Greetings—


We are following up on our previous email with
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the latest analysis in a series that assesses the potential impacts of different policies being considered to cut federal spending on Medicaid.


Urban researchers find that cutting federal Medicaid costs by capping how much money the federal government provides states for enrollees under the Affordable Care Act’s Medicaid expansion would reduce federal spending by $230 billion to $276 billion over 10 years.


Updating previous analyses of two proposals, the 2017 Better Way and the American Health Care Act,
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additional findings include:
- Relative to current spending on the expansion population, Medicaid spending would be cut by 14.8 percent to 17.8 percent.
- Relative to current spending on the expansion population, states would have to increase spending by 133.3 percent to 159.8 percent.
- States with lower per capita incomes that expanded their Medicaid programs would face the largest percentage increases in their state spending to maintain their program.
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As said by Urban researcher John Holahan, “Imposing per capita caps solely on the Medicaid expansion population would have less impact on states than applying the policy to the entire Medicaid program, but it would still require substantial increases in state spending to maintain their Medicaid programs as currently structured.”

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Explore the webpage for additional Urban analyses on how possible changes to Medicaid could affect access to health care and health care spending.
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Sign up to receive Urban’s latest health policy research insights.


If you have questions for the research team, please reply to this email.


Greetings—


As Congress considers substantial cuts to Medicaid over the next decade,
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new research from Urban Institute experts analyzes the potential impacts of capping Medicaid spending per enrollee and reducing the enhanced federal support that states receive for the Medicaid expansion population covered under the Affordable Care Act (ACA).


In their report, the researchers update 2017 analyses of two earlier proposals: the Better Way, and the American Health Care Act. An updated version of the Better Way proposal would begin in 2026 and cap the increase in federal spending by the increase in the consumer price index. The updated American Health Care Act proposal would use 2023 data as the base year and allow federal spending to grow by the consumer price index plus 1 percent, beginning in 2026. Both policies would reduce the 90 percent ACA expansion match rate to a state’s standard matching rate. 

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The researchers find that:
- Imposing per capita Medicaid caps would reduce federal spending over 10 years by $676 billion under the Better Way proposal and $1,104 billion under the American Health Care Act. 
- Reducing the 90 percent federal matching rate for the ACA expansion to states’ standard matching rates would result in a $563 billion reduction in federal spending over 10 years.  
- Between 2026 and 2035, the combined effect of these policies would mean federal spending would fall by $1.2 trillion under the Better Way proposal (a federal spending reduction of 15.6 percent) and $1.7 trillion under the American Health Care Act (a spending reduction of 22.4 percent). 
- States trying to offset these federal spending reductions would need to increase their state Medicaid spending by 25.9 percent under the Better Way proposal and 37.1 percent under the American Health Care Act. 
- Many low per capita income states would face both large percentage reductions in federal contributions and require large percentage increases in state Medicaid spending to maintain their programs as currently in place. 
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Read the report to learn more. If you have questions or would like to speak with the research team, please reply to this email.


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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