Medicaid Expansion Funding Ends by 2035: New Bill Penalizes States That Haven't Expanded Coverage

The “Ending Medicaid Discrimination Against the Most Vulnerable Act” does exactly what its title suggests—it ends a specific federal funding mechanism. This bill mandates the gradual phase-out of the enhanced Federal Medical Assistance Percentage (FMAP) that currently provides extra federal dollars to states covering low-income adults under Medicaid expansion. The enhanced match starts decreasing in 2027 and disappears completely by 2035, leaving states to cover the full cost of this population with only the standard federal match.

The Countdown Clock for Federal Funds

Right now, the federal government picks up a large portion of the tab for people covered under Medicaid expansion. This bill sets a strict timeline for that enhanced support to dry up. Starting in 2027, the enhanced rate begins a calculated, yearly drop until 2034. By 2035, states that expanded coverage will only receive the standard FMAP, which is significantly lower than the current enhanced rate. This means that if you live in a state that expanded Medicaid, your state budget is going to have to find billions of dollars in the next decade to maintain the current level of coverage, or else they’ll have to cut services or benefits.

The Financial Hammer for Non-Expansion States

This bill contains a major financial disincentive for states that haven't expanded Medicaid yet. If a state hasn't fully expanded coverage to low-income adults by the end of 2024, they lose access to this enhanced phase-out schedule entirely. If they decide to expand later, they will only ever get the standard FMAP rate (SEC. 2, Special Rules). This provision effectively removes the last remaining major financial incentive for non-expansion states to provide healthcare coverage to their working poor population, making it much harder for low-income adults in those states to gain coverage.

The Catch-22 for Expansion States

For states that have expanded coverage, the bill offers a complicated choice: they can keep the phase-out schedule—and thus a higher federal match for a few more years—if they agree to limit future enrollment of newly eligible adults to only those whose income is at or below 100% of the Federal Poverty Line (FPL). This means if you’re a new enrollee, your state could use this provision to cap who gets coverage based on a very strict income limit, even if the current expansion covers people slightly above that threshold. While it helps states keep the enhanced rate longer, it creates a mechanism for restricting future access to care for the working poor as costs rise and income levels fluctuate.

What This Means for Everyday People

If you are a low-income adult currently covered under Medicaid expansion, this bill introduces long-term instability. The phase-out means that by 2035, states will face immense fiscal pressure to keep their programs running. This could lead to states cutting optional services, reducing provider reimbursement rates (making it harder to find a doctor who accepts Medicaid), or increasing copayments and deductibles for beneficiaries. For a construction worker or a service industry employee relying on this coverage, the increasing fiscal burden on the state could translate directly into reduced access or higher out-of-pocket costs down the line. Furthermore, the bill removes temporary enhanced funding that was designed to encourage states to expand coverage now (SEC. 2, Removing Temporary Funding). This elimination further discourages states from joining the expansion, meaning millions of low-income people in those states will likely remain uninsured.