The new Donald Trump administration may soon force states to cut spending on services or raise taxes.

That's because the president-elect wants to overhaul the way the federal government pays for state-provided Medicaid health-care coverage.

Both Trump and House Speaker Paul Ryan have proposed giving states fixed payments called block grants instead of covering a share of the cost of delivering health care to low-income families.

"Trump's proposal to convert Medicaid funding into a block grant program would lead to much lower federal funding to states," according to a statement Thursday from Fitch Ratings, which tracks state finances for investors in municipal bonds.

Trump and congressional Republicans have also vowed to repeal the Affordable Care Act, which expanded the number of people who are covered by Medicaid, a program launched 50 years ago to provide health care for low-income families.



Even without a repeal of the ACA, President-elect Trump could use his executive power to let states opt out of federal guidelines, a choice the Obama administration rejected, according to Kaiser Health News. That could let states cut their costs by imposing work requirements for Medicaid coverage enrollees, charging monthly premiums and shifting other costs to families.

Medicaid spending hit $532 billion in fiscal 2015, with about 62 percent of that funded by the federal government, according to Kaiser Family Foundation data.



Those costs vary widely from one state to another. Alaska spent roughly $10,000 a year for each person enrolled in Medicaid, the highest in the country in 2011, according to the latest data available from the Kaiser Family Foundation. Nevada spent just $3,728, well below the U.S. average of $5,790, according to the data.