Medicaid financing is a shared responsibility of the federal government and the states, with states receiving federal matching funds toward allowable state expenditures. For most Medicaid expenditures, the state share of costs is determined by each state’s federal medical assistance percentage (FMAP), which is determined each year based on a state’s per capita income relative to the national average.
To better understand how state financing methods may affect the federal share of Medicaid spending, MACPAC reviewed state policies in 10 states to develop a range of assumptions that could be applied to national Medicaid spending and financing data. Previously, we applied these assumptions to state fiscal year (SFY) 2012 spending and financing, and we estimated that the use of sources other than general revenue increased the federal share of Medicaid spending by about 5 percentage points, from 57 percent to 62 percent (MACPAC 2017).
In this brief, we apply our earlier range of assumptions to newly available data for SFY 2018 from the U.S. Government Accountability Office. Overall, we find a similar effect: after accounting for use of legally permissible sources other than general revenues, we estimate that the federal share of Medicaid spending increased by about 5 percentage points, from 63 percent to 68 percent in SFY 2018.
