Reducing Federal Support for Medicaid Expansion

The Issue

Expanded Medicaid eligibility covers adults who earn approximately $21,000 per year (138% of the federal poverty level) in the 41 states that adopted the expansion. As part of the agreement to expand their Medicaid programs—a partnership paid by both state and federal government—the federal government offered expansion states additional financial support, known as the enhanced Federal Medical Assistance Percentage, or FMAP. 

Key Findings

• Eliminating current levels of federal dollars that go to states that expanded their Medicaid programs would shift more than $44 billion in costs to those states.
  • North Dakota would see its spending increase by nearly half. Indiana, Montana, Nebraska, Oregon, Colorado, Washington, and New York would see spending increase by about one-third. 
• If states reversed their existing Medicaid expansion programs because of the loss of federal support, researchers say nearly 16 million people would lose Medicaid coverage. While some would find other sources of coverage, nearly 11 million people would become uninsured. 
  • The District of Columbia, Iowa, Kentucky, Louisiana, Michigan, New Mexico, New York, Pennsylvania, and West Virginia would see the largest increases in the number of people living without health insurance. 

Conclusion

Researchers conclude that, while eliminating FMAP would reduce federal spending, it would leave states on the hook to either generate billions in new revenue to make up for the loss of federal support, or remove millions of people from Medicaid. 

About the Author/Grantee

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.