FMAP Cuts Tied to State Decisions to Expand Comprehensive Health Coverage with State-Only Funds to Children Regardless of Immigration Status
Section 44111 of the proposed budget reconciliation bill being marked up by the House Energy and Commerce Committee today targets the Affordable Care Act’s Medicaid expansion for cuts with an apparent aim to advance a policy goal – reducing state-only funded health coverage for lower-income undocumented immigrant children and other groups of undocumented adults. This provision changes the rules for the forty states (and DC) that have expanded Medicaid to provide more affordable health care to their residents. As passed by Congress, the ACA splits the costs of expanding Medicaid coverage by requiring the federal government to pay 90% of the costs (the federal medical assistance percentage or FMAP) and the states to pay 10%. Within these Medicaid expansion states, the provision then seeks to enact cuts to 14 specific states (plus Washington, DC) of 10% to the federal Medicaid expansion FMAP, lowering the federal FMAP to 80% and so effectively doubling the current amount states must spend to provide affordable health care to millions of their residents under the Affordable Care Act’s Medicaid expansion.
The 14 states (plus DC) targeted for such large federal cuts all share one characteristic – their elected legislatures have chosen to use state-only taxpayer funds to extend some form of comprehensive health coverage to all children, regardless of immigration status. Federal funds for Medicaid and other health care programs are already largely prohibited from being used to cover undocumented immigrants, including children, but these 14 states (plus DC) decided that covering all children for health care was a value they were willing to use state-only tax money to fund.
Seven of these states (including DC) also covered other income-eligible groups of undocumented immigrants. California, Colorado, DC, Minnesota, Washington and Oregon also provide coverage to low-income adults regardless of immigration status, using state-only funding.
New York provides state-only funded Medicaid coverage to adults 65 years and older, regardless of immigration status. And while Illinois has extended state-only funded coverage to low-income adults regardless of immigration status who are ages 65 and older and low-income adults ages 42 to 64 but has paused enrollment in both programs (currently enrolled individuals can maintain their coverage) due to funding constraints.
So, for trying to provide coverage with state-only funds to groups of low-income children, low-income adults over 65, and other adults who are living in their state but are undocumented immigrants, these 14 states plus DC will stand to lose millions of federal dollars for their Medicaid programs that help provide affordable health coverage to millions of lower income children, parents, people with disabilities, older adults and many more residents. It’s also important to note this provision in the bill would place such severe financial penalties on states in the future that might want to extend state-only funded health coverage to, for example, all children regardless of immigration status, they would be very unlikely to do so.
Finally, one state, Illinois, faces a particularly tough choice under the bill proposed by Congress. Illinois state law on expansion contains a “trigger provision” that requires the state to end within three months the entire Medicaid expansion if federal funding drops below 90% FMAP – and the proposed reduction in the GOP’s House bill to 80% would initiate this change absent state legislative action. Children in Illinois lose either way under this Hobson’s choice.
Sources: National Immigration Law Center and KFF
Sunset of enhanced FMAP two-year bonus for states that decide to expand Medicaid in the future
Section 44131 of the proposed bill ends the enhanced two-year bonuses states could get if they expand Medicaid in the future. These incentives played a significant role in encouraging expansions in both South Dakota and North Carolina because they lowered the cost of expansion significantly for two years and enabled states to also meet other financial priorities. They would no longer be available to the final 10 non-expansion states. Edwin Park and I discuss these incentives in more detail here.
Increase in cost sharing for Medicaid expansion adults with incomes between 100% FPL and 138% FPL
Section 44142 of the GOP House proposed bill requires states to impose cost-sharing payments on Medicaid expansion enrollees with incomes above the federal poverty limit ($15,650 for one person). While cost sharing must now be required by states, the state determines the amount – up to $35 per service and overall can add up to no more than 5% of family income. Current exceptions for cost sharing will still apply.
Two other major changes – work requirements and eligibility checks
My colleague Leo Cuello wrote about the work reporting requirements included in the bill. There is more to come from Tricia Brooks and others on other major changes included in the bill that also affect Medicaid expansion.