All children must have access to the health care they need to grow and thrive. As Congress debates budget reconciliation measures, alarm bells should be ringing for anyone concerned about the health and well-being of children. Current proposals would force hundreds of billions of dollars in cuts to Medicaid and the Children’s Health Insurance Plan (CHIP). These cuts represent far more than abstract numbers on a budget spreadsheet – they threaten the health, development, and future prosperity of more than 37 million children who rely on Medicaid and CHIP for their health care.

Children Stand to Lose the Most

Medicaid and the Children’s Health Insurance Program (CHIP) form the backbone of the U.S.  healthcare system and are the most critical coverage programs for kids. Medicaid and CHIP provide children with access to care, including preventive, dental, vision, mental health, developmental, and specialty services throughout their childhood so they can transition into healthy adulthood. Medicaid/CHIP help cover:

  • 80% of children living in poverty 
  • 42% of all children under 6
  • Over 40% of births 
  • Nearly half of the 13 million U.S. children with special health care needs 
  • 99% of children in foster care
  • Over 40% of children in rural and underserved communities
  • One-third of all school-age children (5-18 years old)

Behind these statistics are real children – children with asthma who need inhalers, children with developmental delays who benefit from early intervention services, children with disabilities who require specialized therapies, and kids who need vaccines, yearly check-ups, and care when they get sick.

Consequences of Proposed Cuts

Per Capita Caps: Arbitrary Limits on Care 

First Focus on Children staff have regularly written about the consequences of converting Medicaid to a block grant or imposing per capita caps on the program (here, here, here). These short-sighted proposals have reared their ugly heads once again. Most recently, lawmakers have suggested that Medicaid be funded on a per capita cap basis. This change would fundamentally transform Medicaid from a responsive program to one with rigid spending limits per enrollee. This is cause for great concern related to children’s health. 

Unlike adults, children’s health needs evolve as they grow – newborns require intensive care, toddlers need vaccinations, school-aged children need development screenings, and teens require mental health support. Medicaid, in its current form, ensures that each stage of development is met with the right care. 

A per capita cap would change this system, forcing states to prioritize budget constraints over children’s health leading to rationing of care for children. 

  • Even if initial caps provide adequate care, limitations on their growth rate would fail to keep pace with health care inflation or emerging pediatric health care needs.
  • When Medicaid funding is cut or capped, states inevitably reduce services or restrict eligibility, which puts benefits like the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit at risk. This valuable benefit ensures children under 21 have access to a comprehensive range of preventive, dental, vision, mental health, developmental, and specialty services. Examples of how care would be rationed for children under a per capita cap system would include:
    • Fewer early intervention services, resulting in lifelong consequences for children with disabilities and chronic illnesses.
    • Cuts to mental health services, which are already underfunded for children.
  • Additional strain would be put on pediatric providers, who rely on Medicaid’s reimbursement to serve children in families with low incomes.
  • States would lose the ability and support to respond to health crises, disease outbreaks, or new treatments.
  • Innovation in pediatric care would be stifled, as states could not afford to cover breakthrough treatments or approaches.

While some policymakers have suggested that per capita caps could be placed on populations other than children, the consequences outlined above would still follow. States would lose significant support for their Medicaid programs, forcing them to ration care, which would have ripple effects for children’s health regardless of the population(s) targeted by such caps.

FMAP Reductions: A Direct Hit to Children’s Care

Some lawmakers have suggested cuts to Medicaid that include different options for reducing the Federal Medical Assistance Percentage (FMAP). The FMAP is the share of costs covered by the federal government as part of the federal-state Medicaid partnership. Any such proposals, regardless of whether they directly target children, will have consequences for children’s health care. When federal funding decreases, states face impossible choices: raise state taxes, cut Medicaid support (including cuts to eligibility, benefits, and provider payments), or make cuts to critical programs like K-12 education or child care.

With limited state budgets already stretched thin, the most likely outcomes would be:

  • Reduced eligibility for children or their parents, separating families from consistent health care.
  • Elimination of optional benefits that are critical for children, especially those with special health needs.
  • Lower provider payments, causing pediatricians, hospitals, and other health providers to limit Medicaid patients or stop accepting Medicaid altogether.
  • Disproportionate impact on rural communities and states/counties/congressional districts with higher poverty rates, where more children depend on Medicaid/CHIP.

The timing could not be worse, as many states are already facing budget challenges following the end of pandemic-era enhanced FMAP rates. Further reductions would destabilize state Medicaid programs rather than provide them the support needed to maintain coverage and improve access to care for children.

Reducing Provider Taxes Flexibility: Undermining Critical Infrastructure

Proposals to limit states’ flexibility to finance their Medicaid programs through provider taxes would have far-reaching consequences for pediatric care. These taxes on hospitals and other health care providers generate revenue that helps states support their Medicaid programs. Restricting state ability to use this financing mechanism would:

  • Force cuts to services, eligibility, or provider payments that directly affect children.
  • Create significant financial pressure on children’s hospitals and pediatric specialty providers that depend heavily on Medicaid.
  • Threaten school-based health services that rely on support from Medicaid.
  • Jeopardize mental health and developmental services for children, which are often financially vulnerable.
  • Hit hardest in states with limited tax bases that rely on provider taxes to maintain their programs.

Children’s hospitals, community clinics, and pediatric specialists often operate on thin margins while serving a high proportion of Medicaid patients. Financial instability in these critical institutions would have immediate consequences for children’s access to care, including specialty care, and particularly in underserved areas.

Work Requirements: Children’s Care as Collateral Damage

Proposals to implement work requirements in Medicaid have gained traction in recent years, despite compelling evidence that they harm families. While these policies typically exempt children directly, the reality is that work requirements for parents and caregivers have profound and well-documented negative impacts on children’s health coverage and access to care.

The Family Coverage Connection

When parents lose Medicaid coverage due to work requirements, their children are more likely to become uninsured as well, even when they remain technically eligible for coverage. This phenomenon, known as the “chilling effect,” occurs for several reasons:

  • Families may not understand that their children can remain covered even if parents lose eligibility.
  • The administrative complexity creates barriers for working families who lack time and resources to navigate separate enrollment processes.
  • Parents focused on meeting work requirements or dealing with their own lack of health care may have reduced capacity to manage their children’s coverage.
  • Some families incorrectly assume that if they don’t qualify, their children don’t either.

Impossible Choices for Families

Work requirements place particularly heavy burdens on families already struggling with significant challenges:

  • Parents caring for children with complex medical conditions often have unpredictable caregiving responsibilities that make maintaining consistent work hours difficult.
  • Families with low incomes frequently work in jobs with irregular schedules, seasonal fluctuations, or limited hours that fail to meet arbitrary monthly work thresholds.
  • Families in rural areas face limited employment opportunities and transportation barriers.
  • Many parents lack access to affordable child care, creating an impossible situation where they cannot work without child care but cannot afford child care without work.

When parents lose coverage due to these barriers, they often face untreated health conditions that further impair their ability to work and care for their children, creating a downward spiral of worsening family health and economic insecurity.

Disrupted Care and Long-Term Consequences

For children, the consequences of coverage disruptions go far beyond missed check-ups. When children lose coverage:

  • Preventive care and immunizations are delayed or missed entirely.
  • Chronic conditions such as asthma, diabetes, or mental health issues go unmanaged
  • Early intervention opportunities for developmental concerns are lost
  • Prescription medications become unaffordable, leading to missed doses and worsening conditions
  • Families delay seeking care until conditions become severe, leading to avoidable emergency department visits

Even short gaps in coverage can have long-lasting impacts on children’s health outcomes and development. The most vulnerable children — those with special health needs, chronic conditions, or living in families with limited resources — suffer the most severe consequences when coverage is disrupted due to work requirements imposed on their parents.

Repealing Access and Enrollment Protections: Creating Barriers to Children’s Care

Some reconciliation discussions have suggested that Congress cut Medicaid and CHIP by repealing rules promulgated by the Biden administration. The potential rules in the crosshairs include those aimed at streamlining enrollment and renewal processes in Medicaid and CHIP and improving access to care for Medicaid and CHIP enrollees. These rules made much needed changes to help children apply for, enroll in, and maintain Medicaid/CHIP coverage as well as to strengthen network adequacy standards and improve wait times.

A critical example of the impact of these rules can be seen in the CHIP context. The rule aimed at streamlining eligibility and enrollment processes prohibits states from imposing waiting periods before a child can enroll in CHIP after having left private insurance coverage; locking kids out from re-enrolling in CHIP coverage if their family fails to pay CHIP premiums; and placing annual or lifetime limits on CHIP benefits. Eliminating these policies helps children enrolled in CHIP maintain coverage and ensures that it does not place arbitrary caps on the care they need.

Repealing any of these rules will have significant consequences for children’s coverage and access to essential care. Dismantling eligibility and enrollment protections will create barriers to children’s health care. Families will face increased administrative burdens, disrupting continuity of care through potential coverage gaps, delayed enrollment, and reduced outreach efforts, ultimately leading to more uninsured children. Repealing access protections would jeopardize children’s access to essential care. Loss of these protections will lead to reduced provider networks, longer wait times, and increased travel distances for children, particularly in rural and underserved areas, thus widening existing health care disparities and limiting state accountability for ensuring children can access covered services.

Long-Term Consequences of Medicaid/CHIP Cuts

Research has consistently demonstrated that children who are covered by these programs experience better health outcomes in adulthood, achieve higher levels of school attendance, and demonstrate greater academic success. Moreover, enrollment in Medicaid and CHIP during childhood is associated with lower high school dropout rates, increased enrollment in higher education, and enhanced future earning potential. By providing this health care coverage, Medicaid and CHIP not only improve children’s immediate health status but also make a profound contribution to their long-term well-being and productivity.

A False Economy

Cuts to Medicaid and CHIP are a false economy that will harm children’s health, development, and future opportunities. Higher emergency room utilization, increased hospitalization for preventable conditions, lost education opportunities, reduced future earnings, and perpetuated cycles of poor health would ultimately cost the nation far more than it will save.

Congress must reject these short-sighted proposals and instead strengthen and protect these vital programs to ensure that all children, regardless of their background or health care needs, have access to the comprehensive care they need. 

Make Investments in Children’s Health

The country will reap the greatest benefits from investing in things that will actually help children thrive and grow up healthy, such as:

For questions, please contact our Vice President, Medicaid and Child Health Policy, Abuko D. Estrada, J.D., at abukoe@firstfocus.org

For more information, check out our fact sheet on the impact of proposed medicaid and chip cuts on children’s health.