Skip to Main Content
Services Talent Knowledge
Site Search


Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

November 29, 2016

Shifting Costs to States?: Republican Medicaid Proposals Could Pop New York's Global Cap

President-Elect Donald Trump and the incoming Republican-led Congress may be considering ways to cut federal Medicaid spending which increased under the Affordable Care Act (ACA). These potential cuts could foist a new burden on states like New York that chose to expand Medicaid eligibility under the ACA.

This expansion was the subject of the United States Supreme Court's landmark National Federation of Independent Business, et al. v. Sebelius, et al., the decision that saved the ACA while limiting the federal government's power to withhold Medicaid spending to states that refused to expand Medicaid within their borders.1 In the aftermath of this decision, some states, including New York, chose to expand Medicaid coverage to those adults who earn 138% of the FPL, while others did not. One of the benefits of expansion is that the federal government covers 100% of each state's expenditures for this newly-eligible population2, which will decrease to 90% of total expenditures by 20203.

This significant subsidy to the states may disappear under a Republican administration. While President-Elect Trump has not clearly signaled his administration's intentions on this topic, in June of 2016 Congressman Paul Ryan issued a document called A Better Way: Our Vision for a Confident America, which characterized Medicaid as "a broken insurance program that has historically failed lower-income families."4 Congressman Ryan's proposal would cap Medicaid spending per beneficiary each year, regardless of how much the state actually spent on that enrollee.5 This plan would also cut the Federal Medical Assistance Percentage, or FMAP, that the federal government pays states for adults who enroll in Medicaid under the Affordable Care Act's expansion effort. Under the ACA, the federal government currently covers 100% of the Medicaid expenditures for these newly-eligible adults.6 Under the Ryan plan, the FMAP would decrease from 100% for these adult enrollees in 2018, to each state's normal FMAP"”which is, in New York, 50%.7

Some back-of-the-envelope calculations illustrate that this reduction could leave New Yorkers with a higher Medicaid bill in 2019. As of December 2015, the most recent time period for which data are available, New York's Medicaid program covered about 5.7 million people, 2.27 million of whom were adults. Approximately 285,000 or 12.5% of those adult Medicaid enrollees were newly-eligible under Medicaid expansion.8 The Kaiser Family Foundation reports that the average payments for adult Medicaid beneficiaries each year is $4,596, which puts yearly Medicaid expenditures only for those newly-eligible adults at just over $1.3 billion.

Assume for a moment that this number remains stable through 2019, when the Ryan plan would take effect: Under the status quo, New York absorbs only 10% of that spending, or about $130 million. Under the Ryan plan, that number would increase to about $655 million"”a new expense of about $525 million. By way of comparison, New York's 2017 budget calls for Medicaid expenditures of $17.7 billion.

Obviously, as a percentage of all New York Medicaid expenditures, this new expense would be relatively small"”just 3.09%. However, Medicaid observers might ask how this new expenditure would influence other Medicaid spending under New York's Global Cap. Governor Andrew Cuomo's stated goal is to ensure that New York's total Medicaid spending growth is limited to the ten-year average rate for the long-term medical component of the consumer price index"”a figure that is approximately 3.6% today. The loss of the federal subsidy for adults at 138% of the FPL could plausibly consume most of that figure on its own at 3.09% of the 2017 Medicaid budget.

The potential loss of a big chunk of the FMAP just for newly-Medicaid-eligible adults illustrates how dramatic other changes to federal Medicaid policy could be for New York"”facing an increase in expense, where will State policymakers choose to make cuts? Consequently, providers should keep an eye on proposals on the federal level to alter the ACA. While there is no guarantee that Congressman Ryan's plan will find its way into law, if it does, New York may have to grapple with some significant questions for one of its biggest budgetary line items.

1567 U. S. ____ (2012), available at
2Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 2001(a)(3), 124 Stat. 119, 272 (amending Social Security Act sec. 195 [42 U.S.C. § 1396d] to add a new subsection (y)).
3Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 2002(a)(1), 124 Stat. 119, 271 (amending Social Security Act 1902(a)(10)(A)(i) [42 U.S.C. § 1396a] to add a new subclause VIII extending this coverage); 42 U.S.C. 1396d(y)(1)(E).
4A BETTER WAY: OUR VISION FOR A CONFIDENT AMERICA, p. 5, June 22, 2016, available at
5Id. at p. 26.
6Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, FY 2017 FEDERAL MEDICAL ASSISTANCE PERCENTAGES, available at
8TOTAL MEDICAID ENROLLEES – VIII GROUP BREAK OUT REPORT, December-2015, (Updated June 2016), available at


If you have questions or require further assistance regarding the information contained in this Legal Alert and the impact on your organization, please contact Susan A. Benz, Co-Chair of the Barclay Damon Health Care & Human Services Practice Area at or Melissa M. Zambri, Co-Chair of the Barclay Damon Health Care and Human Services Practice Area at


Click here to sign up for alerts, blog posts, and firm news.

Featured Media


CDPAP Providers Get First Look at the Future of CDPAP Without FIs


New York State Fiscal Year 2025 Budget: Implications for Employers Unpacked


Lab Providers Under Increased Scrutiny From Civil and Criminal Agencies for OTC COVID-19 Test Claims


NYS Appellate Court Dismisses Claim Based on Material Misrepresentations in Insurance Application


It's Not Over Yet. Turning Your Judgments Into Dollars.


Website Accessibility Lawsuits: Several "Tester" Plaintiffs—Danso, Martinez, Hedges, Thorne, Genwright, and Donet—Targeting Businesses in Recent Flurry of Lawsuits

We're Growing in DC!

We’re excited to announce Barclay Damon’s combination with Washington DC–based Shapiro, Lifschitz & Schram. SLS’s 10 lawyers, three paralegals, and four administrative staff will join Barclay Damon while maintaining their current office in DC’s central business district. Our clients will benefit from SLS’s corporate, real estate, finance, and construction litigation experience and national energy-industry profile, and their clients from our full range of services.

Read More

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out