Introduction to Medicaid Expansion
As Republicans in Congress consider cutting the federal share of Medicaid funding, states are weighing numerous options to scale back their programs. But voters in three states have significantly limited those options by enshrining Medicaid expansion in their constitutions — creating a potential budget disaster and a political challenge for the GOP.
Background on Medicaid Expansion
Over the past several years, voters in conservative Missouri, Oklahoma and South Dakota have amended their state constitutions to require their Medicaid programs to cover all adults below the age of 65 who earn equal to or less than 138% of the federal poverty level ($21,597 for an individual in 2025 ). Those states are among the 40 plus the District of Columbia that expanded Medicaid eligibility under the 2010 Affordable Care Act, with the federal government picking up 90% of the cost.
Potential Cuts to Medicaid Funding
But much of that federal funding could soon vanish. Republicans in Congress are debating several options to achieve $880 billion in Medicaid cuts. One proposal would slash the 90% rate to the lower match rates states get for the traditional Medicaid population, mainly children and their caregivers, people with disabilities and pregnant women. Those percentages range from 50% for the wealthiest states to 77% for the poorest ones.
Impact of Potential Cuts
If Congress goes that route, states would have to come up with $626 billion over the next decade to keep the roughly 20 million people in the expansion population on the rolls.
Nine states (Arizona, Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah and Virginia) already have laws on the books that would automatically roll back Medicaid expansion if the federal funds dip. Some states are considering requiring people to work, go to school or volunteer in order to receive Medicaid benefits, a condition that would trim the rolls and save money.
Constitutional Amendments Limiting Options
But because Missouri, Oklahoma and South Dakota have put Medicaid expansion in their constitutions, they can’t easily take those steps.
“Legislators cannot change that law without going back to voters for a whole other campaign to change the constitution,” said Kelly Hall, the executive director of the Fairness Project, a nonprofit that helped put the constitutional amendments on the ballot in all three states.
State Budget Implications
Medicaid is a huge component of state budgets. Including the federal matching money, states spend an average of nearly a third of their budgets on Medicaid. And the program is also the single largest source of federal funds for states.
Missourians voted in favor of a constitutional amendment to expand Medicaid in August 2020. When state lawmakers refused to fund the expansion, residents sued the state’s Department of Social Services. In 2021, the state Supreme Court ruled that the legislature had to find the resources for Medicaid expansion — a huge win for progressives.
Potential Solutions
For 2025, Missouri allotted $18.2 billion for Medicaid, with the federal government covering $12.7 billion of that, or about 70%. If Congress cuts the federal share of Medicaid funding by $880 billion over the next decade, it would leave Missouri with a budget hole of around $1.7 billion next year, according to research from nonprofit group the Commonwealth Fund. That would force the state to come up with some options to avoid fiscal disaster.
Timothy McBride, a health policy analyst and co-director of a program at the Institute for Public Health at Washington University in St. Louis, told Stateline that these include raising taxes, cutting enrollment for other Medicaid populations, diminishing reimbursements to providers, getting rid of optional medical services such as dental care or ceasing payments for equipment like wheelchairs.
Political Implications
Raising taxes is not a likely or popular choice in Republican-leaning Missouri, McBride noted, while adding that cuts to providers would further endanger struggling hospitals.
“We lost 10 hospitals in Missouri in the last few years. And if you start cutting their payment rates, that’s going to just put them at risk,” McBride said. “The real money is in the disabled and the elderly populations. And so if you really wanted to quote-unquote save money, that’s probably where you’d have to look. But that’s really controversial.”
Conclusion
The state budgetary implications of a potentially sharp decline in federal Medicaid funding have influenced some prominent opponents of Medicaid expansion to have a change of heart. U.S. Republican Sen. Josh Hawley supported efforts to repeal the Affordable Care Act in 2018 when he was Missouri’s attorney general. Now, Hawley has said he would refuse to vote for any Medicaid cuts.
Republicans in the closely divided U.S. Congress might have trouble pushing through Medicaid cuts if other conservative lawmakers from Missouri, Oklahoma and South Dakota follow Hawley’s lead.
FAQs
Q: What is Medicaid expansion?
Medicaid expansion refers to the expansion of Medicaid eligibility under the 2010 Affordable Care Act, which allows states to cover all adults below the age of 65 who earn equal to or less than 138% of the federal poverty level.
Q: Which states have enshrined Medicaid expansion in their constitutions?
Missouri, Oklahoma, and South Dakota have enshrined Medicaid expansion in their constitutions.
Q: What are the potential cuts to Medicaid funding being considered by Congress?
Republicans in Congress are debating several options to achieve $880 billion in Medicaid cuts, including slashing the 90% rate to the lower match rates states get for the traditional Medicaid population.
Q: How will the potential cuts affect states?
If Congress cuts the federal share of Medicaid funding, states would have to come up with $626 billion over the next decade to keep the roughly 20 million people in the expansion population on the rolls.
