by Tess Vrbin, Arkansas Advocate
March 25, 2025

Arkansas’ economy would lose thousands of jobs and hundreds of thousands of dollars in tax revenue and federal funds if cuts to Medicaid and nutrition programs win congressional approval and the president’s signature, according to a Commonwealth Fund report released Tuesday.

The state’s gross domestic product would also shrink by almost $1 billion, the report from the health-care oriented foundation predicts. 

The U.S. House of Representatives approved a budget resolution in February that would clear the way for Congress to increase the federal deficit by as much as $4.5 trillion in order to pay for tax cuts, which benefit wealthy Americans more often than those with lower incomes. The resolution tasks House committees, including the one that oversees Medicaid, with finding $880 billion in spending cuts over the next decade.

If the spending cuts come to fruition and are spread out over 10 years, a cumulative $72.4 billion in Medicaid funding and $22.1 billion in Supplemental Nutrition Assistance Program (SNAP) funding would be gone in 2026, according to the Commonwealth Fund report. Arkansas would lose $763.2 million in Medicaid funding and $129.7 million in SNAP funding.

Nearly a third of Arkansans – 875,153 – were enrolled in Medicaid as of March 1, and 235,927 Arkansans received SNAP benefits as of last week, said Gavin Lesnick, communications chief at the state Department of Human Services.

Nationwide, approximately 80 million people receive health care through Medicaid and approximately 42 million benefit from SNAP. Both are jointly funded by states and the federal government, so cuts on the federal end would put more responsibility on states to fund these programs, said Laura Kellams, the Northwest Arkansas director of Arkansas Advocates for Children and Families (AACF).

“Our concern is that these types of proposals would end up taking the food off the table of hungry Arkansans and cutting the health care of Arkansans because the state wouldn’t be able to afford to pick up that difference,” Kellams said, citing declines in state revenue resulting from income tax cuts the Arkansas government has enacted over the past decade, most recently in June 2024.

Potential Medicaid and SNAP cuts would decrease Arkansas’ gross domestic product, or the value of its goods and services produced in a year, by $999.8 million in 2026, the Commonwealth report states. Arkansas’ GDP increased by 6.9%, the highest increase nationwide, in the third quarter of 2024, according to the federal Bureau of Economic Analysis.

Arkansas’ economic output would drop by $1.66 billion from the Medicaid cuts and $119.4 million from the SNAP cuts, and the state would lose a cumulative $156.6 million in federal tax revenue and $67.9 million in state tax revenue, according to the report.

The Commonwealth Fund also projects Arkansas would lose roughly 109,000 jobs as a result of the proposed cuts. About 600 of those jobs would pertain to SNAP, with about half in food-related sectors such as agriculture, retail grocery and food processing, and the other half in other business sectors as an economic ripple effect.

An estimated 5,600 of the remaining 103,000 lost jobs would be in the health care sector serving Medicaid patients at hospitals, clinics, nursing homes and other facilities. The other 4,700 lost jobs would be a ripple effect in other industries, according to the report.

Medicaid and its beneficiaries

Congressional Democrats reported earlier this month that 25 million people nationwide could lose Medicaid coverage under the likely cuts to the program. This includes more than 250,000 Arkansans, including 100,000 rural residents and 110,000 children, the report states.

Arkansas was among the 10 states with the most children in rural areas relying on Medicaid for health insurance in 2023, and was one of only six with more than half of its rural children on Medicaid, according to a January report from Georgetown University.

Medicaid spending cuts could financially strain health care providers in rural areas to the point they could stop serving Medicaid recipients or shut down completely, according to both the Georgetown report and Tuesday’s Commonwealth Fund report.

This means rural Arkansas could see the majority of the 103,000 projected Medicaid-related job losses, Kellams said.

Additionally, low-income people’s need for health care services would increase because they would develop more health problems if SNAP cuts reduce their access to food, Arkansas Hunger Relief Alliance CEO Sylvia Blain said.

“If you’ve got cuts to your health care, you’re having to spend more of your income, whatever that may be, on health care, and then you are also cutting into your food budget,” she said. “You’re having to make harder decisions even if there were no cuts to SNAP, so the combination of those two things [is] kind of a one-two punch.”

Another likely overlap in the impacts of the proposed cuts would be in the proportion of elderly and disabled Americans who benefit from both SNAP and Medicaid or Medicare, Blain said. More than 45% of Arkansas households receiving SNAP include elderly and disabled beneficiaries, according to the Centers on Budget and Policy Priorities, a nonpartisan research institute.

More broadly, Arkansas is one of nine states that would likely end their Medicaid expansion programs if federal funding decreases, according to KFF Health News. Arkansas became the first southern state to expand Medicaid in 2013.

In January, Sanders unveiled a waiver request to the federal Centers for Medicare and Medicaid Services (CMS) requesting the implementation of a work requirement for “able-bodied, working-age recipients” of the state’s Medicaid expansion program.

Arkansas implemented a work requirement for all Medicaid recipients in 2018, but it was struck down by a federal judge after 18,000 people lost coverage. Work requirements have become increasingly popular among Republican leaders in several states; AACF has repeatedly denounced such proposals.

SNAP and food insecurity

Only 69% of eligible Arkansans were enrolled in SNAP in 2020, the third-lowest participation rate of any state that year, according to USDA data.

AACF released a report in January calling for Arkansas to remove barriers to SNAP enrollment, including a lengthy application process and low ceilings on participants’ income and assets.

Regardless of whether more Arkansans are able to enroll in SNAP, fewer federal funds would result in fewer participants in the program, which could lead families to become more reliant on soup kitchens and food pantries, Blain said.

“If we reduce the amount of food that people are able to get through SNAP [and] they have to visit food pantries more often, that’s going to put even more pressure on an already very strained charitable food network that was intended to be an emergency source of food rather than someone’s regular source of food,” Blain said.

Arkansas has the highest prevalence of food insecurity in the nation, at nearly 19% in 2023, according to a U.S. Department of Agriculture report released in September 2024. The report defines food insecurity as being unable, at some time during the year, to provide adequate food for one or more household members because of a lack of resources.

Gov. Sarah Huckabee Sanders has made feeding children a policy priority. She opted Arkansas into a federal summer nutrition assistance program for students in 2024, and the program will continue this year. Sanders also signed a law in February making school breakfasts free for all public school students in Arkansas.

The free school breakfast program will be funded by state general revenue, private grants and taxes from Arkansas’ billion-dollar medical marijuana industry, as well as some federal funds.

Support for both cutting income tax revenue and expanding federally-funded nutrition programs eventually becomes contradictory, Blain said.

“We’d have to raise taxes in one way or another in order for the state to step in and cover some of these costs,” if federal funding is cut, Blain said.

Kellams and Blain both said they support Sanders’ proposal to eliminate the state’s 0.125% grocery sales tax. Sanders has said the Grocery Tax Relief Act will make it easier for Arkansans to afford groceries. Local sales tax on groceries would not be affected.

Eliminating the grocery tax would cost the state $4.4 million in revenue, according to a fiscal impact analysis of Senate Bill 377 by the state Department of Finance and Administration.

USDA should prohibit “junk food” purchases with SNAP benefits, Arkansas governor says

The Legislature has yet to consider SB 377 since its introduction March 5, but Sanders still wants the bill to reach her desk by the end of the session next month, her spokesperson Sam Dubke said Monday.

Sanders also supports prohibiting SNAP recipients from buying highly processed foods. Senate Bill 217 also awaits legislative consideration and would require DHS to seek federal permission to make candy and soft drinks forbidden purchases with SNAP benefits.

Arkansas officials who have been working to reduce food insecurity should urge federal officials not to support the proposed cuts in the U.S. House budget resolution, Kellams said.

“We would hope that they would use their influence with our members of Congress to let them know that this is going backwards from what we’re actually moving towards, which is trying to make sure that we have no children hungry in Arkansas,” she said.

Congressional budget resolutions are non-binding, so it’s “impossible to make any kind of accurate projections” about future binding decisions about federal spending, Dubke said.

“The Governor has been clear that America is $36 trillion in debt, and President Trump and Congressional Republicans are right to look for ways to cut wasteful spending while investing in needed priorities,” Dubke said.

Arkansas Advocate is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Arkansas Advocate maintains editorial independence. Contact Editor Sonny Albarado for questions: info@arkansasadvocate.com.

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