D.C. Medicaid Funding Set at 70% Until 2027, Followed by Scheduled Drop to 55%

The “District of Columbia Medicaid Fairness Act” might sound like a technical fix, but it’s actually a major shift in how D.C. pays for its Medicaid program—and it’s going to affect the city’s budget in a big way. This bill directly changes the Federal Medical Assistance Percentage (FMAP), which is the share the federal government pays toward a state or territory’s Medicaid costs.

The Good News First: A 70% Floor

For the next few years, D.C. gets a solid deal. The bill sets D.C.’s FMAP at 70% for fiscal years leading up to 2027. This means for every dollar D.C. spends on healthcare for its low-income residents, the federal government covers 70 cents. This high rate provides a stable, predictable funding floor that D.C. can count on for planning its budget and ensuring services remain covered. For the thousands of D.C. residents who rely on Medicaid, this stability is crucial for accessing doctors, prescriptions, and necessary care.

The Coming Fiscal Cliff: The Phase-Down

Here’s where things get tight. The bill introduces a strict, temporary phase-down schedule that kicks in after 2026. Starting in fiscal year 2027, the federal matching rate drops to 65%. It drops again to 60% in 2028, and finally hits 55% in 2029. This means that in just three years, D.C.’s local government share of the Medicaid bill jumps from 30% to 45%. This is a significant increase in financial responsibility placed squarely on the District.

What This Means for D.C. Taxpayers

When the federal government pays less, the local government has to pay more. For the average D.C. resident, this scheduled reduction from 2027 to 2029 translates directly into a massive budget hole that the city must fill. The District will have three main options: raise local taxes, cut other city services (like education, infrastructure, or public safety), or try to reduce Medicaid benefits. This isn’t an abstract budget problem; it’s a real-world squeeze on city finances that will impact everyone living and working in D.C. Imagine the city suddenly having to find tens of millions more dollars annually just to keep the same level of healthcare running—that money has to come from somewhere.

After 2030: Back to the Standard Formula

Once fiscal year 2030 hits, this special D.C. formula disappears, and the FMAP reverts to whatever the standard federal calculation determines. The bill also includes a safety net during the phase-down period: D.C. will always receive the higher rate between the scheduled reduction (e.g., 65% in 2027) and what the standard federal formula would have provided. This prevents the rate from plummeting lower than the standard rate, but it doesn't change the fact that the city is staring down a significant increase in its healthcare spending obligations starting in 2027.