Order Code RS22333
November 28, 2005
CRS Report for Congress
Received through the CRS Web
Budget Reconciliation FY2006: Provisions
Affecting the Medicaid Federal Medical
Assistance Percentage (FMAP)
April Grady
Analyst in Social Legislation
Domestic Social Policy Division
Summary
The federal medical assistance percentage (FMAP) is the rate at which states are
reimbursed for most Medicaid service expenditures. The FY2006 budget reconciliation
bills passed by the House (H.R. 4241) and Senate (S. 1932) include provisions that
would affect state FMAPs for Medicaid in a number of ways. This report describes
these provisions and estimates their impact on FY2006 FMAPs. It will be updated as
legislative activity warrants.
Background
The federal medical assistance percentage (FMAP) is the rate at which states are
reimbursed for most Medicaid service expenditures. It is based on a formula that provides
higher reimbursement to states with lower per capita incomes relative to the national
average (and vice versa); it has a statutory minimum of 50% and maximum of 83%.1 An
enhanced FMAP is available for both services and administration under the State
Children’s Health Insurance Program (SCHIP), subject to the availability of funds from
a state’s SCHIP allotment.2
When FMAPs are calculated by the Department of Health and Human Services
(HHS) for an upcoming fiscal year (usually in the preceding November), the state and
U.S. per capita personal income amounts used in the formula are equal to the average of
the three most recent calendar years of data available from the Department of
Commerce’s Bureau of Economic Analysis (BEA). For example, to calculate FMAPs for
FY2006, HHS used per capita personal income data for 2001, 2002, and 2003 that became
available from BEA in October 2004.
1 For more detailed information, see CRS Report RL32950, Medicaid: The Federal Medical
Assistance Percentage (FMAP), by Christine Scott.
2 The impact of reconciliation provisions on SCHIP FMAPs is not addressed in this report.
Congressional Research Service ˜ The Library of Congress

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CRS-2
BEA revises its most recent estimates of state per capita personal income on an
annual basis to incorporate revised Census Bureau population figures and newly available
source data. It also undertakes a comprehensive data revision — reflecting
methodological and other changes — every few years that may result in upward and
downward revisions to each of the component parts of personal income, which include:
! wages and salaries;
! supplements to wages and salaries (such as employer contributions for
employee pension and insurance funds);
! proprietors’ income; and
! dividends, interest, and rent.
As a result of these annual and comprehensive revisions, it is often the case that the
value of a state’s per capita personal income for a given year will change over time. For
example, the 2001 per capita personal income data published by BEA in October 2003
(used in the calculation of FY2005 FMAPs) differed from the 2001 per capita personal
income published in October 2004 (used in the calculation of FY2006 FMAPs).
Reconciliation Proposals
In the FY2006 budget resolution adopted by the House and Senate on April 28, 2005
(H.Con.Res. 95), reconciliation instructions directed the two committees with jurisdiction
over Medicaid to reduce mandatory FY2006-FY2010 outlays by $10 billion (Senate
Finance) and $14.734 billion (House Energy and Commerce). While the budget
resolution did not instruct the two committees on how to achieve these savings targets,
Medicaid is one of the larger mandatory spending programs that falls under their
jurisdictions.3
On November 3, 2005, the Senate approved a budget reconciliation bill (S. 1932)
that proposes changes to various aspects of the Medicaid program. It includes FMAP
provisions that would:
! temporarily increase FMAPs for states affected by Hurricane Katrina;
! prevent FY2006 and FY2007 FMAPs for Alaska from falling below the
state’s FY2005 level; and
! limit FY2006 FMAP reductions for all states.
The House reconciliation bill (H.R. 4241) passed on November 18, 2005, also
includes FMAP provisions that would:
! temporarily increase FMAPs for states affected by Hurricane Katrina;
! exclude certain Hurricane Katrina evacuees and their income for
purposes of calculating state FMAPs; and
! disregard employer contributions toward pensions in the calculation of
FMAPs if they exceed a certain threshold.
3 For more information on Medicaid and budget reconciliation, see CRS Report RL33131, Budget
Reconciliation FY2006: Medicaid, Medicare, and State Children’s Health Insurance Provisions,
by Evelyne Baumrucker et al.

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CRS-3
Table 1 provides more information on these provisions. Table 2 shows the
estimated impact of selected provisions on FY2006 FMAPs.
Table 1. FY2006 Budget Reconciliation Provisions
Affecting Medicaid FMAPs
FMAP provision
S. 1932
H.R. 4241
Increase for
Section 6032. For items and services
Section 3021. For items and services
Katrina relief
furnished during the period of August
furnished during the period of August
28, 2005 through May 15, 2006, states
28, 2005 through May 15, 2006, states
wo ul d receive 100% FMAP
wo ul d receive 100% FMAP
reimbursement for Medicaid and
reimbursement for Medicaid and
SCHIP assistance provided to
SCHIP assistance provided to (1) any
individuals who resided during the
individual residing in a parish of
week preceding Hurricane Katrina in
Louisiana, a county of Mississippi, or a
one of the parishes of Louisiana or
major disaster county of Alabama and
counties of Mississippi and Alabama
(2) individuals who resided during the
specified in the bill. Costs directly
week preceding Hurricane Katrina in a
attributable to related administrative
parish or county for which a major
activities would also be reimbursed at
disaster has been declared as a result of
100%.a
the hurricane and for which the
President has determined, as of
September 14, 2005, that individual
assistance under the Stafford Act is
warranted. Costs directly attributable
to related administrative activities
would also be reimbursed at 100%.b
Adjustment
No provision.
Section 3205. In computing FMAPs
related to
for Medicaid and SCHIP for any year
Hurricane Katrina
after 2006 for a state that the Secretary
evacuees
of HHS determines has a significant
number of individuals who were
evacuated to and live in the state as a
result of Hurricane Katrina as of
October 1, 2005, the Secretary of HHS
would disregard such evacuees and
their incomes.c
Alaska
Section 6032. If Alaska’s calculated
No provision.
FMAP for FY2006 or FY2007 is less
than its FY2005 FMAP, the FY2005
FMAP would apply.
Limitation on
Section 6037. FY2006 FMAPs would
No provision.
FY2006 reduction
be re-computed so that no FY2006
FMAP would be less than the greater of
(1) a state’s FY2005 FMAP minus 0.5
percentage points (0.1 in the case of
Delaware and Michigan, 0.3 in the case
of Kentucky), or (2) the FY2006
FMAP that would have been
determined for a state if per capita
incomes for 2001 and 2002 that were
used to calculate the state’s FY2005
FMAP were used.

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CRS-4
FMAP provision
S. 1932
H.R. 4241
Employer pension
No provision.
Section 3148. For purposes of
contributions
computing state FMAPs beginning with
FY2006, employer contributions
toward pensions would be disregarded
in computing a state’s per capita
income (but not U.S. per capita
income) if they exceed 50% of the
state’s total increase in personal income
for a period.
Source: Congressional Research Service.
Note: S. 1932 passed the Senate on November 3, 2005. H.R. 4241 passed the House on November 18,
2005.
a. The parishes (31 in Louisiana) and counties (47 in Mississippi, 11 in Alabama) specified in the bill
appear to be those that had been designated for individual assistance following Hurricane Katrina as
of the date the Senate Finance Committee approved its reconciliation proposal (October 25, 2005).
On October 27, two additional counties in Mississippi were designated for individual assistance.
These counties are not listed in the bill.
b. According to Federal Register notices from the Federal Emergency Management Agency (FEMA), 31
parishes in Louisiana, 47 counties in Mississippi, and 10 counties in Alabama had been designated
for individual assistance following Hurricane Katrina as of September 14, 2005.
c. It is unclear whether the intent of this provision (described in the bill as “FMAP hold harmless for
Katrina impact”) is to prevent both increases and decreases in state FMAPs that may result from the
presence of Hurricane Katrina evacuees. States with lower per capita incomes relative to the national
average receive higher FMAPs (and vice versa). In theory, if Hurricane Katrina evacuees have low
incomes, they could have a dampening effect on a state’s per capita income, which could serve to
increase the state’s FMAP. As written, the provision would require evacuees and their incomes to
be disregarded even if their inclusion would increase a state’s FMAP.

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CRS-5
Table 2. Medicaid FMAPs Under Current Law
and Under Selected Provisions of S. 1932 and H.R. 4241
FMAP under Section
FMAP under
3148 of H.R. 4241
Section 6037 of S.
(disregard of
Medicaid FMAP under current law
1932 (limitation on
extraordinary
FY2006 reduction)a
employer pension
State
contribution)b
Estimated
Estimated
FY05-
FY06-
change
change
FY07
FY06
FY07
FY06
FY06
FY05 FY06
from
from
estimatec actual estimated estimate
estimate
current
current
change
changec
law
law
Alabama
70.83 69.51
68.85
-1.32
-0.66
70.33
0.82
69.51
0.00
Alaskad
57.58 50.16
51.07
-7.42
0.91
57.08
6.92
50.16
0.00
Arizona
67.45 66.98
66.47
-0.47
-0.51
67.35
0.37
66.98
0.00
Arkansas
74.75 73.77
73.37
-0.98
-0.40
74.25
0.48
73.77
0.00
California
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Colorado
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Connecticut
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Delaware
50.38 50.09
50.00
-0.29
-0.09
50.28
0.19
50.11
0.02
District of
70.00 70.00
70.00
0.00
0.00
70.00
0.00
70.00
0.00
Columbia
Florida
58.90 58.89
58.76
-0.01
-0.13
58.92
0.03
58.89
0.00
Georgia
60.44 60.60
61.97
0.16
1.37
60.84
0.24
60.60
0.00
Hawaii
58.47 58.81
57.55
0.34
-1.26
58.81
0.00
58.81
0.00
Idaho
70.62 69.91
70.36
-0.71
0.45
70.44
0.53
69.91
0.00
Illinois
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Indiana
62.78 62.98
62.61
0.20
-0.37
62.98
0.00
63.04
0.06
Iowa
63.55 63.61
61.98
0.06
-1.63
63.61
0.00
63.61
0.00
Kansas
61.01 60.41
60.25
-0.60
-0.16
60.54
0.13
60.56
0.15
Kentucky
69.60 69.26
69.58
-0.34
0.32
69.30
0.04
69.26
0.00
Louisiana
71.04 69.79
69.69
-1.25
-0.10
70.54
0.75
69.79
0.00
Maine
64.89 62.90
63.27
-1.99
0.37
64.39
1.49
62.90
0.00
Maryland
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Massachusetts 50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Michigan
56.71 56.59
56.38
-0.12
-0.21
56.61
0.02
56.88
0.29
Minnesota
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Mississippi
77.08 76.00
75.89
-1.08
-0.11
76.58
0.58
76.00
0.00
Missouri
61.15 61.93
61.60
0.78
-0.33
61.93
0.00
61.93
0.00
Montana
71.90 70.54
69.11
-1.36
-1.43
71.40
0.86
70.60
0.06
Nebraska
59.64 59.68
57.93
0.04
-1.75
59.68
0.00
59.82
0.14
Nevada
55.90 54.76
53.93
-1.14
-0.83
55.89
1.13
54.76
0.00
New
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Hampshire
New Jersey
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
New Mexico
74.30 71.15
71.93
-3.15
0.78
73.80
2.65
71.15
0.00
New York
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
North
63.63 63.49
64.52
-0.14
1.03
63.77
0.28
63.50
0.01
Carolina
North Dakota
67.49 65.85
64.72
-1.64
-1.13
66.99
1.14
65.87
0.02
Ohio
59.68 59.88
59.66
0.20
-0.22
59.88
0.00
59.92
0.04

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CRS-6
FMAP under Section
FMAP under
3148 of H.R. 4241
Section 6037 of S.
(disregard of
Medicaid FMAP under current law
1932 (limitation on
extraordinary
FY2006 reduction)a
employer pension
State
contribution)b
Estimated
Estimated
FY05-
FY06-
change
change
FY07
FY06
FY07
FY06
FY06
FY05 FY06
from
from
estimatec actual estimated estimate
estimate
current
current
change
changec
law
law
Oklahoma
70.18 67.91
68.14
-2.27
0.23
69.68
1.77
67.91
0.00
Oregon
61.12 61.57
61.07
0.45
-0.50
61.67
0.10
61.57
0.00
Pennsylvania
53.84 55.05
54.39
1.21
-0.66
55.05
0.00
55.05
0.00
Rhode Island
55.38 54.45
52.35
-0.93
-2.10
54.88
0.43
54.45
0.00
South
69.89 69.32
69.54
-0.57
0.22
69.46
0.14
69.32
0.00
Carolina
South Dakota
66.03 65.07
62.92
-0.96
-2.15
65.53
0.46
65.07
0.00
Tennessee
64.81 63.99
63.65
-0.82
-0.34
64.31
0.32
63.99
0.00
Texas
60.87 60.66
60.78
-0.21
0.12
61.32
0.66
60.83
0.17
Utah
72.14 70.76
70.14
-1.38
-0.62
71.77
1.01
70.76
0.00
Vermont
60.11 58.49
58.93
-1.62
0.44
59.61
1.12
58.49
0.00
Virginia
50.00 50.00
50.00
0.00
0.00
50.00
0.00
50.00
0.00
Washington
50.00 50.00
50.12
0.00
0.12
50.00
0.00
50.00
0.00
West Virginia 74.65 72.99
72.82
-1.66
-0.17
74.15
1.16
72.99
0.00
Wisconsin
58.32 57.65
57.47
-0.67
-0.18
57.82
0.17
57.65
0.00
Wyoming
57.90 54.23
52.91
-3.67
-1.32
57.40
3.17
54.23
0.00
Source: FY2005-FY2006 actual FMAPs were obtained from Department of Health and Human Services
(HHS) notices published in the Federal Register. Other figures are Congressional Research Service
estimates based on analysis of data from the Department of Commerce’s Bureau of Economic Analysis
(BEA), State and Regional Tables (Oct. 2003) and State Personal Income (Oct. 2004 and Oct. 2005) and
personal communication with BEA.
Note: Provisions affecting FMAPs for Alaska and states affected by Hurricane Katrina are not shown. See
Table 1 for more information.
a. Among the 31 states with an FY2006 FMAP increase under this provision, 11 (AZ, GA, HI, ID, KS, NV,
NC, OR, SC, TX, and UT) benefit most from the use of 2001 and 2002 per capita incomes used to
calculate the state’s FY2005 FMAP (i.e., 2001 and 2002 amounts that were available prior to BEA’s
most recent data revisions). The remaining 20 states have a higher FY2006 FMAP under the
provision language that limits FY2006 FMAP reductions to 0.5 percentage points (0.1 in the case of
DE and MI, 0.3 in the case of KY).
b. As the bill language reads, aggregate employer contributions toward pensions would be disregarded if
they exceed 50% of a state’s total increase in personal income. However, the table figures assume
that the intent of the provision is to disregard increases in such contributions. The figures also
provide an overestimate of the provision’s impact on FMAPs because they include employer
contributions for both pension and insurance (health, life, etc.) funds, which cannot be identified
separately from each other in state-level BEA data. Calculations are based on changes in employer
contributions and total personal income for 2001-2002 and 2002-2003 (i.e., the three years of data
used by HHS to calculate FY2006 FMAPs). Due to BEA revisions, comparable 2000 data required
to calculate 2000-2001 changes are not available. As a result, the calculations disregard
“extraordinary” employer contributions in 2002 and 2003, but not in 2001.
c. Actual FY2007 FMAPs have yet to be published by HHS. Estimates were calculated using October
2005 BEA data.
d. P.L. 106-554 (Consolidated Appropriations Act, 2001), provided that for FY2001-FY2005, Alaska’s
FMAP would be calculated using the state’s per capita income divided by 1.05. Dividing by 1.05
lowered the state’s per capita income, thereby increasing its FMAP.

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