Medicaid Cuts and the States: Tracking State-Specific Estimates of the Impacts of Proposed Changes

Apr, 10, 2025

Medicaid Cuts and the States: Tracking State-Specific Estimates of the Impacts of Proposed Changes

Elizabeth Lukanen and Emily Zylla, SHADAC

Congress is considering a variety of federal policy changes that will have significant impacts on the Medicaid program, widely expected to reduce enrollment and federal Medicaid funding to states. While none of these cuts to Medicaid have been codified into law, federal and state agencies, advocates, and research organizations have sought to estimate and quantify the potential state impacts of these various policies on enrollment and spending.

In December 2024, the Congressional Budget Office (CBO) released national estimates of spending reductions related to three proposed policy levers – establishing caps on federal spending for Medicaid, limiting the ability of states to use provider taxes, and reducing the Federal Medical Assistance Percentage (FMAP). In 2023, CBO also estimated that a Medicaid work requirements bill (H.R. 2811) would reduce federal funding to states. These national estimates were among the first projected federal spending reductions to be published (Figure 1).

Figure 1. CBO Estimates of Federal Financial Impacts of Medicaid Policy Changes

Establish Caps on Federal Spending for Medicaid.

Caps on overall spending: Between $459 billion and $742 billion federal spending reduction over 10 years.
Per capita caps: Between $588 billion and $893 billion federal spending reduction over 10 years.

Reduce or Eliminate Provider Taxes.

Lower the tax threshold to 5%: $48 billion federal spending reduction over 10 years.
Lower the tax threshold to 2.5%: $241 billion federal spending reduction over 10 years.
Eliminate the tax threshold: $612 billion reduction over 10 years.

Reduce Federal Medicaid Matching Rate.

Remove the FMAP floor: $530 billion federal spending reduction over 10 years.
Use the same matching rate for all categories of administrative services: $69 billion federal spending reduction over 10 years.
Reduce the matching rate for the Medicaid expansion population: $561 billion federal spending reduction over 10 years.

Establish New Medicaid Work Requirements.

$109 billion federal spending reduction over 10 years.

Since these national estimates were published, a variety of state-level estimates have been released –focused on both specific states and analyses that produce parallel estimates for all 50 states. These estimates can be helpful for state staff as they consider how various policy proposals might impact their state’s specific Medicaid programs.

To date, eight states (Colorado, Kentucky, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma, and Wisconsin) have publicly released some type of estimates seeking to quantify the impacts of federal policy changes on their respective state Medicaid programs (Table 1). The majority of these provide information on enrollment impacts as well as costs. However, they vary significantly in terms of the timeframes examined (for example, New Mexico provides both annual and five-year estimates of impacts), the amount of detail provided about assumptions used to generate estimates, and the documentation of data sources used. Some states, like Kentucky, are also publishing estimates with enhanced details such as projections of impacts by county, congressional districts, and individual hospitals. Other states, such as New Mexico, detail separate state funding impacts from federal funding impacts. Many states have indicated that they plan to update their analyses as specific bill language and/or more policy details become available.

In addition to state governments, organizations such as state-based nonprofits, have also published analyses of the impact of Medicaid policy changes on specific states. For example, the New Hampshire Fiscal Policy Institute examined the financial impact of eliminating the FMAP floor and reducing the enhanced FMAP from 90% to 50% for the expansion population in New Hampshire. In Ohio, the Center for Community Solutions estimated how many individuals would lose coverage as a result of proposed Medicaid work requirements. Some states, such as Minnesota, are using other communication methods (like infographics and fact sheets) to convey which populations and providers might be at risk from Medicaid cuts without providing specific estimates of impacts.

Tracking Potential State-Specific Impacts of Proposed Cuts to Medicaid

Table 1. State-Specific Impact Estimates

State	Source	Federal Policy Examined	Estimated State Impact
Colorado	CO Department of Health Care Policy & Financing	Per capita caps on federal spending	$1.34 billion to $1.51 billion reduction in federal funds annually.
		Eliminate the FMAP floor	$900 million to $1.54 billion reduction in federal funds annually.
		Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 50% for the expansion population results in over a $1 billion reduction in federal funds annually.
		Reduce or eliminate provider taxes	Unspecified impacts. Current tax revenue provides coverage for 427,000 enrollees associated with $3.1 billion in claims.
		Work requirements	“Could have additional administrative costs…Difficult to estimate until actual bill language and excluded populations are clarified.”
Kentucky	KY Cabinet for Health and Family Services: Summary Document Modeling Analysis Methods	Per capita caps on federal spending	Unknown.
		Eliminate the FMAP floor	No impact.
		Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 71.41% for the expansion population results in a $1.4 billion reduction in federal funds (or $75 million for every 1% reduction) annually.
		Eliminate coverage for the expansion population	Loss of $3.8 billion to Kentucky’s economy annually. Loss of coverage for over 450,000 individuals.
		Reduce the administrative and technology FMAP to 50%	$50 million reduction in federal funds annually.
		Reduce provider taxes	Reducing the provider tax rate from 6% to 4% results in an overall $660 million loss annually to providers (including a $519.8 million reduction of federal funds). This includes: $19 million reduction to supports for community living. $69 million reduction to nursing facilities. Reducing the provider tax rate from 6% to 3% results in an overall $1.45 billion loss annually to providers (including a $1.15 billion reduction of federal funds).
		Eliminate provider taxes	$3.88 billion loss annually to providers, including a $2.8 billion loss annually to hospitals.
		Eliminate state directed payments	$5.5 billion overall loss (including a $4.4 billion reduction in federal funds) annually.
Nevada	NV Department of Health and Human Services	Per capita caps on federal spending	Scenario A (Low Impact): $590.2 million reduction in federal funds over the upcoming biennium. Scenario B (High Impact): $3.153 billion reduction in federal funds over the upcoming biennium.
		Eliminate the FMAP floor	No impact.
		Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 50% for the expansion population results in a $1.858 billion reduction in federal funds over the upcoming biennium.
		Reduce provider taxes	Reducing the provider tax rate from 6% to 4% results in: $693 million reduction in supplemental payments for hospitals over the upcoming biennium. $30 million reduction in state revenues for children’s behavioral health over the upcoming biennium. $95.5 million reduction in supplemental payments for skilled nursing facilities.
		Work requirements	$441 million to $705.6 million reduction in federal spending over the upcoming biennium. 70,400 to 112,600 low-income working age adults’ coverage could be affected.
New Jersey	NJ Department of Human Services	Per capita caps on federal spending	Unknown.
		Eliminate the FMAP floor	$2.2 billion reduction in federal funds annually.
		Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 50% for the expansion population results in a $2.3 billion reduction in federal funds annually.
		Reduce or eliminate provider taxes	$3.4 billion reduction in federal funds annually.
		Reduce or eliminate state directed payments	$756 million reduction in federal funds annually.
		Work requirements	$250 million reduction in federal funds annually. 700,000 low-income working age adults’ coverage could be at risk.
		Increase eligibility checks from once every 12 months to every six months	Would require a new $50 million state/county investment. “Some members would likely lose eligibility, due to failure to complete more frequent paperwork with short turnaround times.”
New Mexico	NM Health Care Authority	Per capita caps on federal spending or block grants	$14.7 million reduction in federal funds annually. “Cuts to rates, populations served, and/or covered services.” (Details not specified).
		Lower the FMAP floor	Reducing the federal match rate from 78.1% to 50% would result in a $2.1 billion reduction in federal funds annually. “Cuts to rates, populations served, and/or covered services.” (Details not specified).
		Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 71.66% would result in a $458.8 million reduction in federal funds annually. 262,000 adults would be impacted.
		Reduce the administrative and technology FMAP to 50%	$117.8 million reduction in federal funds annually. “Cuts to ability to modernize systems.” (Details not specified).
		Eliminate continuous coverage for children ages zero through six	$70.5 million reduction in federal funds annually. 25,000 children would be impacted.
		Reduce state directed payments	50% reduction to provider taxes would result in a $591.1 million reduction in federal funds annually. 48 hospitals and 68 nursing facilities would be impacted.
		Work requirements	$548.7 million reduction in federal funds. “Costs to fund, build and maintain new IT systems to track and monitor compliance.” (Details not specified). 110,000 individuals would be required to comply; 64,000 adults would lose coverage.
North Carolina	Governor Josh Stein	Per capita caps on federal spending or block grants	$30 billion reduction in federal funds over the next 10 years.
North Carolina	Governor Josh Stein	Reduce the enhanced federal match rate for the expansion population	Reducing the federal match rate from 90% to 50% for the expansion population results in a $6 billion reduction in federal funds. 640,000 individuals would lose coverage.
Oklahoma	Oklahoma Health Care Authority	Per capita caps on federal spending or block grants	If 2024 funding levels are used as the base year to determine the block grant amount, a 0% change in federal funds is estimated. If 2023 funding levels are used as the base year, a $626.8 million reduction in federal funds is estimated annually.
		Eliminate the FMAP floor	No impact.
		Reduce the enhanced federal match rate for the expansion population	Reducing the enhanced federal match rate from 90% to 66.5% for the expansion population results in a $453 million reduction in federal funds annually.
		Reduce or eliminate provider taxes	Reducing the provider tax rate from 4% to 3% would result in the Medicaid program losing $32 million annually.
		Eliminate state directed payments	$2 billion reduction in funding to providers.
		Work requirements	Projected a $10 million annual decrease in total program expenditures. “May require new administrative costs to implement.” (Details not specified). 230,000 working-age adults would potentially be impacted.
Wisconsin	Governor Tony Evers	Unclear (“cuts to the Medicaid program”)	$9 billion reduction in federal funds. 757,000 individuals would be impacted.

Medicaid Cuts and the States: Check Back for Regular Updates

In this rapidly evolving policy environment, it is crucial to continue to monitor potential impacts of proposed changes and cuts to Medicaid. SHADAC will continue to regularly monitor published estimates from states, updating this page as a resource. If your state has produced estimates that should be included in this expert perspective, please contact us here.