While Medicaid continues to fly beneath the radar as an election issue, it is increasingly clear that the results of this fall’s federal elections will determine whether Medicaid will be at serious threat of deep and damaging cuts next year. I have previously written about the severe Medicaid cuts proposed in the Project 2025 blueprint for a second term of the Trump Administration, in this year’s Republican Study Committee budget, and in an earlier budget plan from the Center for Renewing America (run by Russell Vought, former director of the Office of Management and Budget and a key architect of Project 2025). And my colleague Joan Alker and I recently wrote about the severe Medicaid cuts recommended in an issue brief from the Paragon Institute, a conservative think tank. I wanted to highlight one more sign that Medicaid is at serious risk: the fiscal year 2025 budget resolution marked up by the House Budget Committee in March 2024.
According to the House Budget Committee, the budget resolution would cut federal Medicaid spending by $2.2 trillion over 10 years. While the fiscal year 2025 budget resolution includes almost no detail, like the fiscal year 2024 budget resolution issued by House Budget Committee Chair Jodey Arrington last year, it offers (here and here) some indication about how the budget resolution intends to institute these draconian Medicaid cuts, which mirror some of the Medicaid cuts included in the other plans and proposals.
Per capita caps: Under the current federal-state financial partnership, the federal government pays a fixed percentage of states’ Medicaid costs, whatever those costs are. In contrast, the budget resolution would impose caps on federal funding per beneficiary — known as “per capita caps” — that are typically designed to fail to keep pace with health care cost growth and thus deeply cut federal Medicaid funding over time, relative to current law. The caps would also fail to account for any unexpected growth in costs per beneficiary such as from another public health emergency, a new, costly drug therapy, other high-cost medical advance or higher-than-expected systemwide health care costs. States would either have to dramatically increase their own spending to compensate (by raising taxes and cutting other parts of their budgets like K-12 education) or, as is far more likely, make large and growing cuts to their Medicaid programs in the areas of eligibility, benefits and provider and plan payment rates. Tens of millions of low-income people, including children, parents, people with disabilities, seniors and other adults, would likely end up uninsured or underinsured and lose access to needed care.
Work reporting requirements: The budget resolution would impose onerous work reporting requirements on Medicaid beneficiaries similar to those included in a House-passed debt ceiling bill in April 2023 (which we analyzed here) that would likely adversely affect tens of millions of Medicaid beneficiaries, including people with disabilities and low-income parents, and place them at significant risk of losing their Medicaid coverage and ending up uninsured.
Elimination of the Medicaid expansion matching rate:Under current law, the federal government picks up 90 percent of the cost of the expansion on a permanent basis. The budget resolution would “equalize” the matching rate (known as the FMAP) for the expansion. According to the House Budget Committee report accompanying the budget resolution, this entails ending the expansion FMAP and instead having the regular FMAP, which on average is about 57 percent, apply. (The Paragon Institute similarly proposes to phase out the expansion FMAP over time until it equals the regular FMAP.) Such a sharp cut in the expansion matching rate, however, would shift considerable costs to states. It is very likely that most or all expansion states would eventually drop their expansions, as the expansion FMAP was a critical factor influencing the decision to adopt the expansion. (Some states also have explicit “trigger” laws that automatically drop the expansion if the expansion FMAP is lowered.) Many millions of low-income parents and other adults who became newly eligible through the expansion would lose their Medicaid coverage, end up uninsured and go without needed health care. It would certainly deter the 10 remaining holdout states from taking up the expansion in the future.
Reversal of the final Medicaid and CHIP eligibility and enrollment rule: In September 2023 and in April 2024, the Centers for Medicare and Medicaid Services finalized both parts of an important rule related to Medicaid and the Children’s Health Insurance Program (CHIP) that as our supportive public comments to the proposed rule and our subsequent explainer indicated, will significantly improve the eligibility and enrollment process for Medicaid and CHIP. Among its provisions, the final rule eliminates certain access barriers for children enrolled in CHIP; makes transitions between programs easier; aligns and strengthens enrollment and renewal requirements for most individuals in Medicaid; establishes beneficiary protections related to returned mail; creates timeliness requirements for redeterminations of eligibility; addresses other outdated barriers to coverage; modernizes record-keeping requirements; and significantly improves participation in the Medicare Savings Programs (MSPs) which help low-income Medicare beneficiaries pay for their premiums and/or cost-sharing. When fully implemented by state Medicaid and CHIP programs, the final rule will increase participation among eligible people and extend health coverage to more eligible low-income children, families and other adults. According to the markup summary, the budget resolution, which was marked up prior to the second part of the rule being finalized, would block the rule (which would presumably mean eliminating the regulatory changes included in both parts of the final rule). The report accompanying the budget resolution also supports “policies to enhance Medicaid program integrity, reduce improper payments, and bolster enrollee eligibility verification….” While there is no other detail, this presumably entails requiring states to impose far greater red tape and make it harder for eligible individuals and families to apply for, enroll in, and renew their Medicaid coverage.
Cut to Medicaid matching rate for the District of Columbia: Under federal law, the regular FMAP for D.C. is set at 70 percent. (Under the formula for calculating Medicaid matching rates, which is based on relative per-capita income, D.C. would likely instead have the minimum FMAP of only 50 percent.) The budget resolution would “end special FMAP treatment for D.C.” This likely means cutting D.C.’s FMAP to 50 percent from the current 70 percent (which was put in place to take into account the high levels of need for Medicaid coverage among the District’s low-income residents). This would shift substantial costs to the District government and require the District to make damaging cuts to its Medicaid program, including cutting eligibility, benefits and provider payment rates.
