Implications of Reduced Federal Medicaid Funds: How Could States Fill the Funding Gap?

The following details the methods and data used to examine the outcomes for reductions in federal Medicaid spending.

• Estimated Reductions in federal Medicaid spending. FY 2015 spending for each state was obtained from the Medicaid Budget and Expenditure System (MBES). Adjustments were made for states that expanded mid-year in FY 2015 or in FY 2016. Since Indiana and Pennsylvania expanded early in FY 2015, spending for the expansion population was adjusted to represent a full year of spending. Enrollment data for Alaska (as of April 2017), Louisiana (as of February 2017), and Montana (as of October 2016) were obtained from state resources. The latest enrollment data for these three states were multiplied by the federal per enrollee spending across all Medicaid enrollees in the state to estimate spending for the expansion population.
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  Using the adjusted FY 2015 spending for the expansion group, we assumed a 90% match rate (the rate when the ACA is in full effect) and then took the difference between that match rate and spending assuming a state’s traditional match rate. For the other effects, we estimated a 10% and a 20% reduction in federal funding off of FY 2015 spending for the traditional Medicaid population. We did not estimate the specifics of per capita cap or block grant proposals.
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  (KFF analysis of Centers for Medicare and Medicaid Services, Expenditure Reports from MBES, https://www.medicaid.gov/medicaid/financing-and-reimbursement/state-expenditure-reporting/expenditure-reports/index.html; Centers for Medicare and Medicaid Services, Quarterly Medicaid Enrollment Report, https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/enrollment-mbes/index.html; Alaska Department of Health and Social Services, Medicaid in Alaska Dashboard, accessed May 23, 2017, http://dhss.alaska.gov/HealthyAlaska/Pages/dashboard.aspx; Louisiana Department of Health, Medicaid Dashboard, accessed March 3, 2017, http://ldh.la.gov/healthyladashboard/; Montana Department of Public Health and Human Services, Monthly enrollments, accessed March 3, 2017, http://dphhs.mt.gov/StatisticalInformation.)
• Change in Medicaid spending per state resident: Medicaid cut divided by state population as of July 1, 2015. (U.S. Bureau of the Census, State Population Totals Tables: 2010-2016, https://www2.census.gov/programs-surveys/popest/tables/2010-2016/state/totals/nst-est2016-01.xlsx.)
• Change in state government taxes: The percentage increase in state government taxes that would be required if states were to raise taxes to offset Medicaid cuts. The calculation is the Medicaid cut as a percentage of state taxes, based upon state fiscal year 2015 state government tax collections. For the District of Columbia, which does not have a state government, we used District tax collections. (U.S. Bureau of the Census, 2015 Annual Survey of State Government Tax Collections, https://www.census.gov/govs/statetax/.)
• Change in largest state government tax: The percentage increase that would be required in a state’s largest state-government tax, if the state raised that tax to offset Medicaid cuts. The calculation is the Medicaid cut as a percentage of the state’s largest tax, where the largest tax is determined based upon detailed item-code data for state fiscal year 2015. For the District of Columbia, which does not have a state government, we used the largest District tax. (U.S. Bureau of the Census, 2015 Annual Survey of State Government Tax Collections, https://www.census.gov/govs/statetax/.)
• Change in state aid for K-12 education: The percentage cut in state aid for K-12 education that would be required if states were to cut this aid to offset Medicaid cuts. The calculation is the Medicaid cut as a percentage of state aid for K-12 education. Revenue of public schools from state governments is used as a proxy for state aid because data that explicitly measure state aid and that are both timely and comparable across states are not available. (Revenue from the state government may differ from what states show in their budgets for state aid. For example, Hawaii operates all of its schools, rather than providing aid to school districts. This approach treats revenue from the state of Hawaii as state aid.) For the District of Columbia, which does not have a state government, we used District revenue used to support schools. The latest available data for revenue of public schools is for 2014, from the National Center for Education Statistics NCES. (NCES, Revenues for public elementary and secondary schools, by source of funds and state or jurisdiction, https://nces.ed.gov/programs/digest/d16/tables/dt16_235.20.asp.) We estimated values for 2015 by adding one year of estimated growth to each state’s value for 2014, based on the compound annual growth rate for the prior five years (2009 to 2014).
• Change in K-12 education per-pupil spending: The cut that would be required in K-12 education spending per pupil if the entire Medicaid cut were offset by cuts in spending by school districts. The per-pupil cut is calculated as the Medicaid cut divided by the number of public school pupils in the state in the 2014-15 school year, excluding adult education enrollment. (National Center on Education Statistics, Digest of Education Statistics, K-12 Enrollment – Total Students, All Grades (Excludes AE) [Public School], http://nces.ed.gov/ccd/elsi.) To provide context for these numbers, we then compute this cut as a percentage of total public school expenditures per pupil (excluding adult education enrollment). The latest available data for revenue of public schools is for 2014, from the National Center for Education Statistics NCES. We estimated values for 2015 by adding one year of estimated growth to each state’s value for 2014, based on the compound annual growth rate for the prior five years (2009 to 2014).

Grouping States by Characteristics

• Medicaid expansion status: ACA Medicaid expansion status, as of January 2017. https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
• Political party: Political party of the state governor or mayor, as of January 25, 2017 (in the case of the District of Columbia). https://www.nga.org/files/live/sites/NGA/files/pdf/GOVLIST.PDF
• Region: Major geographic divisions of the United States as defined by the Bureau of the Census http://www2.census.gov/geo/docs/maps-data/maps/reg_div.txt
• Poverty quartile: The poverty-rate quartile that each state is based upon the 2013-2015 three-year-average CPS poverty-rate. (U.S. Bureau of the Census, Historical Poverty Tables: People and Families – 1959 to 2015, Table 19. Percent of Persons in Poverty, by State, https://www2.census.gov/programs-surveys/cps/tables/time-series/historical-poverty-people/hstpov19.xls.)