The Senate Finance Committee released a bill that would take significant federal funds away from states with certain programs funded solely with state money that provide comprehensive health coverage to people who are not citizens and do not have a “qualified” immigration status (including many people with a lawful status). As a result, 16 states and the District of Columbia would face a combined $83 billion in cuts to federal funding unless they stop providing this coverage — which their state legislatures have approved and provided state funding for. These cuts would force states to make difficult decisions and put millions at risk of having their coverage taken away. (See table below for federal funding impacts on each of these states and D.C.)
Medicaid has strict, long-standing eligibility requirements that prohibit anyone who is undocumented from enrolling and also bar many people with lawful immigration statuses from accessing coverage.[1] A 1996 law created the “qualified” immigrant standard to be used in determining eligibility for Medicaid; a narrow list of immigration statuses are defined as “qualified,” and many people with a “qualified” immigrant status are only eligible for Medicaid after they have had that status for five years. Many people lawfully in the U.S. do not have a status that falls within the “qualified” category.
The Senate bill would cut the federal matching rate of 90 percent down to 80 percent for the Affordable Care Act (ACA) Medicaid expansion in states that operate programs funded solely with state money that provide comprehensive health coverage to people who are not citizens and do not have a “qualified” immigrant status. Unlike the House bill, the Senate version does not penalize states that provide coverage to people with humanitarian parole, though in another provision, the Senate takes away all federal funding for Medicaid provided to this group, and the proposal clarifies that children and pregnant adults with lawful statuses who are covered through specific state options allowed in separate Children’s Health Insurance Program (CHIP) will not trigger the penalty.
The penalty in the Senate bill creates an unconscionable decision for states: end health coverage for many immigrant children and adults their state policymakers believe should be covered, or face a huge penalty that would make coverage for ACA expansion adults (a completely different group) difficult or impossible to afford. In two of the 16 states affected, “trigger” laws would automatically terminate Medicaid expansion if the expansion’s federal matching rate decreases.[2]
This policy also encroaches on state sovereignty. States would likely be forced to end one of their coverage programs, for either the ACA expansion group or the state-funded program for people who are not citizens and do not have a “qualified” immigration status, despite their lawmakers having adopted these options. The Congressional Budget Office (CBO) estimated that 1.4 million people would become uninsured by 2034 under the original version of the penalty from the House Energy & Commerce Committee’s bill, which included 14 of the 16 states below and D.C.[3]
We estimate that the policy would cut $83 billion in federal funds to the affected 16 states and D.C. from 2028 to 2034, doubling the expansion group costs that each state would be required to pay to maintain their current programs, if they keep their expansion programs.[4] (See table and methodology below.)
CBPP estimates measure reductions in federal funding that states would have to assume to maintain their current programs, including both their Medicaid expansion and their state-only funded programs that provide coverage to people who do not meet the federal “qualified” immigrant eligibility standard. Unlike estimates from CBO, CBPP estimates do not incorporate assumptions about how states might respond. For example, in order not to incur the federal funding cut, states may choose to drop the state-only, immigrant-inclusive coverage program or to drop Medicaid expansion. Alternatively, states could make other cuts to enrollment, benefits, or provider payments to make up for the federal funding cut. CBPP estimates also do not include interactions with other provisions in the Senate bill.
We estimate enrollment and spending using MBES data collected by the Centers for Medicare & Medicaid Services (CMS) and CBO’s June 2024 Medicaid baseline.[5] For states that adopted Medicaid expansion before 2019, enrollment and spending are projected from fiscal year 2019 to account for differences in pandemic-era enrollment trends; otherwise, we project enrollment and spending from fiscal year 2023.
In line with the proposed policy, we estimate the federal funding cut to states and D.C. from fiscal years 2028 to 2034 by comparing state spending under the 90 percent federal match rate and under the reduced 80 percent match rate.
