As congressional Republicans consider massive Medicaid cuts, state officials indicated that a proposal to strip away a federal matching rate for a large group of low-income people could lead to a nearly $1.9 billion revenue loss for Nevada over the next two years. 

The group became eligible for coverage under the expanded Medicaid program a decade ago during President Barack Obama's administration. Assembly Speaker Steve Yeager (D-Las Vegas) said Thursday that the state could not afford to make up the difference if the federal government ended its substantial contributions toward the coverage, meaning Nevadans in the “expansion population” would likely lose their Medicaid benefits.

The details about the revenue loss came Wednesday in response to top state Senate Democrats’ queries about the effects potential Medicaid cuts would have on the state. Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) noted during a meeting in early February that the state has to be prepared if the Trump administration cuts Medicaid, which serves 1 in 4 Nevadans — 800,000 people.

“Cutting those services would be extremely detrimental,” Cannizzaro said. “Should that happen outside of a legislative session, [that would put this body] into a place where we would have to come back into this building to cut significantly budgets that we have, because that federal funding is incredibly important to how it is that we are providing those services.”

State lawmakers will meet next Wednesday to discuss the proposed cuts. 

Republican President Donald Trump’s stance on Medicaid cuts is unclear. He had promised his administration would not cut Social Security, Medicare and Medicaid, but later endorsed a House budget proposal Wednesday that would likely lead to $880 billion in cuts to Medicaid, though specific details on the cuts are still being considered. 

Rep. Steven Horsford (D-NV) delivered an address to lawmakers Wednesday raising the alarm on the proposed Medicaid cuts by House Republicans and the downstream effect on the state's budget.

He shared a personal story about his grandmother, Grace Dorothy, who didn’t have private insurance and received care at a nursing home thanks to Medicaid. When the program had reductions or cutbacks, he said it negatively affected her health and the quality of care she received while increasing stress on his family.

"We can’t afford the capital costs – and we can’t afford the human toll either," he said about the proposed cuts.

The federal government covers 90 percent of the costs of Medicaid for the “expansion population,” but one Republican proposal under consideration would drop that federal support to the state’s usual federal matching Medicaid rate, which for Nevada hovers around 60 percent. 

If that happens, and if Nevada were to drop coverage for people insured through the expansion in response, about 312,000 Nevadans would be disenrolled in the next nine years — a roughly 42 percent enrollment decrease, reporting from health care policy group KFF indicates.

The KFF analysis also shows that if Nevada picked up the expansion expenses currently paid by the federal government, it would cost the state an additional $6.7 billion over a roughly nine-year period, or about $670 million yearly. For comparison, the state is expected to bring in a bit more than $12 billion in revenue in the next two years.

Yeager said Thursday there’s likely no money in the state budget to keep the Medicaid expansion population covered if the expansion rate is stripped away.

“We’d have to pull funding from education. We’d have to pull funding from every other state agency. We don't have a printing press in the basement where we can print money,” Yeager said. “I think we would be in a very untenable situation of having to cut services, and I don't know how we would do that.”

The Affordable Care Act allowed states to expand eligibility for their Medicaid programs to cover nearly all low-income Americans — previously, it had focused on children, pregnant women and people with disabilities — and the federal government footed nearly all of the bill to cover those who were newly qualified. 

Former Nevada Gov. Brian Sandoval was the first Republican governor to expand Medicaid. In a 2023 interview, he said he did so because he had a “fiduciary duty to the people of my state.”

“At that time, we went from 200,000 to 600,000 people that had coverage, and now it's over 900,000,” Sandoval said. “So there are a lot of individuals in the state that have coverage that would not otherwise have it.”

After Nevada expanded Medicaid in 2014, its uninsured rate dropped from 22 percent in 2012 to 12 percent in 2015, and it saw the largest percentage point decline in its rate of uninsured children, which dropped from 14.9 percent in 2013 to 7.6 percent in 2015.

The response letter from the head of the Department of Health and Human Services said that if a floor for the federal share of Medicaid expenditures was removed (one of the other options Republicans are weighing), there would be little impact on the state’s share of funding. State officials acknowledged that funding for children’s behavioral health care may need reevaluation, raising questions about the state’s ability to comply with federal law and carry out a planned overhaul of a children’s behavioral health system that ranks last in the nation.

“It is very difficult at this time to determine coverage losses in Medicaid without more information about the actual proposals being considered to meet federal spending reduction targets,” Health and Human Services Director Richard Whitley wrote in the letter. “The Department will continue to monitor the developments at the federal level and ensure that the Legislature and Governor have the information necessary to make informed decisions for the state budget.”

The federal expenditures in Nevada are determined by a rate calculated state by state through a formula referred to as FMAP (Federal Medical Assistance Percentages) that takes into account a state’s per capita income compared with the national average. The congressional proposal that’s being weighed would reduce the FMAP of 90 percent for the expansion population to the state’s current rate for the pre-expansion population of about 60 percent, saving the federal government an estimated $561 billion over a 10-year period.

Under current policy, the federal government pays a fixed percentage of each state’s Medicaid spending, covering unexpected and expected costs. 

As congressional Republicans weigh another proposal in which the federal government sets a per-capita limit on how much it will pay for Medicaid, Whitley said there would be no direct impact on the state budget except for on behavioral health services funded by the private hospital tax passed during the 2023 legislative session.

Whitley said providers within the private hospital tax program — private hospitals and skilled nursing homes — would likely receive lower supplemental payments because there would be less tax revenue available for the state to match with federal funds.

One big question surrounds funding for behavioral health care stemming from the provider tax. About 15 percent of revenue from the expanded tax on hospitals, sometimes referred to as a provider fee, will be put toward overhauling the state’s behavioral health care system as part of an effort to meet the requirements of a settlement agreement with the Department of Justice. Officials said the money would “transform” the state’s behavioral health care system for children in foster care and with significant behavioral health needs; federal officials had concluded in a 2022 investigation that Nevada’s system was so inadequate it likely violated the Americans with Disabilities Act.

The letter noted that in the state’s agreement, there is a provision acknowledging the state’s budgets have been structured to depend on federal funding obligations through Medicaid health coverage for children. If financial situations change, including through the federal Medicaid program, the agreement stipulates that all parties would need to consider modifications.

This story was updated on 2/20/2025 at 1:46 p.m. to include a statement from Assembly Speaker Steve Yeager.