By: By Morgan Carter and Madeline Waltman, LSU Manship School News Service
Louisiana's reliance on federal funds for half of the state budget leaves it vulnerable as President Donald Trump and congressional leaders push for substantial cuts in federal spending.
Federal funds provided $21.4 billion, or 50.8%, of the $42.1 billion Louisiana state budget in fiscal 2024. Louisiana is usually ranked within the top five states with the greatest percentage of their budgets coming from federal funding, and residents who depend on Medicaid for health insurance or on food stamps could be particularly vulnerable.
Louisiana spent $14.8 billion in 2024 on Medicaid for 1.6 million residents participating in either the traditional Medicaid program for low-income people or the Medicaid Expansion part that covers many working people around the state, according to the Kaiser Family Foundation. Nearly 35 percent of people in the state rely on some type of Medicaid assistance, and the federal government provides 68% of those funds.
"They have put a bullseye on the Medicaid program," said Jan Moller, executive director of Invest in Louisiana, a nonprofit that focuses on how government spending affects low- and middle-income residents.
The U.S. House narrowly passed a budget framework Tuesday night that calls for spending reductions to pay for an extension of tax cuts from 2017 and for increases in spending on defense and border security. The vote was mostly along party lines, with 217 Republicans supporting the bill and 214 Democrats and one Republican, Rep. Thomas Massie of Kentucky, opposing it.
The bill directs the House Energy and Commerce Committee to find $880 million in cuts over 10 years in programs it oversees. Medicaid and Medicare, the health insurance program for elderly Americans, make up the bulk of that spending.
The framework also calls on the House Agriculture Committee to propose $230 million of cuts over 10 years. It oversees the SNAP food stamp program and support programs for farmers.
House Speaker Mike Johnson and House Majority Leader Steve Scalise, both Republicans from Louisiana, pushed the bill forward, with President Trump calling a few reluctant House Republicans to lobby for their support.
Trump has said he does not intend to cut Social Security or Medicare. Johnson and Scalise have downplayed the possibility of significant cuts in Medicaid programs.
"What we're talking about is rooting out the fraud, waste, and abuse," Johnson told the Advocate. "We can eliminate all these fraudulent payments and achieve a lot of savings. What you're doing with that is you're shoring up the program and you're making sure that the people who rely upon that have it and that it's a better program."
Scalise told the paper that Medicaid is not mentioned in the budget framework passed Tuesday night.
But U.S. House Budget Committee Chairman Jody Arrington, R-Texas, and Rep. Brett Guthrie, the chairman of the House Energy and Commerce Chairman, have both suggested that states who have adopted the Medicaid Expansion program might see negative changes to their funding.
With so many Louisiana residents enrolled in the Medicaid programs, Moller of Invest in Louisiana said that the state is going to have to make some "tough decisions" if the federal government decides to withhold funds.
Moller said no one knows exactly what's coming since the various U.S. House committees now need to work out the details of any cuts. Moller said federal cuts could lead to reductions in services because in Louisiana "we have to balance the budget, and we can't print money the way the federal government can."
The Medicaid program was created to provide healthcare to low-income individuals below the federal poverty level. Later the Medicaid Expansion program was established to expand similar coverage to those earning up to 35% above that level who would have trouble paying for private insurance.
In 2016, former Gov. John Bel Edwards adopted the Medicaid Expansion program after years of debate. Healthcare leaders credit the program with helping many of the state's rural hospitals keep their doors open.
With the expansion program being 90% federally funded, there are concerns about Louisiana' ability to afford it if federal funding is cut.
The majority of the budget overseen by the U.S. House Committee of Energy and Commerce goes to the federal healthcare programs.
According to the Kaiser Family Foundation, potential changes could attach work requirements to federal Medicaid Expansion funding which would put 36 million Americans who are sick, disabled, students or caretakers, at risk of losing their coverage.
This includes 980,000 to 1.26 million Louisiana residents according to the Kaiser Family Foundation.
U.S. Sen. John Kennedy, a Republican from Louisiana, has proposed a bill that would impose nationwide work requirements to which Mike Johnson has shown his support.
In 2018, the Louisiana Legislature considered a similar work requirement they found that the increase in administrative costs would limit the cost savings.
In 2023, Georgia created its own Medicaid Expansion alternative, Pathways to Coverage, that was still federally funded but had work requirements for coverage.
Over the course of 18 months, Georgia spent $26 million the administrative costs of enforcing the work policy.