Medicaid Financing: How the FMAP Formula Works and Why It Falls Short

Authors

Christie Provost Peters, George Washington University

Document Type

Issue Brief

Publication Date

12-11-2008

Abstract

Medicaid costs for health and long-term care services for low-income individuals are substantial. As a result, each state’s “match rate,” or federal medical assistance percentage (FMAP), which determines the share of Medicaid benefit costs the federal government pays, has enormous implications for state budgets and state economies, as well as for Medicaid beneficiaries and providers. Shifts in the FMAP from year to year, even minor ones, can mean the gain or loss of tens or hundreds of millions of federal matching dollars, depending on the size of the state’s Medicaid program. This paper explains the FMAP formula, examines the limitations of this method for distributing federal Medicaid financing, and highlights options to address the formula’s shortcomings.

Comments

Issue brief no. 828

Recommended Citation

Peters, Christie Provost, "Medicaid Financing: How the FMAP Formula Works and Why It Falls Short" (2008). National Health Policy Forum. Paper 206.
https://hsrc.himmelfarb.gwu.edu/sphhs_centers_nhpf/206

Open Access

yes