Shirley Lewis, a Jawonio Day Services participant, was among the Medicare recipients, healthcare workers, and caregivers who gathered with U.S. Senate Minority Leader Chuck Schumer at Helen Hayes Hospital in Haverstraw, N.Y. April 17, 2025. Schumer spoke about how cuts to Medicaid will affectrecipients as Republicans in Congress vote to enact cuts to the program as well as to other social safety net programs.
Sacramento, California – According to a new Urban Institute report, several U.S. states—including California—stand to lose hundreds of billions in Medicaid funding over the next decade if Congress moves forward with a proposal to eliminate a long-standing federal funding guarantee.
The nonpartisan think tank, supported by the Robert Wood Johnson Foundation, analyzed the fiscal consequences of removing the 50-percent floor on the Federal Medical Assistance Percentage (FMAP)—the rate the federal government matches state Medicaid spending. Since the 1960s, the federal government has covered at least 50% of each state’s Medicaid costs, with higher reimbursement rates for poorer states like Mississippi.
If Congress scraps the FMAP floor entirely, as some Republicans have proposed, federal funding would drop by $467.7 billion across ten states and Washington, D.C., between 2026 and 2035. California would face the steepest loss, with an estimated $156.5 billion reduction—an 18% drop in federal assistance.
Other heavily impacted states include New York, which could see $116.2 billion in cuts, and Massachusetts, which stands to lose $80.6 billion over the same period.
Medicaid, which provides healthcare coverage for low-income Americans—including children, people with disabilities, pregnant women, and the elderly—has been a flashpoint in budget negotiations as Republicans seek to rein in spending without directly slashing benefits.
House Speaker Mike Johnson recently indicated that FMAP cuts and other controversial cost-containment measures like “per capita caps” were off the table, but not all party members agree. Texas Representative Chip Roy responded on X, saying, “Well – I haven’t ruled it out,” signaling that FMAP changes could still resurface in negotiations.
Urban Institute researchers cautioned that such drastic reductions in federal support would force states to make difficult choices. “Cuts in federal Medicaid funding would place more of the responsibility on states for financing the care of millions of vulnerable people,” the report states. Because most states are legally required to balance their budgets, the shortfalls could trigger higher state taxes, reduced spending on other services, or cuts to Medicaid eligibility and benefits.
California officials have not yet commented on the potential impact. Still, analysts warn that the loss of billions in federal support could destabilize the state’s healthcare infrastructure, particularly in underserved communities.
The GOP-led House is expected to finalize its budget reconciliation proposal in the coming weeks. Ways and Means Committee Chair Jason Smith hopes the bill reaches President Donald Trump’s desk by July 4.
