The federal government and the states share responsibility for financing Medicaid. States receive federal matching funds for allowable state expenditures on an open-ended basis. As state spending increases or decreases, so does federal spending. When states experience circumstances such as unexpected variation in economic conditions on the health system and changes to federal policy, Medicaid’s flexibility allows states to incorporate program modifications that can affect coverage, benefit structure, and provider payment, among other considerations.
Our latest Policy in Brief looks at Medicaid’s share of state budgets and outlines options that states have to address spending growth through tools such as eligibility, benefits, provider payments, delivery systems, and program integrity.