Greetings—


Following our previous message about how states could be affected by a reduction of the enhanced Federal Medical Assistance Percentage (FMAP), we wanted to share
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new research from Urban Institute experts examining how an elimination of the enhanced FMAP could affect health care providers.


If enhanced federal Medicaid funding were eliminated, and all 41 states that adopted Medicaid expansion were to drop the expansion in 2026 as a result,
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the researchers find:
- Spending on health care services would decrease by nearly $80 billion, with declines varying significantly within and across states.
- Hospitals would face the largest revenue losses at $31.9 billion. Among the 306 geographic hospital markets in the US, 25 would face declines in overall health spending of 7.0 percent or more, 61 would experience declines of 5.0 to 7.0 percent, and 74 would experience declines of 3.5 to 5.0 percent.
- Among other services, $20.9 billion less would be spent on prescription drugs; $20.7 billion less on other health care services such as, dental care, home health care, and services delivered by providers other than hospitals and office-based physicians; and $6.4 billion less on services provided by office-based physicians.
- Uncompensated care demand among uninsured people would increase by $18.9 billion in response to declines in health insurance coverage. We hope you find
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this information helpful in your work. If you have questions for the research team, please reply to this email so we can connect you.

Greetings—


Reducing federal support for Medicaid expansion would shift costs to states and likely result in coverage loss,
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new analysis from Urban Institute experts finds.


As Congress considers cuts to Medicaid spending, one proposal is to reduce the enhanced Federal Medical Assistance Percentage (FMAP), or the federal matching rate that states receive for the expansion population covered under the Affordable Care Act.


It is difficult to predict state responses, so the researchers use Urban’s
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Health Insurance Policy Simulation Model to estimate the potential state budget shortfalls and coverage losses that could result from reducing the FMAP expansion:
- If the enhanced FMAP were eliminated in 2026 and the 41 expansion states kept their Medicaid expansions in place, they would need $44.3 billion in state budget cuts or additional revenues that year to replace reductions in federal spending. States would see an average increase of about 25.6 percent in expansion state spending on Medicaid acute care for the nonelderly.
- If the enhanced FMAP were eliminated and all 41 states were to drop Medicaid expansion, Medicaid/Children’s Health Insurance Program enrollment would decline by 15.9 million people and the number of uninsured people would rise by 10.8 million people. Just over two-thirds of those losing Medicaid would become uninsured, and the remainder would enroll in Marketplace or employer health coverage. “In sum, while eliminating the enhanced FMAP for the Medicaid expansion population would reduce federal spending, it would shift those costs to the states, which would have to cover the shortfall by cutting Medicaid enrollment, provider payment rates or optional benefits, or by raising taxes or cutting non-Medicaid spending,” the researchers write.

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Explore the research , which includes findings by state and Congressional district. If you have questions for the research team, please reply to this email and we can connect you.


Thanks,


- The Stakeholder Outreach team

U R B A N I N S T I T U T E

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www.urban.org




Urban Institute is a nonprofit research organization that believes in the power of evidence to improve people’s lives. Urban as an organization does not take policy positions but Urban’s independent experts are empowered to make recommendations based on their research.


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