Maine House Speaker Ryan Fecteau, flanked by legislative Democrats, last month called for a $250 million investment in the state to offset cuts to federal health care. A new analysis finds that state Medicaid programs will lose a total of $665 billion over the next decade after President Donald Trump’s One Big Beautiful Bill Act reduces federal investment in the health insurance program. (Photo: Eesha Pendharkar/Maine Morning Star)
State Medicaid budgets will be cut by a total of $665 billion over the next decade after President Donald Trump’s One Big Beautiful Bill slashes federal investment in the health insurance program, a new analysis shows.
Researchers at RAND Health, a nonprofit policy and research organization, analyzed state and federal data to estimate how much the loss of federal money would affect state Medicaid budgets. publishing their findings end of last month. Medicaid is a public health insurance program for low-income people financed jointly by state and federal funds.
The report found that the overall net impact on state budgets, outside of Medicaid programs, would be a reduction of $86 billion. This number is lower than the overall reduction in Medicaid budgets because while some states will have to spend more money from their general funds to cover Medicaid losses, others will have to spend less.
New federal regulations, such as work requirements for certain people enrolled in Medicaid, are intended to reduce the number of people on Medicaid, which means states that cover these people will no longer have to pay their share of medical bills, saving money. However, many states operate financial strategies such as “provider taxes” to qualify for additional federal money under Medicaid. The new law limits their ability, forcing them to operate general funds to cover the loss of income.
“The bill’s impact on Medicaid budgets and college enrollment is significant, but will vary greatly by state, and in some cases may be at least partially offset by savings in the state general fund,” Preethi Rao, senior economist at RAND and lead author of the study, said in her study statement.
The authors estimated that by 2034, there would be 7.6 million fewer people enrolled in Medicaid. Between 2025 and 2034, the federal government will save approximately $714 billion.
Medicaid budgets in Arizona, Iowa and Nevada will be reduced by more than 15%.
California and New York will see the largest combined declines in their Medicaid budgets, by $112 billion and $63 billion, respectively.
At the other end of the spectrum there are countries that do not rely as much on financial strategies, such as: state-directed payments AND supplier taxeswill not see such a significant impact. The report shows Florida will likely see less than a half-percent change in its Medicaid budget. North Dakota and Nebraska are also likely to see minimal impacts because their losses are expected to be offset by increased federal funding for rural health care.
The report found that state general funds in Tennessee, Mississippi, Oklahoma and Kentucky could see more than 2% savings by reducing Medicaid enrollment or limiting the types of care covered.
Several states with tiny Medicaid populations, including Wyoming and South Dakota, are expected to see their budgets escalate due to funding for the rural health program.
“As states plan for upcoming changes in funding and eligibility, understanding state-specific differences will be important,” Rao said.
Stateline reporter Anna Clare Vollers can be reached at: avollers@stateline.org
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