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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Health Care-Related Taxes in Medicaid
Under the Medicaid statute, states may generate their share of Medicaid expenditures through multiple sources, including health care-related taxes, sometimes referred to as provider taxes, fees, or assessments. Health care-related taxes have become a more common funding source for state Medicaid programs over the past 15 years, with 49 states and the District of Columbia […]
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Considerations for Countercyclical Financing Adjustments in Medicaid
Medicaid is a countercyclical program; that is, enrollment and spending increase when a downturn in the economic cycle leads to rising unemployment, people losing employer-sponsored insurance, and concurrent growth in the low-income population. In early 2020, when the rapid spread of the novel coronavirus led to declaration of a national emergency and a swift economic […]
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The Impact of State Approaches to Medicaid Financing on Federal Medicaid Spending
Medicaid financing is a shared responsibility of the federal government and the states, with states receiving federal matching funds toward allowable state expenditures. The Medicaid statute permits states to raise their share of Medicaid expenditures through multiple sources, including state general revenue, contributions from local governments, and health care-related taxes. Because federal contributions match state […]
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