Medicaid Expansion: Senate Cuts Federal Spending

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House Bill’s Medicaid Changes: ACA Expansion States Face Disproportionate Cuts

Washington D.C. – A New Budget Reconciliation Bill, referred to as The One Big Beautiful Bill Act, has passed The House. Projections Indicate that if enacted, it will trigger significant shifts in the nation’s Medicaid landscape. Federal Medicaid spending could be reduced by an estimated $793 billion.this could lead to 10.3 million fewer people enrolled in Medicaid, and a staggering 7.8 million individuals becoming uninsured.

While the Affordable Care Act (ACA) isn’t facing outright repeal,crucial provisions within the house bill specifically target states that embraced the ACA Medicaid expansion. These measures,Coupled with changes to ACA marketplace operations and the expiration of enhanced premium tax credits,threaten to leave millions without coverage,according to the Congressional Budget office (CBO).

ACA Expansion States Bear the Brunt of Federal Medicaid Cuts

approximately half-$427 billion-of the total federal spending reductions outlined in the House bill are tied directly to provisions affecting only states that adopted the ACA expansion. These provisions include:

• Mandating work and reporting requirements for adults eligible through ACA expansion, accounting for $344 billion in cuts.
• Increasing the frequency of eligibility redeterminations for the ACA expansion group, leading to $64 billion in reductions.
• Imposing a federal match rate penalty for states that have expanded coverage for immigrants using state-only funds, resulting in $11 billion in penalties.
• Requiring additional cost-sharing for certain expansion enrollees, amounting to $8 billion in decreased federal support.

Disproportionate Impact on Medicaid Expansion States

States that expanded Medicaid under the ACA are poised to experience significantly larger federal spending reductions and enrollment losses compared to non-expansion states. The House-passed bill could reduce federal spending in expansion states by 13%, compared to 6% in non-expansion states. Enrollment losses in expansion states could reach 14% of projected enrollment by FY 2034, versus just 5% in non-expansion states.

Senate’s Finance Committee Language Amplifies the Impact

While the CBO hasn’t yet assessed the full implications of the Senate Finance Committee’s Medicaid language, changes to the House bill are likely to exacerbate the financial strain on ACA expansion states. One key alteration involves provider taxes, wich states use to help finance their Medicaid programs. The Finance Committee proposes reducing existing provider taxes *only* in states that have adopted ACA expansion. This could reduce federal Medicaid spending in 22 states by amounts ranging from tens to hundreds of billions of dollars.

Furthermore, the Senate language proposes lower limits on supplemental hospital payments made by managed care organizations in expansion states (100% of Medicare payments) compared to non-expansion states (110% of Medicare payments). A new provision to limit federal matching payments for Emergency Medicaid for individuals who would or else be eligible for expansion coverage,except for their immigration status,will impact expansion states only.

These cumulative changes suggest that federal medicaid cuts to ACA expansion states could approach levels previously estimated for eliminating the enhanced federal match rate for ACA Medicaid expansion which were around $626 billion.

Potential Consequences for States

The projected Medicaid cuts could force states to make arduous choices, including:

• Reducing eligibility for Medicaid.
• Cutting back on covered services.
• Lowering payments to healthcare providers.

These actions could lead to reduced access to care, especially for low-income individuals and families. States may also face increased pressure to find option funding sources to maintain current levels of coverage.

Impact Area	ACA expansion States	Non-Expansion States
Federal Spending Reduction	13%	6%
Enrollment Losses (Projected FY 2034)	14%	5%

Understanding Medicaid Expansion: An Evergreen Outlook

The Affordable Care Act (ACA) offered states the option to expand their Medicaid programs to cover adults with incomes up to 138% of the federal poverty level. The federal goverment initially covered 100% of the cost of expansion coverage, gradually phasing down to 90%.This expansion aimed to reduce the number of uninsured Americans and improve access to healthcare for low-income individuals. As of June 2025, numerous studies have examined the impact of Medicaid expansion on various health outcomes and economic indicators. results have shown a reduction in uninsured rates, improved access to care, and positive effects on state economies.

Did You no? States that expanded Medicaid often experience lower rates of hospital uncompensation, where hospitals are burdened with costs for treating uninsured patients.

Though,Medicaid expansion has also faced criticism. Some argue that it places a strain on state budgets and that the quality of care may be compromised due to increased demand. The current debate surrounding the House bill highlights the ongoing tension between expanding access to healthcare and controlling federal spending.

Pro Tip: Stay informed about your state’s Medicaid policies and any proposed changes that could affect your coverage or access to care. Contact your state Medicaid agency or a local healthcare navigator for assistance.

Frequently Asked Questions About Medicaid Changes