Proposed cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) could have wide-ranging effects on state economies and employment.
A recent report warns that over 1 million jobs may be lost by 2026, with significant impacts on the healthcare sector.
According to Health Care Dive, these cuts are expected to result in a decrease in federal funding, ultimately triggering economic disruptions across multiple industries and leading to substantial job losses nationwide. The full extent of these effects remains to be seen.
Republican Budget Cuts Target Medicaid and SNAP
Republicans are seeking substantial budget reductions to help offset tax cuts and increased defense and border control spending.
A recent budget resolution passed by the House Republicans outlined plans to cut $880 billion from Medicaid and $230 billion from SNAP over the next decade. These cuts would be a significant blow to state economies, especially those reliant on federal funding for healthcare and food assistance programs.
This effort is part of a broader goal to reduce $1.5 trillion in spending, which includes offsetting President Donald Trump’s tax cuts and increases in defense and border control spending.
The House resolution instructs the Energy and Commerce Committee to find $880 billion in cuts to healthcare programs, including Medicaid, while the Agriculture Committee is directed to reduce SNAP funding by at least $230 billion.
Economic and Employment Impact of Proposed Cuts
The report from Commonwealth reveals that cutting Medicaid funding could result in nearly 12% less federal support for states, leading to $72 billion in lost funding in 2026 alone.
This reduction is expected to trigger a ripple effect, impacting industries like healthcare, retail, and manufacturing, ultimately costing the U.S. economy $95 billion in gross domestic product (GDP) and leading to the loss of 888,000 jobs.
These job losses would extend beyond healthcare, with significant impacts on sectors such as retail, construction, and manufacturing.
Joseph Betancourt, President of Commonwealth, emphasized the broader consequences, stating,
Slashing these programs will worsen health outcomes for all Americans, and particularly for people with chronic conditions who rely on Medicaid for ongoing care.
Similarly, cutting SNAP will push more families into financial distress, making it harder for them to afford basic necessities.
The ripple effect will hit the entire health care system and impact everyone — not just those with Medicaid — driving more people to emergency rooms and further straining an already overburdened system.
Implications for SNAP and Broader Economic Impact
The proposed cuts to SNAP would reduce funding to states by nearly 21%, causing a further decline in state GDPs by $18 billion in 2026.
This reduction in SNAP benefits would not only result in 143,000 job losses nationwide but also adversely affect the food and retail sectors, which rely heavily on the program.
Additionally, state and local governments could face a $1.8 billion decline in tax revenues. The loss of SNAP funding would disproportionately affect food-related industries, such as agriculture, retail grocery, and food processing.
Combined Effects of Medicaid and SNAP Cuts
When combining the impact of both Medicaid and SNAP cuts, the U.S. could face a loss of over 1 million jobs by 2026. This includes both direct job losses in healthcare and food sectors and the broader effects on other industries.
These cuts would also lead to a substantial reduction in tax revenues, exacerbating financial difficulties for states already grappling with budgetary constraints.
The original article also notes that some states, such as Wyoming, would be relatively less affected, with only about 800 jobs lost. However, nearly every other state would see at least 1,000 jobs cut due to the funding reductions.
The total loss in state GDP from Medicaid and SNAP cuts would be $113 billion in 2026, far surpassing the federal savings of $95 billion.
Future Legislation and Specific Cut Proposals
The specifics of these cuts are still unclear, as further details will come in future legislation.
However, several proposals are already on the table, such as eliminating enhanced federal funding for low-income, working-age adults under the Affordable Care Act (ACA), reducing SNAP benefits, and expanding work requirements in both Medicaid and SNAP.
If these proposals are enacted, the effects could be even more pronounced in states that have expanded Medicaid under the ACA, as they would lose enhanced federal funding for these populations.
In an earlier analysis, it was also noted that not extending the enhanced premium tax credits for marketplace health insurance coverage, set to expire at the end of 2025, would result in a loss of 286,000 jobs nationwide.
Combining these losses with the job cuts from Medicaid and SNAP reductions, the total job loss could reach 1.3 million across the U.S. by 2026.
