House Appropriations Chair Del. Ben Barnes (D-Prince George’s and Anne Arundel) said the briefing on Medicaid was important “given the uncertainty of the new administration” in Washington. (Photo by Bryan P. Sears/Maryland Matters)
No one knows for sure what cuts President-elect Donald Trump has in store for Medicaid after he is sworn in to his second term Monday. But Maryland officials are pretty sure it’s not going to be good for the state’s bottom line.
That was the takeaway from a House Appropriations Committee briefing Tuesday by Anne Braun, the operating budget manager with the Department of Legislative Services, who said cuts could end up costing from tens of millions to a couple billion if the state decided to pick up the affected services.
“There have not been any formal announcements or indications of changes to Medicaid, so I would just emphasize that these [projections] are considering possible changes,” Braun said.
Even with that level of uncertainty — or perhaps because of it — the committee needs to be prepared for any eventuality at a time when the state is grappling with a nearly $3 billion shortfall in the fiscal 2026 budget, said Del. Ben Barnes (D-Prince George’s and Anne Arundel), the chair of the committee.
“We thought this was important – given the uncertainty of the new administration,” Barnes said at the top of the meeting.
Medicaid is one of the biggest parts of Maryland’s budget, with the state spending $14.6 billion on the program, according to August 2024 data from the health policy research group KFF. Medicaid provides health care coverage to about a quarter of Maryland residents.
Medicaid is a joint federal-state health care plan that assists specific eligible populations, including low-income households, people with disabilities and certain senior populations. In most cases, the federal government reimburses states for 50% of the cost of care, but some programs — particularly for people who got coverage through the Affordable Care Act — are reimbursed up to 90%.
Trump has promised sweeping cuts to the federal budget, with few details so far on where those cuts might land. But some Republicans in Congress are floating ideas to cut trillions from federal spending, according to a report last week in Politico, which include cuts to Medicaid that could take the form of restructuring payments to states, restricting beneficiaries or adding work requirements to qualify for the program.
Braun said many of the potential changes would lead to financial burdens for the state or a loss of care for some residents.
Potential changes to Medicaid funding
One possible cut would be to reduce the generous federal share for beneficiaries who enrolled under the Affordable Care Act — also known as Obamacare — which covers families earning up to 138% of the poverty level. As of December, there were 371,499 Marylanders in that group, Bruan said.
Reducing the federal match for that group from 90% to 50% would cost Maryland $1 billion if it wanted to keep those participants enrolled, according to DLS estimates. If federal funding for that group was cut entirely, the state would be on the hook for $2.3 billion to keep those people enrolled.
Another possibility that has been discussed is to replace the federal match with other funding formulas, such as a block grant or per person funding. Under either plan, Maryland would get a designated amount of federal money that would be capped.
If the program went to a block grant, Braun said, the impact on state budgets “would vary drastically on how that grant or cap is designed and calculated.” It will be difficult to predict a precise impact without more details, she said, but any block grant design would likely cause the state trouble if there are greater economic struggles.
“Depending on how the formula is calculated, state funding levels may not respond as quickly to economic downturns – when Medicaid enrollment tends to increase,” she said. “So, if the block grant is set at a certain level, and then it doesn’t rise with enrollment, then … the state might have to cover a higher share of the costs.
“The other considerations would be that limiting federal funds to a certain cost per person might make the program less reactive to inflation and increasing medical care costs – and that depends on how growth factors are applied, but it is possible that the cost per person might not be as reactive to inflation increases,” Braun said.
Reducing eligibility for Medicaid
Another cost-saving avenue is restricting eligibility, or including conditions like work requirements for enrollees, which would result in people getting disenrolled from Medicaid, Braun said.
“Based on a past Congressional Budget Office estimate, states could see a 3.5% reduction in enrollment from work requirements,” Braun said. “So for Maryland’s program, that would reduce the budget by about $100 million in total funds.”
But she noted that there would be additional administrative costs for the state in hiring staff to run eligibility checks on all Medicaid enrollees and ensure they are adhering to any work requirements.
The same would be true if federal officials require more frequent eligibility checks, Braun said. Medicaid enrollees already have to prove eligibility once a year. If that was increased, the state would need to hire more staff to conduct multiple eligibility determinations each year, she said.
The Trump administration could also prohibit undocumented residents from getting federally funded Medicaid benefits. Maryland currently provides Medicaid coverage to certain undocumented pregnant mothers during pregnancy and for four months after the child is born, under the 2023 Maryland Healthy Babies Equity Act.
Braun said that Maryland is slated to receive $110 million to help fund that program, funds that would be at risk under a new administration that is more hostile to undocumented immigrants.
“To continue covering that group without federal support, the state would have to backfill that $110 million,” Braun told the committee.
The incoming administration could also prohibit federal funding for certain medical procedures, such as family planning or gender-affirming care for transgender people. A 2023 state law allowed qualifying transgender residents to receive gender-affirming care, such as hormone therapy and facial surgeries, through Medicaid.
It is unclear which, if any, changes Trump or the GOP-controlled Congress might impose on Medicaid, which make forecasting a challenge, Braun said.
“I would just emphasize that these are considering possible changes that might be made,” she said. “But still, the effect on Maryland is very uncertain. And so I would just emphasize that these are all estimates of what that impact might be.”