Why exactly should I trust you over the CBO here?
Because they are dumb and I am not.
Besides, initially you were arguing that states literally couldn't drop provisions or eligibility in response to a federal shortfall. This argument-- that "rationally" they could but empirically they haven't so far-- is a substantial departure and hardly inspiring much confidence.
What they can't do is not cover the difference. Whatever the shortfall between total cost and federal spending, the states have to cover it. If someone on Medicaid is treated for something and Medicaid is billed $100, and the FMAP is 90%, the federal government gives the state $90 for that treatment and the state covers the last $10. If that FMAP drops to 80%, instead DC sends $80 and the state has to cover the last $20. They have to. It has to be 100% funded, the state has to cover whatever the difference is.
If the state imagines "ok, we lost $10 of federal funding, so we'll just drop our payment rate to the doctor by that amount", it doesn't work out, cause if they charge $90, now the federal government covers $72 and the state still pays $18. The percentage is locked, they can't escape it. If they wanted to not increase state spending at all, they'd have to drop the payment to $50, at which point they doctor isn't agreeing to treat it and the state is violating federal Medicaid standards. Even if they could do that, they'd be giving up $4 of federal money into their state for every $1 saved in their coffers, some of which is gained by state taxes downstream of those federal dollars, and the state still ends up in a worse financial situation than if they just funded the extra 10% themselves.
This is a big part of why the costs of medical care in the US are so screwed up: the federal government through medicare and medicaid pays for things almost universally as a percentage of the total. They don't say "we pay X amount to treat a broken arm", rather they say "we pay X% of whatever it costs to treat a broken arm", and that situation creates financial incentives towards inefficiency. In the imaginary scenario where increased economic activity downstream of healthcare resulted in $0.11 of tax revenue for each $1 spent, a state can actually generate funds for itself long term by negotiating worse terms with healthcare providers for expansion recipients because the federal spending is worth more than the additional cost. Similarly, the ACA told healthcare companies they could only profit a certain percent, which gives them a financial incentive to increase the costs they are paying. The whole incentive structure is flipped upside-down. The economic incentive structure built by Medicare and Medicaid makes it economically detrimental to states and providers downstream to be tightly budgeted or cost efficient.