Financing the Medicaid program is a shared responsibility of the federal government and the states. As long as a state operates its program within federal requirements, it can receive federal matching funds toward allowable state expenditures. The federal share for most of these expenditures is determined by each state’s federal medical assistance percentage.
Some policymakers have expressed concerns about the growth and sustainability of Medicaid as spending has grown in both absolute and relative terms, and the program has become a larger share of federal and state budgets. Policymakers have previously considered several alternative approaches to federal financing of Medicaid aimed at reducing the future rate of growth in federal Medicaid spending.
Our latest Policy in Brief examines the alternative approaches and policy design considerations that the Commission has previously explored on federal Medicaid financing.