Financing
The federal government and the states share responsibility for financing Medicaid. In fiscal year (FY) 2019, the federal share of Medicaid spending was 65 percent nationally. Funding for the nonfederal share of Medicaid comes from a variety of sources; at least 40 percent must be financed by the state and up to 60 percent may come from local governments. In state fiscal year 2018, 68 percent of funds came from state general revenues, 12 percent from local governments (including intergovernmental transfers and certified public expenditures), 17 percent from health care related taxes, and 4 percent from other sources (GAO 2020).
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Medicaid Financing
August 12, 2025
Since the Medicaid program was enacted as part of the Social Security Amendments of 1965 (P.L. 89-97), Medicaid financing has been a shared responsibility of the federal government and the states, with states receiving federal matching funds toward allowable state expenditures and each state administering its own program within federal guidelines. For most Medicaid service […]
Alternative Approaches to Federal Medicaid Financing
April 10, 2025
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 […]
Hospital Non-Disproportionate Share Hospital (DSH) Supplemental Payment and Directed Payment Targeting Analyses
February 27, 2025
Hospital spending is a strategic priority for MACPAC’s analytic work due to its substantial effect on overall Medicaid spending. Hospitals receive a complex array of Medicaid payments, including various types of supplemental payments, and payment mechanisms vary significantly across states. This session presents new information on supplemental payments, specifically non-DSH supplemental payments such as upper […]