Occasionally, I’m reminded that I was an Economics major in college and not a historian. I was enticed into choosing economics by the use of simple graphs in Economics 101. On the first day of class, we were introduced to a supply and demand chart, which expanded by the end of the year to have dual supply and demand lines. There were S1 and S2, and D1 and D2. We always assumed there were no other variables that would only complicate the calculations. Another graph commonly used was about guns and butter, the only two products that could be purchased with a fixed amount of money. Every gun bought would directly lead to a reduction in butter and vice versa.
These assumptions had no basis in reality. Besides guns and butter, real people bought medicine, school books, clothing, cars, and homes. A million things were vying for our attention and money, and rarely were decisions as simple as the guns and butter chart led us to believe. There is one real-life example that is that simple. You can have one or the other and not both. That example would be the Trump tax cuts or the preservation of Medicaid. The same people coming for Medicaid will eventually come for Medicare and Social Security. That will require a new graph.
I’m not on Medicaid and have never looked into the specific qualification requirements, which vary by state. There are multiple sources who will gladly give you a quote for health insurance. Many websites are official sounding as if they are the government but aren’t. Some will lead to receiving dozens of texts and calls asking for further information. I went to the HealthCare.Gov site, which at least won’t harass me.
- In all states, You can qualify for Medicaid based on income, household size, disability, family status, and other factors. Eligibility rules differ between states.
- In states with expanded Medicaid coverage, You can qualify based on your income alone. You qualify if your household income is below 133% of the federal poverty level. (Because of how this is calculated, it turns out to be 138% of the federal poverty level. A few states use a different income limit.)
I looked to see how little one would have to make to qualify on income alone. I live in Florida, which hasn’t expanded Medicaid (an Obamacare option), so there is no income level by which an individual can qualify for Medicaid without other factors. If you are poor in states that haven’t opted to expand Medicaid, you also don’t make enough money to qualify for savings on a commercial plan. You are in a gap where you can’t afford health insurance, and the government won’t help.
If your state hasn’t expanded Medicaid, your income is below the federal poverty level, and you don’t qualify for Medicaid under your state’s current rules, you won’t be eligible for either health insurance savings program: Medicaid coverage or savings on a private health plan bought through the Marketplace.
- When the health care law was passed, it required states to provide Medicaid coverage for all adults 18 to 65 with incomes up to 133% (effectively 138%) of the federal poverty level, regardless of age, family status, or health.
- The law also provides premium tax credits for people with incomes between 100% and 400% of the federal poverty level to buy private insurance plans in the Health Insurance Marketplace®.
- The U.S. Supreme Court later ruled that the Medicaid expansion is voluntary with states. As a result, some states haven’t expanded their Medicaid programs.
- Adults in those states with incomes below 100% of the federal poverty level, and who don’t qualify for Medicaid based on disability, age, or other factors, fall into a gap.
- Their incomes are too high to qualify for Medicaid in their states.
- Their incomes are below the range the law set for savings on a Marketplace insurance plan.
Obamacare was enacted in 2010, but 10 states have not expanded Medicaid, the federal-state program that provides health care for low-income people. They are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. In those states, 1.6 million people couldn’t afford Medicaid in 2024.
Republicans in the House of Representatives are struggling to find a way to pay for the tax cuts requested by the Trump administration. Leaders are pushing a message that they are cutting “waste, fraud, and abuse,” saying the proposed 10.3 million losing some coverage and 7.6 million becoming totally uninsured are people who shouldn’t be receiving benefits because they’ve somehow defrauded the system.
There are two main components to the Trump tax cuts. Tax cuts passed by Trump in 2017 are set to expire at the end of 2025 and, unless renewed, will affect over 80% of Americans. I don’t need to tell you what 20% won’t see their tax bill rise, though they will be impacted in other ways. The 2017 plan was set up to ensure the rich won’t face the same increase as the rest of us (I’m not among the 20%).
In January 2025, the U.S. Treasury released a new analysis of the various ways that extending the expiring individual and estate tax provisions of Trump’s 2017 tax overhaul — known as the Tax Cuts and Jobs Act — could cost the government, and who would directly benefit the most from the legislation’s permanent extension.
For instance, the Treasury’s Office of Tax Analysis estimates that the top 0.1% of earners would get a tax cut of $314,000 under a full extension of the individual and estate tax provisions, with the total cost of those tax cuts amounting to $4.2 trillion between 2026 and 2035.
Everything in the Trump tax plan is subject to change, and most Americans would benefit in some fashion. What’s certain is that these tax cuts will significantly burden the national debt. A proposal is making its way through the House of Representatives to raise the debt ceiling by $4 trillion. An increase or a suspension of the debt ceiling is needed to keep America from defaulting on its debt as soon as July 2025.
Significant cuts must come from somewhere else to pay for these tax increases, with Medicaid the most likely target. Poor people don’t have powerful lobbyists like the Defense Department does, and of the three third rails, Medicare, Medicaid, and Social Security, Medicaid has the least power to fight back.
Sometimes, it really is a guns-and-butter choice. The money won’t be made up by cutting waste but by taking away healthcare from millions who can’t afford it. Don’t believe the hype that tariffs will save the day. Those funds will be more than offset by inflation, higher unemployment, and higher prices.
Pay attention to your legislators and what they tell you about tax cuts and Medicaid. In a guns-and-butter scenario, there is always a loser.
This post originally appeared on Medium and is edited and republished with author's permission. Read more of William Spivey's work on Medium. And if you dig his words, buy the man a coffee.