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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Featured Publications
Comment Letter: Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments
July 21, 2026
In a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Memhet Oz, MACPAC offered comments on a notice of proposed rulemaking on Medicaid managed care state directed payments (SDPs) and fee-for-service (FFS) targeted practitioner payments.
The Commission supports efforts to ensure that Medicaid payments are consistent with the statutory principles of economy, efficiency, access, […]
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 […]