Under the still-developing federal fiscal plan, which congressional leaders are targeting for final passage by July, Medicaid and related health care programs are expected to face reductions. Here, we assess ways that these budget cuts could affect Maryland’s State budget and its vulnerable residents.

Medicaid is a broad program that ensures low-income residents receive health care through a nationwide network, with costs split between the federal and state governments. Maryland’s Medicaid budget for the coming year, FY 2026, includes nearly $5 billion in State funds alone for Medicaid programs, with an allusion to the federal uncertainty embedded in the Governor’s Budget Highlights message:

The budget includes record State funding for Medicaid at $4.7 billion in FY 2025 and FY 2026, an increase of $1 billion or 26 percent since just FY 2023. The budget also includes $16 million for the Medicaid MD Primary Care Program as required for Maryland’s participation in AHEAD in FY 2026 and $8 million for expanded coverage for biomarkers as well as record funding of $51 million for Autism Waiver services. All of this represents substantial progress on critical healthcare services even in light of tough fiscal constraints and federal funding uncertainty for Medicaid. (emphasis added)

A full analysis of Medicaid and CHIP in Maryland is available on the Medicaid website.

An earlier Conduit Street article, Could Federal Medicaid Cuts Create a New $2 Billion Maryland Problem? delved into a speculative effect on Maryland, simply based on the overall magnitude of health care reductions embedded in a “framework” adopted by both chambers of the US Congress. Now, with more elements of a potential House of Representatives plan coming into focus, the elements of these effects are coming into further focus.

What Does the House Plan Include?

As of this morning (5/14/2025), the US Energy and Commerce Committee is still revising proposals on Medicaid. From Politico:

The work requirement proposal being considered would produce the biggest savings of any other policy in the House Energy and Commerce Committee’s draft bill, accounting for nearly $301 billion over a decade, according to a Congressional Budget Office estimate released by panel Republicans. That level of savings is even higher than many people had anticipated, indicating there would be significant uninsured rates as a result of the policy: The CBO estimated that the Medicaid portions would lead to 7.6 million people losing Medicaid benefits.

With legislative negotiations still underway, some elements of the House of Representatives’ plan have become public. The Washington Post offers this overview:

The text of the legislation, released Sunday night by the House committee that oversees health care, calls for new requirements for beneficiaries, including co-pays for those above 100 percent of the federal poverty level and work requirements for many able-bodied, childless adults. It also tightens up eligibility verification rules and cracks down on taxes states charge medical providers as a roundabout way of collecting more federal Medicaid dollars.

This approach is less across-the-board than a mere adjustment of the federal/state cost share for the entire program, but potentially hones in on certain facets of state-administered plans in Maryland and elsewhere.

The new work requirement creates a projection challenge for the federal legislation, requiring a forecast of how many current recipients would remain eligible. From a summary on the PBS website:

To be eligible for Medicaid, there would be new “community engagement requirements” of at least 80 hours per month of work, education or service for able-bodied adults without dependents. People would also have to verify their eligibility to be in the program twice a year, rather than just once.

A thorough summary of the Medicaid and related proposals “megabill” is also available on Politico.

Provider Taxes Capped (But Not Eliminated)

An element of specific importance to Maryland is a limitation on “provider taxes” used by multiple states, effectively seeking additional federal reimbursement. The current proposal in the House caps, but does not eliminate, the federal government’s payment toward those efforts.

It is not yet clear whether the limitation would place the cap at limits in place today, at the time of the bill’s passage, or some other date like the October 1, 2025, start of the next federal fiscal year. That question may be important for Maryland, which used an increased Medicaid provider tax as part of its own fiscal plan for FY26, totaling $150 million in additional federal funds.

Effects on the Number of Uninsured

An analysis made public by House Democrats illustrates a preliminary analysis from the Congressional Budget Office on the number of residents who would no longer have health insurance coverage under the revised Medicaid laws and related changes. That forecast suggests an additional 8 million people would be without coverage, as the collective effect of multiple components of the still-evolving plan. That number is atop an already “baseline” assumption of 5 million more uninsured arising from other laws scheduled to expire (premium tax credits supporting the Affordable Care Act) and not slated to be extended as part of the fiscal package underway.

The CBO analysis suggests that collective actions will result in ten-year savings of $912 billion.

No analysis by state, or specific to Maryland, has yet been assembled. Maryland is among the (many) states adopting a Medicaid expansion under the Affordable Care Act, and a change in the federal support for those costs may leave Maryland relatively more heavily affected than other states with comparable populations.

Timeline for Effects on Maryland

Federal action follows a less predictable route than that through our state legislature, where Maryland has a “single subject rule” forbidding all-purpose omnibus bills. Political leaders in Washington have spoken broadly of “one big beautiful bill” and have set goals for the final passage in July. If that comes together, Maryland agencies should have reasonable estimates of the effects on Maryland service recipients soon thereafter, and a sense of what actions may need to be taken to fund continued services or to account for a reduction in eligible residents.

This article is part of MACo’s Deep Dive series, where expert analysts explore and explain the top county issues of the day. A new article is added each week – read all of MACo’s Deep Dives.