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
Hospital Cost Drivers: Literature Review Findings
October 29, 2026
Staff summarized findings from a literature review on factors that drive hospital costs. MACPAC discussed the Medicaid payment methodologies used for inpatient and outpatient hospital services and clarified the distinction between hospital cost, defined as the resources that hospitals expend to provide care, and Medicaid hospital spending, defined as the payments Medicaid makes for those […]
State Directed Payment and Provider Tax Proposed Rule
September 24, 2026
In this session, staff presented a summary of two proposed rules from the Centers for Medicare & Medicaid Services to implement statutory limits on state directed payments (SDPs) and health care-related taxes (provider taxes) pursuant to the 2025 Budget Reconciliation Act. The proposed SDP rule implements the Medicare-based payment limit applicable to new SDPs. In […]
Comment Letter: Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes
September 21, 2026
In a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator, Dr. Mehmet Oz, MACPAC commented on a recently proposed rule to amend the indirect hold harmless threshold of health care-related taxes. The proposed rule (1) revises the indirect hold harmless threshold, often referred to as the safe harbor threshold, for determining whether an […]