A new Economic Policy Institute report shows just how damaging House Republicans’ plan to cut Medicaid to help pay for extending Trump’s tax cuts would be for typical families. The proposed $880 billion cuts to Medicaid would reduce incomes for the bottom 40% of households far more than extending the Tax Cuts and Jobs Act (TCJA) would boost them—and the lowest-income households would fare the worst. On net, the bottom 20% would see a 6.8% income cut, while the top 1% would see incomes rise by 3.9%. 

The report also analyzes the impact by state, showing that the proposed Medicaid cuts would be a disaster for the incomes of the bottom 40% in every state. States with more generous Medicaid coverage would see larger cuts, while states that have been stingier to date with Medicaid would see smaller cuts. 

Cutting Medicaid would greatly increase hardship for already struggling families and reduce future opportunities for children who will grow up less healthy and poorer because their families lack access to Medicaid. The cuts would also put enough strain on the nation’s overall economy that they would make a future recession far more likely. Meanwhile, extending the TCJA would significantly boost incomes for the richest households, leading to greater income inequality.   

“Cutting Medicaid to pay for low taxes on the rich is a terrible trade for American families,” said Josh Bivens, EPI’s chief economist. “These cuts would not just cause harm to individual families, they would lead to hospital closures in rural counties and higher medical debt while making the economy far more vulnerable to a recession.”