How States Fare in 2018 Federal Budget: Keep Your Eyes on Medicaid

The president's federal budget was released May 23 and the analysis of winners and losers began practically before the ink was dry, although almost all of Washington seemed to agree the budget was dead on arrival. Over the 10-year budget window, the plan would increase defense spending by $489 billion and cut nondefense discretionary funding by $1.6 trillion.

State policymakers are looking to understand how the budget will impact their state. Many cuts to federal funding that flows to and through state budgets are proposed, including SNAP, also known as food stamps, Title I education funding for disadvantaged students, work force training, the mental health block grant, child care, community development grants, low income home energy assistance, and public housing as well as Medicaid and the Children's Health Insurance Program, or CHIP. Cuts to the Medicaid and Children's Health Insurance Program, or CHIP, alone total $616 billion over the next ten years. The budget also envisions saving $250 billion from partly repealing and replacing the 2010 health care law. Taken together, these Medicaid cuts are nearly half the nondefense discretionary funding cuts. 

To further understand just how important federal Medicaid funds are to states, CSG looked at 2017 federal funding flowing to the states. According to Federal Funds Information for the States, or FFIS, data, the federal Medicaid funding for 2017 is more than 50 percent of all federal grant funds flowing to states in all but four states -- Alaska, Nebraska, South Dakota and Wyoming. In ten states and the District of Columbia, Medicaid makes up at least 70 percent of the state's federal funding. 

                                                                                  Source: Federal Funds Information for the States, 2017. CSG calculations. 

One day later, May 24, the Congressional Budget Office released its analysis of the House-passed American Health Care Act. Medicaid provisions to terminate the enhanced federal matching funds for expansion and to institute per capita-based caps on Medicaid payments to the states would total a loss of $834 billion between 2017 and 2026 to states, according to the CBO.

CNN reports that White House officials have been unable to clarify how or whether the budget savings and the AHCA savings overlap. However, budget expert groups agree the cuts will be additive. 

"Ultimately, Medicaid would face a nearly 50 percent cut in the year 2027 relative to current law," the Concord Coalition, a deficit watchdog group, said to CNN on Tuesday. CNN reported that experts on the conservative side -- the Heritage Foundation -- and the liberal side -- the Center on Budget and Policy Priorities -- agree that the spending reduction appear to be additive.