Medicaid provides health insurance for lower-income people and their families. But it is not always called Medicaid. It has different names in different states: Health First Colorado, HUSKY Health in Connecticut, and Medical Assistance in Minnesota.

While Medicaid is funded mostly by the federal government, it is run by individual states. And Medicaid programs across the country now have some difficult choices to make, given $1 trillion in cuts from President Donald Trump's tax and spending law.

Marketplace senior economics contributor Chris Farrell spoke with “Marketplace Morning Report” host David Brancaccio to discuss. The following is an edited transcript of their conversation.

David Brancaccio: Medicaid is run by the states, but about 70% of its funding — most of its funding — comes from the federal government. I was just looking. We are talking about a program that accounts for something like a fifth of total health care expenditure in the United States.

Chris Farrell: That's right. And Medicaid is also the country's single largest payer for mental health services. Medicaid finances over four in 10 births nationally, and it's the primary provider of coverage for nearly two out of every three nursing home residents. So, David, states don't have the resources to absorb the extraordinary cost shift that's embedded in the new legislation that you mentioned, and that legislation will unfold over several years.

Brancaccio: Chris, with a system this complex, the cuts must come from different parts of the Medicaid program. What are some that stand out?

Farrell: In essence, David, much the savings comes from fewer people enrolled in Medicaid. For instance, enrollment will likely drop, because participants will need to prove eligibility twice a year rather than annually. Then, there is the new work requirement for able-bodied Medicare beneficiaries. Alice Burns is associate director with KFF's Program on Medicaid and the Uninsured.

Alice Burns: Data show that many people are expected to lose coverage, not necessarily because they're not working, but because they fail to navigate the reporting requirement successfully.

Brancaccio: In other words, put people through more red tape so they maybe miss a deadline or something, and then Franz Kafka helps grow the number of uninsured to save money to help pay for other parts of the new budget law, right, Chris?

Farrell: That's spot on. And that's why state-run programs want to invest considerable sums to keep people on Medicaid, says Kim Bimestefer, executive director for the Colorado Department of Health Care Policy and Financing.

Kim Bimestefer: We have massive investments to make, and massive people to hire, and significant investments to make in the training of those individuals to make sure that we achieve our North Star again: Don't let people lose their coverage because of administrative barriers. Because, holy moly, the implications and down-streaming effect of people losing coverage are devastating.

Brancaccio: And data point to rural communities getting hit especially hard in this?

Farrell: Yes, the studies show that a higher percentage of rural residents, especially children, depend on Medicaid for the health insurance coverage compared to their metro area peers. John Connolly is Minnesota's Medicaid director.

John Connolly: We cover, in some rural Minnesota communities, more than half of children, and so it's an incredibly important source of health coverage. It's an incredibly important payer when it comes to rural hospitals who are very dependent on Medicaid. It's also important for long term services and support, so nursing facility care is another good example.

Brancaccio: Do Medicaid cuts, Chris, make people sick?

Farrell: Well, here's the answer I got:

Burns: We've never experienced a clawback in federal funding and coverage of this level, so we just don't know what's going to happen, what the effects on people's health and well-being will be.

Farrell: That's Alice Burns at KFF.

Brancaccio: And that's Marketplace’s senior economics contributor Chris Farrell, who's following this for us. Thank you very much.