Abstract

Introduction

The Republican-led Congress has passed a “concurrent budget resolution” under which leaders of the House of Representatives and the Senate have agreed to identify at least $1.5 trillion in savings as part of budget reconciliation legislation to be enacted later this year. ¹ An earlier Commonwealth Fund brief examined the potential economic effects of cutting funding for Medicaid by $880 billion over 10 years and funding for the Supplemental Nutrition Assistance Program (SNAP) — food stamps — by $230 billion. ² In this brief, we focus on two specific proposals that could be under discussion for budget reconciliation legislation: mandatory work requirements for people with Medicaid, and a substantial reduction in the federal funding matching rate for the District of Columbia’s Medicaid program (DC Healthy Families).

A different study looked at a broader work requirement policy targeted at people ages 19 to 64, including nonexpansion beneficiaries. It concluded that 10.1 million to 14.4 million Medicaid beneficiaries could potentially lose their coverage. ¹⁵ Of course, future congressional proposals might differ from either of the policies modeled.

In this brief, we estimate the federal Medicaid funds that states would lose if work requirements were implemented in 2026, based on the Urban Institute’s estimates of coverage losses and state-level costs per enrollee. We then computed state-level changes in state gross domestic products (GDPs) and employment based on these federal funding losses. To do this, we used IMPLAN, a widely employed economic modeling system. (For more details, see “ How We Conducted This Study .”)

We also estimate the impact of a budget proposal to reduce the funding that the federal government contributes to the District of Columbia’s Medicaid program. The current federal matching rate is set in statute at 70 percent; the proposal would reduce the match to 50 percent. Our analyses also show the interstate consequences of Medicaid policy changes. For example, even though the federal funding proposal directly affects DC only, the repercussions would ripple out to harm Maryland and Virginia’s economies, too.

Key Findings

Impact of Medicaid Work Requirements

Loss of federal funding . Using the Urban Institute’s coverage estimates and state-based estimates of federal Medicaid expenditures per adult in 2026, we estimate the 40 states and DC which expanded Medicaid eligibility will lose between $32.9 billion and $45.9 billion in federal funding in 2026. The 10 states that did not expand Medicaid would not lose federal funds. These results are summarized in Table 1, with more detail about all states in Table 2 and Table 3 .