Congress is currently considering draconian cuts to Medicaid that would mean millions of low-income Americans lose access to affordable health care. But both the type of federal cuts and how the joint state-federal Medicaid program operates in each state mean that the impact on people living in different states would vary considerably. The major difference stems from the fact that 41 states (including DC) have expanded Medicaid under the Affordable Care Act and cuts targeted at these “Medicaid expansion” states would leave the 10 states that still haven’t expanded untouched while falling much more heavily on the other 41 (including DC).
And within these Medicaid expansion states, 12 states have legislative “trigger provisions” that were an attempt by state legislators to protect state budgets (and state politics) from reductions in federal Medicaid funding for the expansion when they enacted new coverage. In addition, three states passed Medicaid expansion by constitutional amendment without such trigger language. I have provided an overview of these provisions before and this week I wrote about the operation of these statutes and constitutional amendments should Congress substantially cut Medicaid expansion funding. My colleague Edwin Park also reviewed one proposal to cut federal Medicaid expansion funding through a per capita cap and how both imposing a per capita cap on expansion and directly cutting the federal matching rate (the Federal Medical Assistance Percentage or FMAP) for the expansion would have the same effect: slashing federal support for the expansion by explicitly or effectively cutting the current 90% matching rate for the expansion.
In addition to the map and state list above, because there is currently so much interest in these trigger provisions and constitutional amendments, I have also assembled two charts below that provide links and the full text of each legislative provision or constitutional amendment. Looking at all these provisions together also provides not only a lesson in federalism and the human impact of cutting health care for so many people, but how, if these large federal Medicaid cuts are enacted, low-income residents in some states would be much more likely to have their health coverage taken away or taken away more quickly.
First, one important caveat. I do not believe it is realistic to try to predict state legislative responses to enormous federal funding cuts to the Medicaid program by only parsing current state legislative trigger or constitutional language. I’ve been watching state legislatures work for over twenty-five years. State budgeting is a primary state legislative duty both operationally and politically and legislators will work hard to make new budget decisions and adjustments through their regular (or special session) budget processes when faced with huge federal Medicaid funding cuts regardless of what legislative or constitutional language is in place. Decisions may well be delayed or end up in court, but legislators are likely to act in what they believe is the best interest of their state given the situation they currently face — especially where there are huge implications for overall state fiscal health and because they are required to balance their budgets. For example, if this means immediately terminating a Medicaid expansion program in the face of federal funding reductions even if those reductions don’t quite meet legislative requirements for termination in a state Medicaid statute, then some legislators would likely act anyway.
Regardless, it is important to take a close look at these trigger provisions. Their operation means some states will move faster than others to reduce coverage. One overall theme is that Arizona, Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah and Virginia all have trigger provisions that are intended to end Medicaid expansions very quickly should federal funding for expansion drop. (Arizona’s threshold for action, 80% FMAP, is lower than the 90% FMAP threshold in the other states.) It is clear that a direct cut to the expansion matching rate would end expansion in these states. (In these states, there may be some question when the expansion would be terminated: when the expansion matching rate cut first takes effect or immediately when such cut is enacted into law.)
It is far less clear in the case of a per capita cap on the expansion. Such a cap would result in an effective reduction in the 90% FMAP with such reductions getting larger each year. That would at the very least violate the legislative intent of these triggers, as I earlier wrote. Moreover, as one example, in the case of Virginia’s trigger law, it states: “In the event that the increased federal medical assistance percentages for newly eligible individuals… are modified through federal law or regulation from the methodology in effect on January 1, 2024, resulting in a reduction in federal medical assistance as determined by the [Medicaid agency] in consultation with the Department of Planning and Budget…” the Medicaid agency shall disenroll and eliminate coverage for expansion individuals. A per capita cap that results in less federal funding could thus be viewed as pulling this trigger in Virginia, as well as potentially in some other states, though of course that would ultimately be determined by state officials and potentially state courts. In any event, it is not correct to claim, as some House Republican leaders apparently believe, that a per capita on expansion would definitely not implicate these triggers and end the expansion. A similar example can be found in Illinois where the trigger statute reads: “If Illinois’ federal medical assistance percentage (FMAP) is reduced below 90% for persons eligible for medical assistance under this paragraph 18, eligibility under this paragraph 18 shall cease no later than the end of the third month following the month in which the reduction in FMAP takes effect.”
Idaho’s trigger provision has a little more wiggle room for state officials to take other actions to offset the decrease in federal funding, but requires a quick decision about continuing expansion. Iowa’s current language is vaguer than the other states. It requires a review and allows the option of provider rate reduction depending on the amount of the federal cut, but also starts the process for eliminating coverage.
Looking to the state constitutional amendment text is interesting as well. As has been noted, the state constitutional language passed by voters is clear – Medicaid expansion must continue and there are no “trigger provisions” rescinding coverage if federal funding drops. In addition, state legislators cannot unilaterally change state constitutions so by this language their hands are tied to continue the expansions. However, I think legislators will be very motivated to try to find a way around these restrictions should they face hundreds of millions of dollars in federal funding shortfalls. State courts may well be called to step in, and the end result for residents of these states will be enormous uncertainty about their coverage as these battles play out.
Finally, it is important to look at the impact on the expansion of all the Medicaid cuts that are under consideration. As my colleague Edwin Park writes, the combined effect of cutting federal expansion funding — through a per capita cap or an explicit cut to the matching rate — restricting state use of provider taxes, imposing work requirements on expansion enrollees and other adults, and adding new red tape that makes it harder to stay enrolled in and renew coverage would be virtually certain to end state expansions over time and take away coverage for the nearly 21 million low-income people who have gained coverage through them.