Allocating CBO’s Estimates of Federal Medicaid Spending Reductions and Enrollment Loss Throughout the States

Be aware: KFF’s evaluation was up to date on June 4 to replicate new estimates on federal Medicaid spending launched by the Congressional Funds Workplace (CBO) for the One Huge Stunning Invoice Act.

On Could 22, the Home handed a reconciliation invoice, the One Big Beautiful Bill Act. The Congressional Funds Workplace’s (CBO) newest cost estimate exhibits that the invoice would scale back federal Medicaid spending by $793 billion and that the Medicaid provisions would improve the variety of uninsured individuals by 7.8 million. Previous CBO estimates present that 10.3 million fewer individuals could be enrolled in Medicaid. Constructing on prior KFF evaluation, this evaluation allocates CBO’s federal spending reductions and enrollment losses throughout the states. The Medicaid reconciliation provisions are quite a few and complex, however the majority of federal financial savings stem from work necessities for the growth group, growing boundaries to enrolling in and renewing Medicaid protection, and limiting states’ capability to boost the state share of Medicaid revenues by means of supplier taxes.

This evaluation allocates the CBO’s estimated discount in federal spending throughout states based mostly on KFF’s state-level information and the place doable, prior modeling work; and exhibits the federal spending reductions relative to KFF’s projections of federal spending by state underneath present legislation. KFF allocates the spending reductions provision-by-provision, pulling in a wide range of information sources on which states are estimated to be most affected by every provision (see Methods). The evaluation then makes use of KFF’s state-by-state estimates of decreased federal spending to allocate the discount in Medicaid enrollment throughout the states. KFF solely consists of provisions anticipated to cut back Medicaid enrollment in that element of the evaluation (see Methods).

This evaluation doesn’t predict how states will reply to federal coverage modifications, and anticipating how states will reply to Medicaid modifications is a serious source of uncertainty in CBO’s value estimates. As a substitute of creating state-by-state predictions, CBO generates a nationwide determine by estimating the % of the affected inhabitants that lives in states with completely different anticipated forms of coverage responses. For instance, completely different states would possibly select to implement a piece requirement with reporting necessities which are simpler or more durable to adjust to. In estimating the prices of the laws, CBO assumes that in mixture, states would change half of decreased federal funds with their very own sources in response to provisions that scale back the sources out there to states, reminiscent of limits on supplier taxes. For provisions that scale back enrollment however don’t have an effect on the division of prices between the federal and state governments, reminiscent of work necessities, CBO estimates that the federal and state governments would share these financial savings. Nonetheless, these assumptions replicate states’ responses as a complete and are more likely to differ and should not apply in all states.

To the extent that states’ responses are far completely different from the general common response, modifications in federal Medicaid spending and Medicaid enrollment can be bigger or smaller than what’s proven right here. States may make additional Medicaid cuts, which might lead to enrollment loss and spending reductions better than is estimated right here and additional scale back states’ Medicaid spending. Alternatively, states may improve their spending on Medicaid to mitigate the results of federal cuts, which may lead to enrollment loss and spending reductions which are smaller than is estimated right here.  This evaluation illustrates the potential variation by displaying a spread of spending and enrollment results in every state, various by plus or minus 25% from the CBO estimated midpoint.

Key Take-Aways

• After accounting for CBO’s estimated interactions, KFF estimates that the Home-passed reconciliation invoice would scale back federal Medicaid spending by $793 billion. (With out accounting for interactions, the whole is $863 billion, see Methods).
• The 5 greatest sources of Medicaid financial savings within the Home-passed reconciliation invoice sum to $736 billion in financial savings, which is 85% of the uninteracted complete, and embody:
  • Mandating that adults who’re eligible for Medicaid by means of the ACA growth meet work and reporting necessities ($344 billion),
  • Repealing the Biden Administration’s rule simplifying Medicaid eligibility and renewal processes ($167 billion),
  • Establishing a moratorium on new or elevated supplier taxes ($89 billion),
  • Revising the cost restrict for state directed funds ($72 billion), and
  • Growing the frequency of eligibility redeterminations for the ACA growth group ($64 billion).
• Provisions that may solely apply to states which have adopted the ACA growth account for $427 billion, roughly half of the whole quantity of federal spending reductions.
• Federal cuts to states of $793 billion over 10 years would characterize 12% of federal spending on Medicaid over the interval. By state, the cuts vary from 5% in Wyoming and Alabama to 17% in Washington.
• CBO’s estimated 3 million lack of Medicaid enrollment in 2034 represents 12% of projected enrollment in that 12 months. Essentially the most closely affected states embody Washington and Virginia the place Medicaid enrollment may lower by 26% and 21%, respectively.