Several states could face a severe shortfall in funding for Medicaid, should Congress carry out proposed limitations on federal support.
This is according to new analysis from researchers at the Urban Institute, with support from the Robert Wood Johnson Foundation, who assessed the potential impacts of removing the 50-percent floor on the Federal Medical Assistance Percentage (FMAP)—the rate at which the government matches state spending.
They found that FMAP cuts would cut federal funding for ten states as well as Washington, D.C., by a total $467.7 billion from 2026 through 2035, with California seeing the greatest absolute decrease of $156.5 billion.
Why It Matters
Medicaid has been a central focus on the ongoing budget reconciliation process, as Republicans seek ways to reduce spending while avoiding direct cuts to one of the nation’s most popular and subscribed-to programs.
While GOP leadership has recently signaled its intention to avoid changes to FMAP, other forms federal funding reductions have been proposed, and changes remain on the table as the inter-party budgetary negotiations continue.
What To Know
Since the 1960s, the federal government has paid for at least half of every state’s Medicaid costs through the FMAP guarantee. Federal funding ranges from the 50-percent floor to up to 77 percent in Mississippi.
The Urban Institute, a non-profit research organization, based its findings on the total elimination of the FMAP floor, which would leave states struggling to offset the significant cuts to their Medicaid budget.
As well as California, which would experience an estimated 18-percent drop in federal Medicaid assistance, other states would need to make up significant shortfalls in funding over the next ten years. New York would see an absolute decrease of $116.2 billion, followed by Massachusetts at $80.6 billion.
Republicans have previously considered shifting more responsibility for financing Medicaid to states themselves in order to free up federal funds. Following a meeting with House Republicans on Tuesday, Speaker Mike Johnson said that the party was no longer considering changes to FMAP, The Hill reported, and that the budget would likely exclude “per capita caps”—a proposed means of limiting federal funding by setting a fixed dollar amount on each Medicaid enrollee.
However, Texas Republican Representative Chip Roy responded to Johnson’s comments on FMAP and per capita caps on X, writing: “Well – I haven’t ruled it out.”
Newsweek has reached out to Johnson via email for comment.
What People Are Saying
Researchers at the Urban Institute wrote in their report: “Given the populations that Medicaid serves, cuts in federal Medicaid funding would place more of the responsibility on states for financing the care of millions of vulnerable people, including children, disabled and elderly people, and pregnant women. Because most states are required to balance their budgets, any decreases in the federal government’s contribution to state Medicaid costs will be met by increases in state taxes, reductions in spending on other state programs, or cuts to Medicaid eligibility, benefits, or provider payments.”
What Happens Next?
House Republicans are working to reach consensus on their budget reconciliation bill before it is sent to the Senate for debate and further revision. Ways and Means Committee Chair Jason Smith told Fox News he hopes for the final legislation to reach President Donald Trump‘s desk by July 4.
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