Support for this issue brief was provided by the State Health and Value Strategies (SHVS) program, a grantee of the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation.
The budget reconciliation process is continuing to move forward in Congress and includes developing proposals in the House to identify $880 billion in federal savings over the next ten years, the vast majority of which will need to come from Medicaid. States and their partners are working to quantify and communicate the impacts of such proposals, including state-specific estimates for projected impacts to state Medicaid costs and health coverage among people covered by Medicaid today.
To support states in informing and validating their own estimates of how federal policy changes will impact their programs, Manatt has developed, with support and input from State Health and Value Strategies (SHVS), a new toolkit providing national and state-by-state data on the potential impact of key cuts under consideration in Congress. Specifically, the toolkit estimates how the Congressional "pre-legislative" proposals being considered in the budget reconciliation would affect federal and state Medicaid spending and, where applicable, enrollment during the federal fiscal year 2025 to 2034 budget window, assuming a range of potential state responses.
Potential policy changes and their ten-year impacts include:
- Reduce the Enhanced Federal Match for the Medicaid Expansion Adult Population (Impacts 40 states and D.C): If expansion states and D.C. end Medicaid expansion due to a reduction in the 90% matching rate, close to one-third (32%) of current Medicaid enrollees nationally would lose coverage, resulting in a $2.5 trillion (27%) reduction in total Medicaid expenditures. If expansion states and D.C. fully replace lost federal funding to continue Medicaid expansion, they will need to increase non-federal Medicaid spending by $836 billion.
- Remove the 50% FMAP Floor for the Standard Medical FMAP (Impacts 10 states and D.C.): If impacted states and D.C. do not replace lost federal funding, their total Medicaid expenditures would drop by $664 billion (15%), and if these states and D.C. choose to replace half of lost federal funding, they would need to increase their expenditures by $332 billion.
- Impose Per-Capita Caps for Expansion Enrollees Only (Impacts 40 states and D.C.): If expansion states and D.C. only contribute Medicaid funding that is matched by the federal government, total Medicaid spending would decline by $460 billion (a 6% reduction in total Medicaid spending and a 22% reduction in spending on the expansion group). If expansion states and D.C. fully replace any lost federal funding, they will need to increase their own spending by $408 billion.
The toolkit consists of a written issue brief and an accompanying Excel workbook with national and state-by-state impacts as well as detail on the methodology and descriptions of the "pre-legislative" proposals. In the coming weeks, Manatt will update the toolkit to provide estimates on the potential impact of making work reporting requirements a condition of Medicaid eligibility. Manatt will also update the toolkit as the budget reconciliation process unfolds and additional details on proposed Medicaid cuts emerge.
Access the toolkit via SHVS here.
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