Cutting Medicaid will harm Iowa’s health and economy

Last year, 60-year-old Iowan Susan McKinney started a new job working from home for a travel agency. Susan suffers from diabetes, arthritis and atrial fibrillation (AFib), and her insurance coverage hadn’t kicked in before her health deteriorated to the point where she couldn’t walk up or down her apartment steps. She couldn’t get to a doctor — which she had no way to pay for anyway — so her conditions went untreated. In November, her concerned siblings moved her back to her hometown of Cedar Rapids, where the local free clinic told her that she qualified for Medicaid. Susan’s sister says, “Medicaid saved her life.”

Medicaid provides comprehensive medical coverage and long-term care for approximately 21% of Iowans like Susan. In 2023, the federal government covered around 72% of Iowa’s $7 billion in Medicaid spending. On Feb. 25, all four members of Iowa’s House delegation voted in lock step with the Republican majority to advance a budget that would necessitate slashing federal contributions to state Medicaid programs to fund tax cuts for the wealthy. If implemented, this legislation could mean a loss of over $8 billion for Iowa’s economy over the next decade.

Congress may attempt to achieve these cuts by imposing work requirements for Medicaid enrollees, setting annual limits for health benefits, or shrinking the amount of money the federal government provides states to help finance their Medicaid programs. Should Congress pursue the latter option, as many as 173,000 Iowans could lose their coverage entirely. In addition to making basic health care less affordable, that means people with serious conditions like cancer or Susan’s diabetes could be diagnosed at later stages, require more expensive treatments and face a higher risk of premature death.

KFF estimates the proposed federal cuts to the Medicaid program would leave an estimated $14 billion gap in Iowa’s budget. In order to avoid coverage losses as a result of the proposed cuts, Iowa policymakers would be forced to raise taxes on Iowa families to make up for the dramatic drop in federal funding, or else make devastating cuts to Medicaid services — which extend beyond healthcare. In fiscal year 2022-23, for example, $75.5 million in federal Medicaid funds helped Iowa’s public school system pay for special education services. The loss of even a portion of those federal dollars would require schools to cut services that empower children with developmental delays and other special health needs to thrive in the classroom.

To make matters worse, Iowa — like all other states — already faces a staffing crisis for doctors, nurses, and other health care workers. Cutting federal Medicaid funding will only exacerbate these challenges. Iowa’s rural counties would be particularly hard hit, since they average higher rates of Medicaid enrollment than metropolitan areas. Thirty-three percent of Iowa’s rural hospitals are already losing money on services, and 22% are at risk of closing. If even one rural Iowa hospital closed due to Medicaid cuts, the entire community would be left with fewer available services and forced to travel longer distances to receive care.

Thanks to Medicaid and the help of her siblings, Susan now lives independently. But her success story could be short-lived if Republicans in Congress are successful in slashing federal Medicaid spending or instituting Medicaid work requirements. Susan is ready to look for a job, but due to her health, she can only work part-time and remotely, making employment opportunities scarce. If she loses Medicaid access or becomes subject to stiff work requirements, she doesn’t know how she’ll be able to pay for the expensive medications and regular doctor visits that are keeping her healthy and alive.  

Cutting federal Medicaid payments, whether by imposing work requirements or simply shrinking the amount the federal program provides to states, will then shift the burden onto people. While those who are dropped from Medicaid altogether will be directly harmed, all Iowans will bear the burden of lost revenues to the state and the associated job losses, provider shortages and closed businesses — including rural health care facilities. Iowa’s members of Congress have the power to protect Iowans by firmly opposing federal cuts to Medicaid. They should use it.

Sue Dinsdale is the executive director of the Iowa Citizen Action Network, a grassroots public interest organization committed to creating social change in Iowa and across the nation. She is also the state lead for Health Care for America NOW. Brian Keyser is a health policy research associate at Center for American Progress, an independent, nonpartisan policy institute that is dedicated to improving the lives of all Americans through bold, progressive ideas, strong leadership and concerted action.