Despite virtually no discussion of Medicaid during the election, Medicaid is facing proposals for significant reductions in federal funding. My colleague Edwin Park has already detailed some of the discussion around these cuts – which are being considered in service of facilitating an extension of tax breaks, the majority of which would go to the highest income earners. Just over the last week multiple reports have appeared in the New York Times, the Washington Post and NPR about major cuts being considered to Medicaid by some influential members of the incoming Congress.
These news stories also mention proposals for cuts coming from organizations like the Paragon Institute. This is significant because Paragon has proposed to Members of Congress reductions in specific federal matching funds available to states that have expanded Medicaid under the Affordable Care Act under the guise of “equalizing” funding for different groups covered by Medicaid like children.
The harmful impacts of proposals like this and other federal Medicaid funding reductions being discussed by some Members of Congress would mean that in over a quarter of the states that have expanded Medicaid, state law will require that millions of people quickly lose coverage because of existing “trigger” provisions in state law. And a majority of these state residents who get their health insurance through Medicaid are people working full or part-time – and mostly at low-wage jobs like cashiers, drivers, janitors, and cooks where their employer often doesn’t provide health coverage.
These “trigger” state laws can be complex. Currently, the federal government pays a minimum of 90% of the total costs for the Medicaid expansion population and the states pay 10%. This federal payment is called the FMAP or federal medical assistance percentage. Legislative language concerning what happens to expansion in a state should federal funding drop below this level – as has been proposed – can be in state statute or may be contained in annual budget bills that fund Medicaid. Additionally, some states don’t automatically end expansion should federal funding drop but begin a review process that can end in elimination of expansion.
While I will continue to work with many others to interpret this complicated legislative picture, here is our best understanding to date: There are nine states where the state legislative language that created the Medicaid expansions contains a “trigger” or an automatic elimination of the Medicaid expansion program if the federal funding for the Medicaid expansion drops below a set floor. This would mean automatic elimination of affordable health coverage for parents and other adults with no action required from the state’s legislature.
There are two variants on the theme: Arizona’s floor for elimination is 80% of FMAP instead of 90% and Virginia doesn’t set a specific FMAP percentage reduction. Additionally, there are three states where legislative language doesn’t trigger an automatic rescission of Medicaid expansion should federal funding drop below a set floor, but a federal funding drop does trigger a required review of the state’s Medicaid expansion and can result in a reduction in enrollment, benefits or full elimination of the state expansion.
The bottom line? In just the nine “automatic trigger” states, a reduction of federal funding for the Medicaid expansion population below the current level of 90% (80% for Arizona) will mean over three million (3,099,900) parents and other adults will quickly lose affordable health coverage. Add in the three states where legislative language makes it very likely that their Medicaid expansion programs will also be eventually eliminated (566,000) and this number rises to 3,666,500.1
Changes in federal budget funding can often seem remote. However, a simple reduction in federal funding for the Medicaid expansion population will have a very quick and direct effect in multiple states with millions losing their health coverage. And Medicaid expansion is not just important to fund care for the parents and other adults who would lose coverage. As our new fact sheet clearly shows, Medicaid expansion significantly improves the health and lives of children as well.
- Enrollment estimates: KFF, State Health Facts, See: https://www.kff.org/affordable-care-act/state-indicator/medicaid-expansion-enrollment ↩︎
