Lowering Federal Matching Commitments to Medicaid

The Issue

For decades, the federal government paid for at least half of every state’s Medicaid costs. This guarantee is called the Federal Medical Assistance Percentage (FMAP) and starts at a floor of 50%.

Key Findings

1. If the FMAP floor of 50% is reduced, 10 states (Cal., Colo., Conn., Md., Mass., N.H., N.J., N.Y., Wash., and Wyo.) and the District of Columbia would be affected. 
2. According to the analysis, the change would result in Medicaid funding cuts of $189.5 billion for disabled people, $161.1 billion for the elderly, and $50.1 billion for children in these 10 states, plus the District of Columbia.
3. Researchers say if this reduction in federal funding were combined with other proposed federal cuts to the Medicaid program—like the funding support the federal government provides states that expanded eligibility for the Medicaid program—the loss in federal funds provided to these 10 states and the District of Columbia would balloon to $835 billion over the next decade.

Conclusion

Researchers conclude enacting this policy would place tremendous fiscal strain on states and likely result in healthcare coverage losses.

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.