Red states would be hit hardest by GOP's next budget moves: analysis

House speaker Mike Johnson (R-LA) has taken major cuts to the Affordable Care Act’s Medicaid expansion off the table for now, but the largest cuts still available to make their tax cuts work would hit red states hardest.

Republicans have been working for months to shrink Medicaid spending to help pass president Donald Trump's agenda, but they're running out of options to slash $800 billion in spending to offset the cuts sought by the White House, reported the New York Times.

"One policy would significantly dial back funding for the Obamacare Medicaid expansion, which the Congressional Budget Office estimated Wednesday would save $710 billion over a decade," the Times reported. "Some of the deepest cuts would be felt by rich, Democratic-led states. This was the option Mr. Johnson ruled out for now after meeting with moderate Republican members this week."

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"The remaining big cut on the table, limiting the way states use a tax loophole to increase federal spending on Medicaid, would save $668 billion, mostly by reducing Medicaid spending in poorer, Southern states," the report added.

The federal government covers a larger share of medical costs for patients in poorer states and gives less money to wealthier states that can support Medicaid with their own taxpayer funding, and states hit hardest by GOP budget cuts could be forced to drop Medicaid coverage for some lower-income adults or cut hospital payments.

"The first Republican policy option, reducing funding for the Obamacare Medicaid expansion, would decrease the 90 percent match back to whatever share a state normally gets from the federal government," the Times reported. "That would hit richer, Democratic states in two ways: They’re more likely to participate in Medicaid expansion, and they have lower matching rates."

The 10 mostly GOP-led states that didn't take part in Medicaid expansion would experience no effects from the cuts, but North Dakota, made wealthy by its natural gas industry, would lose about 19 percent of its federal Medicaid funds if Congress cuts the Obamacare expansion.

Johnson signaled he won't make changes to the Medicaid expansion matching rates after meeting moderate Republicans, but he remains open to replacing that system with a fixed payment for each enrollee to states, which the Congressional Budget Office said could save about $225 billion over a decade.

"The second large option, closing the medical provider tax loophole, would end a system in which states can use hospital and nursing home tax revenue to artificially inflate their Medicaid spending, allowing them to collect more matching funds from the federal government," the Times reported.

"These policies tend to account for a large chunk of the Medicaid budget in poorer states, where each dollar they spend on the program gets matched twofold or threefold by the federal government," the report added. "There are four Southern states — South Carolina, Mississippi, Alabama and Tennessee — that arguably have the most at stake in which way Congress cuts Medicaid."