The Trump administration shut off federal funding through Medicaid for non-healthcare-related services such as housekeeping, groceries, and internet earlier this month. It’s about time.
Medicaid exists to provide health benefits to the nation’s neediest, not to subsidize a laundry list of liberal priorities. Over the last two decades, it has increasingly served as a slush fund for high-spending states.
In 2005, the Centers for Medicare and Medicaid Services began green-lighting Medicaid waivers for “designated state health programs” and “designated state investment programs.” These programs aim to boost health outcomes by spending Medicaid dollars on “social determinants of health” — external factors that purportedly affect health, such as food and housing.
President Donald Trump took steps to phase out these waivers during his first term.
But the Biden administration made them a major focus. In 2023, CMS authorized Medicaid waivers for nutrition counseling, pantry stocking, rent, home improvements, and utility assistance, among other things that have little to do with health on their face. Arizona, California, Hawaii, Massachusetts, New York, North Carolina, Oregon, and Washington now have waivers on the books.
There’s a financial incentive for state Medicaid programs to spend money addressing social determinants of health. States receive at least $1 in federal funding for every dollar they spend on Medicaid. The more they spend on the entitlement, the more they can draw down from the federal government.
States are accordingly allocating more funds toward social determinants of health. Between 2019 and 2025, state spending on designated state health programs and designated state investment programs tripled from $886 million to $2.7 billion, with federal tax dollars covering much of the cost. No wonder CMS calls these programs “essentially a tap on the federal Treasury.”
Now, the Trump administration is ending the federal gravy train.
TRUMP CMS STOPS MEDICAID SPENDING ON INTERNET AND HOUSEKEEPING
CMS lists just a few examples of the non-healthcare-related services states provide through Medicaid. New York has $241 million in Medicaid funds slated for housekeeping and home services, $11 million for labor union grants, and $3.8 million for diversity in medicine. North Carolina spends $20 million on internet for rural healthcare providers. California has $17 million slated for student loan repayment.
Paring back Medicaid is a fiscal necessity. Our national debt has topped $36 trillion, and Medicaid is a significant contributor to our debt burden. Cutting off funds for social determinants of health is a commonsense way to preserve scarce Medicaid resources for those who need them most.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It (Encounter 2025). Follow her on X @sallypipes.