As the Trump administration and legislators weigh cuts to federal spending, Medicaid, the Supplemental Nutrition Assistance Program (SNAP) and other entitlements are set to be prime targets.
But a new report from the Commonwealth Fund and the George Washington University Milken Institute School of Public Health warns that doing so could cause significant financial turmoil among the states. The paper estimates that budget cuts for Medicaid and SNAP could lead to the loss of 1 million jobs and a $113 billion decline in states' gross domestic product.
In addition, the researchers estimate that it could drive $8.8 billion in lost local and state tax revenue for 2026 alone.
The report is based on the current budget resolution in the House of Representatives, which calls for $880 billion in federal funding cuts.
"Medicaid and SNAP programs are not just designed to strengthen individual health and nutrition—they support the economic well-being of communities and businesses nationwide," said Leighton Ku, Ph.D., the study's lead author and director of the Center for Health Policy Research at the Milken Institute School of Public Health. "Cuts of this magnitude will not be harmless. In fact, such drastic reductions would harm millions of families and also trigger widespread economic instability and major job losses."
Significant cuts to Medicaid could drive down state GDPs by $95 billion in 2026 and lead to the elimination of 477,000 jobs in healthcare, likely impacting hospitals, skilled nursing facilities and physicians' offices. It also estimates that it could drive 411,000 additional job losses in other segments of the economy.
Severe Medicaid cuts could also lead to a $7 billion drop in state and local tax revenues due to lost income, according to the report.
The report also estimates that cuts to SNAP could lead state GDPs to decrease by $18 billion and the loss of 143,000 jobs nationally. This includes potentially 78,000 lost positions in the food and grocery industries as well as 65,000 in other industries affected by consumer spending.
It also projects that cuts to SNAP would result in a $1.8 billion drop in state and local tax revenues.
“Cutting Medicaid and SNAP will make it harder for millions of Americans to stay healthy and make ends meet," Sara Collins, Ph.D., senior scholar at The Commonwealth Fund, said in the press release. "Medicaid provides essential health coverage for families nationwide, ensuring they can get and afford the care they need."
"Cutting back on these critical programs would have severe health and financial consequences for people already struggling to stay afloat," Collins said.