These estimates are based on Kaiser Family Foundation analysis. We combined data from a variety of sources to develop a baseline of future Medicaid enrollment and spending by state and future federal spending by state for marketplace premium tax credits, cost sharing reductions, and Basic Health Program coverage under current law. We then applied the policy changes in the proposal—specifically, the replacement of federal ACA coverage funds with a state block grant program and the use of a per enrollee cap on federal funds for traditional beneficiaries—to project future spending under the proposal and compare these estimates to our baseline. These estimates assume that states make no other policy changes other than those explicitly modeled. They therefore differ from estimates from the Congressional Budget Office (CBO). CBO also must account for all provisions in the legislation and make estimates about how the Secretary will respond to discretion to implement various provisions as well as how states and individuals will respond to changes in the law that are not incorporated into our estimates. Our estimates for changes in federal spending nationally may differ from those released by CBO for a variety of other reasons. Our estimates are based on the most currently available data for federal spending on the Medicaid expansion and marketplace subsidies. Because the Congressional debate is in the context of a fiscal year 2017 budget resolution, CBO uses its March 2016 baseline to score health reform proposals, and this baseline is not adjusted for more recent data. CBO assumes that some additional states would expand Medicaid in future years under current law, while our estimates are based on current state Medicaid expansion decisions. Baseline Medicaid Enrollment and Spending. We generated estimates of Medicaid enrollment and spending for full-benefit enrollees in FY2016 based on Kaiser Family Foundation analysis of the FY2015 Medicaid Statistical Information System (MSIS). We adjusted MSIS spending to CMS-64 spending to account for MSIS undercounts of spending. Because FY2015 MSIS data were missing some or all quarters for some states, we also adjusted the enrollment data using secondary data to represent a full fiscal year of enrollment. We accounted for a state’s expansion status, the number of quarters of missing data, and the state’s historical patterns of spending and enrollment in making state-by-state adjustments, using similar methods we used for estimates for earlier years. Because MSIS does not identify adults who are eligible through the ACA expansion versus pre-ACA pathways, we used the FY2015 Medicaid Budget and Expenditure System (MBES) data to break out enrollment and spending for Group VIII (ACA expansion) enrollees. We then inflated to FY2016 based on the CMS Office of the Actuary (OACT) estimates of annual changes in enrollment and spending by eligibility group, with the exception of enrollment for Group VIII, which was obtained from the available FY2016 MBES data. In some cases (e.g., states that expanded after FY2015), we made state-specific adjustments to the data. We used the FY2016 base year data to project future Medicaid enrollment and spending by eligibility group. Because there is uncertainty around future growth rates in Medicaid and estimates vary widely, we used the average of OACT and Congressional Budget Office (CBO) predictions of future growth in Medicaid enrollment and spending per enrollee by eligibility group. We applied the same growth rates to all states. We calculated the federal/state split in spending by enrollment group for each year based on the relevant FMAP for the eligibility group and year. For non-expansion groups, we used the most recent FMAPs available (FY2018) for all years; for expansion groups, we used the FMAPs for each year as specified under current law, though we did not account for differential match rates for Group VIII enrollees who are not newly eligible and may qualify for a different match rate. Since these projections use national data and uniform growth rates, individual state estimates may have more detailed data. Baseline Marketplace Spending. We estimated state-level federal spending for advanced premium tax credits (APTCs) for individual coverage through the marketplace based on data reflecting February 2017 effectuated enrollment and average APTCs publicly-available from CMS. Cost-sharing reduction (CSR) payments are based on data by county from CMS for healthcare.gov states, trended forward to 2017. For state-based exchanges, we assumed for each state that CSR payments represent the same percentage of average APTCs as that for healthcare.gov states. We included federal payments for Basic Health Programs for 2017 based on federal spending estimates from CBO, apportioned by state based on enrollment data from CMS. We then projected future total spending for APTCs, CSRs, and BHP based on growth rates from CBO projections of future spending for the sum of these provisions, using the latest CBO report of federal subsidies for health insurance coverage. We assumed that marketplace APTCs and CSRs for Alaska do not grow from 2017 to 2018, since that state is implementing a reinsurance program under an ACA waiver. Premiums are expected to drop in Alaska, lowering APTC amounts, but the federal government is also providing pass-through payments to the state under the waiver. Based on data included in the federal government’s approval letter for the waiver, we assume those amounts are offsetting. Federal Spending Under Proposed Bill. Market Based Block Grant Program: We used our estimates of 2017 federal spending for marketplace payments and ACA Medicaid expansion payments. For marketplace payments, we inflated 2017 to 2019 based on CBO projections of CPI-M; for Medicaid payments, we inflated 2017 to 2019 based on CPI-M as the inflations factor specified in the bill were not clear. We used the sum of federal marketplace and Medicaid expansion payments for 2019 to estimate state block grant allocations within the total federal allocation starting in 2020 as specified in the bill: 2020 allocations are based on actual state amounts, prorated up to the US total; 2026 allocations are based on the US total distributed across states according to the state’s share of legal resident population with income between 50% and 138% of poverty; and 2021-2025 are allocated by the difference between the state’s 2020 and 2026 allocations divided by six. Because 2020 actual spending was below the total US allocation, we shifted the $10 billion reserve fund to spending in 2026 as specified in the bill. While it would not affect the block grant allocations, the bill includes another provision that would eliminate Medicaid DSH reductions for 2021-2025 and provide for a one-time DSH increase in 2026 for states that experience “grant shortfalls.” We do not estimate the potential offset of the DSH policy due to limited data on future DSH allocations and cuts across states. Medicaid Per Enrollee Cap: Our estimates of spending under the proposal to use a per enrollee cap first inflate FY2016 per enrollee spending to FY2019 based on CPI-M as specified in the bill. For FY2020 and on, we apply limits in growth in per enrollee spending as specified in the bill: from FY2020-2024, per enrollee growth is limited to CPI-M for adults and children and CPI-M+1 for aged and disabled; from FY2025 on, per enrollee growth is limited to CPI-U for adults and children and CPI-M for the aged and disabled. We use estimates of CPI-M and CPI-U from the CBO., We calculate the federal/state split in spending based on the most recent FMAPs available (FY2018) for all years. We assume no changes in Medicaid enrollment other than those explicitly modeled and calculate the difference in federal spending compared to the baseline. We exempt Alaska and Montana from the per enrollee cap because these states meet the rules for exemption (based on their block grant allotments) specified in the bill.