How do Medicaid trigger laws work?

There have been several policy proposals aimed at reducing federal payments to the Medicaid program. One of those policies is reducing the match of funds that the federal government contributes. Federal matching funds or the Federal Medical Assistance Percentage (FMAP) is the rate at which the federal government matches state spending on Medicaid. It represents the percentage of Medicaid costs that the federal government pays, with states covering the remaining portion.

The Federal Medicaid Assistance Percentage is determined using a formula that considers factors like a state’s per capita income, so states with lower per capita incomes receive a higher matching rate (up to a maximum of around 77 percent for traditional Medicaid), while those with higher incomes receive a lower rate (with a minimum of 50 percent).

For Medicaid expansion under the Affordable Care Act, states currently receive a 90 percent FMAP for eligible adults, meaning the federal government pays 90 percent of the costs for those enrollees.

For Medicaid expansion under the ACA the federal government pays 90 percent of the costs for those expansion enrollees.

Reducing the FMAP is a measure that would substantially alter the financial landscape for states that have adopted the expansion. For nearly all adults with incomes up to 138 percent of the Federal Poverty Level ($21,597 for an individual in 2025), the federal government currently pays 90 percent of the cost of their care. In contrast, traditional Medicaid, which covers low-income children, pregnant women, older adults, and people with disabilities, receives a match rate determined by a statutory formula that ranges from a minimum of 50 percent up to 77 percent for fiscal year 2026. In Ohio, the federal match rate for traditional Medicaid is 64.85 percent.

The highest population of enrollment in the expansion group is in urban metropolitan areas and rural Appalachian counties.

 
In Ohio, more than 770,000 Ohioans are enrolled in Medicaid through the expansion group. The highest population of enrollment in the expansion group is in urban metropolitan areas and rural Appalachian counties.

Trigger laws create an unstable situation‍

At the heart of the policy debate is the concept of “trigger” laws. These are provisions embedded in state legislation that would automatically end or force a review of the Medicaid expansion if federal support were to fall below a predetermined threshold. Currently, many states have put these trigger laws into their Medicaid expansion statutes or included them within annual budget bills that fund Medicaid. The fundamental idea behind trigger laws is to legally require states to act on, most often termination of Medicaid expansion coverage if they’re suddenly on the hook for more of the costs.

In practice, these trigger laws create an unstable situation. In 12 states, trigger provisions exist that would automatically end Medicaid expansion or require significant changes if the federal match rate drops below the set floor. Not every trigger law calls for an immediate shutdown, but all make it clear that enrollees in states with such provisions are at a higher risk of losing coverage. Among these states, there are nine where the legislative language mandates an automatic elimination of the expansion if the FMAP falls below 90 percent (with the notable exception of Arizona, where the trigger is set at 80 percent, and Virginia, which does not specify a particular percentage). This means that in these nine states, a reduction in federal support, even by a small margin, would automatically cut off the federal funding stream that underpins the expansion, with no further action required from state lawmakers.

Medicaid expansion and trigger laws in Ohio

Ohio implemented Medicaid expansion on January 1, 2014. Medicaid expansion has greatly contributed to both the financial stability and health of Ohioans. When Ohio decided to implement Medicaid expansion, it did so under the following conditions in its State Plan Amendment to the Centers for Medicare and Medicaid services:

• The state can end coverage of the expansion population if there is a reduction in the federal medical assistance percentage for individuals in Group 8 below the amount specified in the Social Security Act section 1905(y) as of March 30, 2010.
• The state can end coverage of the expansion population for other administrative, budgetary, or policy reasons.
• The state will incur no penalty if it terminates coverage of the expansion population.

If Ohio ended Medicaid expansion in response to the reduction FMAP for the expansion population, it is estimated that the state would forgo an additional $32.8 billion over the 2020-2029 period, and by 2029, 858,000 Ohioans estimated to be covered in the expansion group would lose Medicaid coverage.

Kaiser Family Foundation estimates that changes in Medicaid spending and enrollment due to eliminating the ACA Expansion match would result in a $20.1B reduction in federal spending charges while adding a $20.1B increase in state spending charges without a trigger in place.

Many Medicaid beneficiaries are working adults who are often employed in low-wage jobs.

The implications of such a funding cut are staggering. In just nine of the “automatic trigger” states, a drop in the FMAP below the designated threshold would result in an immediate loss of affordable health coverage for over three million parents and other adults. When you factor in an additional three states that, while not triggering an immediate termination, contain legislative language that makes it highly likely their Medicaid expansion programs will eventually be curtailed or eliminated, the total number of individuals at risk increases further.

Many Medicaid beneficiaries are working adults who are often employed in low-wage jobs such as cashiers, drivers, janitors, childcare providers, and cooks, many of whom do not have access to employer-sponsored health insurance. These are the jobs that keep our lives moving. For these folks, the loss of Medicaid expansion coverage would have a direct impact on not only their financial stability but also their health.

Beyond the immediate loss of coverage for hundreds of thousands of low-income adults, the proposed reduction in FMAP would force Ohio into making extremely difficult budgetary decisions. To maintain Ohio’s Medicaid expansion program without the current level of federal support, Ohio would need to find ways to replace the lost funding. This could involve increasing state tax revenues or cutting spending on other critical services. Any state-based decision that includes cutting spending on critical services would have far-reaching consequences for low-income Ohioans.

Even a small reduction in the FMAP for Medicaid expansion could have dramatic consequences due to the trigger laws embedded in state legislation.

Having a Medicaid trigger law that results in the reduction or elimination of the expansion population is not just a shift in a funding mechanism but a fundamental change in the balance between federal and state responsibilities in the partnership to fund Medicaid. Medicaid is designed to be administered by states under broad federal guidelines and to be jointly funded through a state-federal match. This structure ensures that states can meet rising health care costs, whether there is an economic downturn or even a public health emergency, while still being able to balance state budgets.

Lowering the FMAP and reducing federal funding for Medicaid

Reducing the federal funding for Medicaid expansion enrollees by lowering the FMAP below the current 90 percent level, and subsequently decreasing the expansion population, would be catastrophic for low-income Ohioans. Even so, Ohio is not alone in these considerations as states work to make tough decisions.

If Ohio ended Medicaid expansion the state would forgo an additional $32.8 billion over the 2020-2029 period, and by 2029, 858,000 Ohioans estimated to be covered in the expansion group would lose Medicaid coverage.

In states with trigger laws, nine of which have provisions for automatic termination of Medicaid expansion if federal funding drops below the set floor, and three more with similar review processes, this reduction would lead to the immediate loss or eventual curtailment of affordable health coverage for millions of low-income adults. The loss of federal funds would force states to make tough fiscal decisions, potentially cutting services or benefits and jeopardizing the financial and health security of the nation’s most vulnerable populations.

Reducing the expansion population, however, would have delirious effects that would be both immediate and longer term. The relationship between federal funding reductions and state trigger laws represent a critical decision-point for Medicaid expansion, with far-reaching implications for health care access and equity.