Column: Medicaid cuts will hurt workers and the economy

Published 9:58 am Tuesday, July 29, 2025

When I was 23, I thought my future would be writing punchlines for “Saturday Night Live.” Instead, I spent most nights filling pill boxes, learning how to flush chemo ports, and convincing two very stubborn dads to let me help them shower while they fought cancer.

That experience taught me something every business leader needs to understand: Care is infrastructure. When you lose the funding, the entire economy begins to wobble.

We’ve already removed 25.2 million people from Medicaid during the post-pandemic “unwinding,” and 69 percent of those terminations were paperwork errors, according to KFF (formerly the Kaiser Family Foundation) data. Now, Congress’s One Big Beautiful Bill Act proposes nationwide work-reporting rules that the Congressional Budget Office says will remove an additional 10.3 million people by 2034.

This isn’t a healthcare issue; it’s an economic one.

Medicaid is the largest payer of long-term services and supports in America, covering 4.5 million people who rely on home and community-based services such as personal care, meal preparation and transportation. When someone loses Medicaid coverage, the formal support disappears, but the labor doesn’t. It shifts to family members who provide it free, adding to an unpaid care economy already valued at $600 billion annually.

The ripple effects hit the workforce hard. Women in the “sandwich generation” already average 24 hours of unpaid care weekly. Remove a parent’s Medicaid-funded aide, and that mid-career project manager often reduces her hours or leaves entirely. Companies lose output, the economy loses innovation, and tax revenues decline.

We’ve tested this approach before. Arkansas imposed similar work rules in 2018. Eighteen thousand adults lost coverage in seven months. The Urban Institute found zero employment gains from the policy.

Healthcare startups face particular risk. Since 2021, analysts estimate $8 billion to $10 billion has flowed to companies delivering care in the home. Their business models assume Medicaid reimbursement. Shrink that payer pool, and revenue projections evaporate.

Even before new cuts, 700,000 people were stuck on waiting lists for these services, with an average wait of 40 months. Cut an additional 10 million enrollees, and those queues grow longer while provider revenue shrinks.

There are practical solutions. States could auto-renew coverage for documented family caregivers since they already track care hours through electronic systems. Congress could pass the bipartisan Credit for Caring Act, a refundable tax credit up to $5,000 for caregiving expenses. It would cost less than one-tenth of the proposed bill’s projected savings while keeping caregivers in the workforce.

As a founder of Aidaly, which pays and trains family caregivers in five states, I see the fear these policies create. Daughters call, worried that one missing document will cost a parent their coverage. Many states don’t have programs like ours, so their concern is justified.

Smart investors recognize the trend. Companies like Fortuna Health and Arine, which develop software to reduce Medicaid administrative costs, have recently completed successful funding rounds. Broader cuts threaten the entire industry.

We talk constantly about America needing “roads and bridges.” We also need the family members who keep older adults out of hospitals through daily care and health monitoring. Remove their financial lifeline, and costs appear elsewhere: lost productivity, higher employee turnover, and overcrowded emergency rooms.

Medicaid cuts aren’t budget discipline. They’re a boomerang aimed at America’s aging workforce and economic stability. Policymakers need to catch it before it hits.

— Margaret Norris is CEO and founder of Aidaly, a platform that trains and pays family caregivers. She wrote this for InsideSources.com.