve only the very poorest parents, while serving more children. Costs disproportionately were incurred and paid for long term care for the elderly. Most working parents, who did not receive health care as an employment benefit, were not eligible. Adults without minor children and undocumented immigrants were not eligible.
The Affordable Care Act, passed in 2010, included an expansion of Medicaid to cover working parents to a level modestly above poverty, along with adults without children. Undocumented immigrants remained ineligible. The Supreme Court, while upholding the constitutionality of the Act, ruled that the Medicaid expansion was voluntary for states. As of the present, 41 states have adopted it.
The reasons why are important. Virtually all of the people made eligible for Medicaid under the Act were working but not receiving health care from their employer. So many people received care for the first time. This substantially reduced states’ uninsured populations. It also got them out of hospital emergency rooms, the most expensive and inappropriate delivery site for routine care.
A critically important aspect of the Act was the federal government undertaking to pay the lion’s share of the cost. This posed a financial bonanza for states, pumping in billions of dollars to support their health care institutions and facilities along with their economies.
With that background, we turn to the question of work. Much of the current debate turns on the assumption that many poor people on Medicaid don’t work. That is rhetoric, not reality.
The Kaiser Family Foundation is one of the most respected research organizations in America. According to its May 2025 study, 92% of Medicaid recipients under 65 years of age are either working full or part time (64%), or are not working because of illness or disability, caregiving responsibilities, or school attendance. The remaining 8% are either retired, unable to find work, or not working for another reason.
I would add, based on my legal aid experience, that transportation issues are a major problem for many low-income people. If one does not own a car or live near a bus line, working can be a huge challenge.
Does Medicaid cost a lot? Of course. It is providing health care to some 75 million Americans, 23% of the population. Children’s Health Care Program (CHIP) recipients are not included in that total. Their cost of care is comparatively very low.
The real issue is not the total cost, but the realities of health care and health care economics. Health Care is expensive. Regardless of who the patient is or who is providing the care.
Most recipients are on Medicaid because they do not qualify for or cannot afford private insurance. Medicaid is much more efficient than private insurance – probably a counterintuitive reality for many. The administrative cost is in the 5% range, as opposed to the 20+% range for private insurance. Reimbursement rates to providers are substantially lower for Medicaid than for private insurance. Additionally, Medicaid funds go independent of patient reimbursement to hospitals and community health centers to help them meet their costs of providing care.
In conclusion: while costly, Medicaid is not a program to be cut on the basis of rhetoric rather than reality. It is a major component of our health care delivery system in America, providing care to the youngest, the oldest, the sickest and the poorest among us, at a cost substantially less than would be required if their care were to be provided under private insurance.
We need a robust dialogue about our budget priorities and strategies. And about our health care system.
But let’s have that dialogue on the basis of facts, not rhetoric.
Col Owens is a retired legal aid attorney and law professor, author of Bending the Arc Toward Justice, longtime Democratic Party activist, and member of the Boards of Directors of Kentucky Voices for Health and the Kentucky Board of Elections.