ȱ
Ǳȱȱȱȱȱ
ȱǻǼȱ
ȱ ¢ȱ
¢ȱȱ ȱȱȱ
¢ȱŘǰȱŘŖŖşȱ
ȱȱȱ
ŝȬśŝŖŖȱ
ǯǯȱ
řŘşśŖȱ
ȱȱȱ
Pr
epared for Members and Committees of Congress

ǱȱȱȱȱȱȱǻǼȱ
ȱ
¢ȱ
Medicaid is a health insurance program jointly funded by the federal government and the states.
Generally, eligibility for Medicaid is limited to low-income children, pregnant women, parents of
dependent children, the elderly, and people with disabilities. The federal government’s share of a
state’s expenditures for most Medicaid services is called the federal medical assistance percentage
(FMAP).
Determined annually, the FMAP is designed so that the federal government pays a larger portion
of Medicaid costs in states with lower per capita income relative to the national average (and vice
versa for states with higher per capita incomes). For FY2008, FMAPs range from 50.00% to
76.29%. For FY2009, FMAPs range from 50.00% to 75.84%.
In recent years, the fiscal situation of the states has focused attention on Medicaid expenditures,
as well as on changes in the federal share, or FMAP. In the 108th Congress, the Jobs and Growth
Tax Relief Reconciliation Act of 2003 (JGTRRA, P.L. 108-27) provided temporary fiscal relief
for states and local governments through a combination of FMAP increases and direct grants. In
the 109th Congress, provisions to exclude certain Hurricane Katrina evacuees and their incomes
from FMAP calculations and prevent Alaska’s FY2006-FY2007 FMAPs from decreasing were
included in the Deficit Reduction Act of 2005 (P.L. 109-171). In the 110th Congress, a temporary
FMAP increase was included in economic stimulus legislation that was debated but not adopted
at the end of 2008.
In the 111th Congress, a temporary FMAP increase is currently under consideration in the House
and Senate as part of the American Recovery and Reinvestment Act of 2009. The House passed
its version as part of H.R. 1 on January 28, 2009. The Senate Finance Committee reported its own
version of a temporary FMAP increase on January 27, with consideration by the full Senate
expected the first week in February. Although the House-passed and Senate Finance versions are
broadly similar, they differ on the degree to which funds are targeted at states experiencing
unemployment rate increases and whether the temporary FMAP increase applies to expenditures
for individuals who are eligible for Medicaid because of an increase in a state’s income eligibility
standards. Preliminary estimates from the Congressional Budget Office indicate that over five
years, the House-passed version would increase federal spending by $87.7 billion and the Senate
Finance version would increase federal spending by $86.6 billion.

ȱȱȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
ȱ
Introduction ..................................................................................................................................... 1
The Federal Medical Assistance Percentage ................................................................................... 1
How FMAPs Are Calculated..................................................................................................... 1
Statutory Exceptions ................................................................................................................. 4
Data Used to Calculate State FMAPs ....................................................................................... 5
Factors That Influence FMAPs ................................................................................................. 5
Recent Issues and Legislation ......................................................................................................... 6
108th Congress........................................................................................................................... 6
109th Congress........................................................................................................................... 6
110th Congress ........................................................................................................................... 7
111th Congress ........................................................................................................................... 7
Temporary FMAP Increase ................................................................................................. 7
Exclusion of Certain Employer Contributions from FMAP Calculations ........................ 14

ȱ
Table 1. FY2003-FY2010 FMAPs, by State ................................................................................... 2
Table 2. Estimated Increase in FMAPs and Federal Medicaid Funding Under House-
passed Proposal, First Two Quarters of FY2009........................................................................ 10
Table 3. Estimated Increase in FMAPs and Federal Medicaid Funding Under Senate
Finance Proposal, First Two Quarters of FY2009...................................................................... 12

ȱ
Author Contact Information .......................................................................................................... 15

ȱȱȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
ȱ
Medicaid is a health insurance program jointly funded by the federal government and the states.
Although states have considerable flexibility to design and administer their Medicaid programs,
certain groups of individuals must be covered for certain categories of services. Generally,
eligibility is limited to low-income children, pregnant women, parents of dependent children, the
elderly, and people with disabilities. The federal government’s share of Medicaid costs for most
services is determined by a formula established in statute; states must contribute the remaining
portion of costs in order to qualify for federal funds.1
ȱȱȱȱȱ
The federal government’s share of most Medicaid service costs is determined by the federal
medical assistance percentage (FMAP), which varies by state and is determined by a formula set
in statute.2 Certain Medicaid services receive a higher federal match, including those provided
through an Indian Health Service facility, to certain women with breast or cervical cancer, for
family planning, or under the Qualifying Individuals program that pays Medicare Part B
premiums on behalf of certain Medicaid beneficiaries. For Medicaid administrative costs, the
federal share does not vary by state, and is generally 50%.3
An enhanced FMAP—not discussed in this report—is provided for both services and
administration under the State Children’s Health Insurance Program (SCHIP), subject to the
availability of funds from a state’s federal allotment for SCHIP. When a state expands its
Medicaid program using SCHIP funds, the enhanced FMAP applies and is paid out of the state’s
federal allotment until it is exhausted, at which point the regular FMAP applies and is paid out of
federal Medicaid funds.4
ȱȱȱȱ
The FMAP formula compares each state’s per capita income relative to U.S. per capita income,
and provides higher reimbursement to states with lower incomes (with a statutory maximum of
83%) and lower reimbursement to states with higher incomes (with a statutory minimum of 50%).
The formula for a given state is:
FMAPstate = 1 - ( (Per capita incomestate)2/(Per capita incomeU.S.)2 x 0.45)
The use of the 0.45 factor in the formula is designed to ensure that a state with per capita income
equal to the U.S. average receives an FMAP of 55% (i.e., state share of 45%). In addition, the

1 For a broader overview of financing issues, see CRS Report RS22849, Medicaid Financing, by April Grady.
2 The FMAP is also used in determining the federal share of certain child support enforcement collections, Temporary
Assistance for Needy Families (TANF) contingency funds, a portion of the Child Care and Development Fund
(CCDF), and foster care and adoption assistance under Title IV-E of the Social Security Act.
3 See CRS Report RS22101, State Medicaid Program Administration: A Brief Overview, by April Grady.
4 See CRS Report RL30473, State Children’s Health Insurance Program (SCHIP): A Brief Overview, by Elicia J. Herz,
Chris L. Peterson, and Evelyne P. Baumrucker.
ȱȱȱ
ŗȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
formula’s squaring of income provides higher FMAPs to states with below-average incomes than
they would otherwise receive (and vice versa).5
The Department of Health and Human Services (HHS) usually publishes FMAPs for an
upcoming fiscal year in the Federal Register in the preceding November. Thus, FMAPs for
FY2008 (the federal fiscal year that began on October 1, 2007) were calculated and published in
2006, and FMAPs for FY2009 were calculated and published in 2007. This time lag between
announcement and implementation provides an opportunity for states to adjust to FMAP changes,
but it also means that the per capita income amounts used to calculate FMAPs for a given fiscal
year are several years old by the time the FMAPs take effect.
Table 1 shows FMAPs for FY2003-FY2010.
Table 1. FY2003-FY2010 FMAPs, by State
FY03
FY03
FY04
FY04
first 2
last 2
first 3
last
State
quarters quartersa quartersa quarter FY05 FY06 FY07 FY08 FY09 FY10
Alabama
70.60 73.55 73.70 70.75 70.83 69.51 68.85 67.62 67.98 68.01
Alaskab
58.27 61.22 61.34 58.39 57.58 57.58 57.58 52.48 50.53 51.43
Arizona
67.25 70.20 70.21 67.26 67.45 66.98 66.47 66.20 65.77 65.75
Arkansas
74.28 77.23 77.62 74.67 74.75 73.77 73.37 72.94 72.81 72.78
California
50.00 54.35 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Colorado
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Connecticut
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Delaware
50.00 52.95 52.95 50.00 50.38 50.09 50.00 50.00 50.00 50.21
District
of
Columbia 70.00 72.95 72.95 70.00 70.00 70.00 70.00 70.00 70.00 70.00
Florida
58.83 61.78 61.88 58.93 58.90 58.89 58.76 56.83 55.40 54.98
Georgia
59.60 62.55 62.55 59.58 60.44 60.60 61.97 63.10 64.49 65.10
Hawaii
58.77 61.72 61.85 58.90 58.47 58.81 57.55 56.50 55.11 54.24
Idaho
70.96 73.97 73.91 70.46 70.62 69.91 70.36 69.87 69.77 69.40
Illinois
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.32 50.17
Indiana
61.97 64.99 65.27 62.32 62.78 62.98 62.61 62.69 64.26 65.93
Iowa
63.50 66.45 66.88 63.93 63.55 63.61 61.98 61.73 62.62 63.51
Kansas
60.15 63.15 63.77 60.82 61.01 60.41 60.25 59.43 60.08 60.38
Kentucky
69.89 72.89 73.04 70.09 69.60 69.26 69.58 69.78 70.13 70.96
Louisiana
71.28 74.23 74.58 71.63 71.04 69.79 69.69 72.47 71.31 67.61
Maine
66.22 69.53 69.17 66.01 64.89 62.90 63.27 63.31 64.41 64.99
Maryland
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Massachusetts
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Michigan
55.42 59.31 58.84 55.89 56.71 56.59 56.38 58.10 60.27 63.19
Minnesota
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Mississippi
76.62 79.57 80.03 77.08 77.08 76.00 75.89 76.29 75.84 75.67
Missouri
61.23 64.18 64.42 61.47 61.15 61.93 61.60 62.42 63.19 64.51
Montana
72.96 75.91 75.91 72.85 71.90 70.54 69.11 68.53 68.04 67.42

5 For example, in state A with an above-average per capita income of $42,000 compared to a U.S. per capita income of
$40,000, the FMAP formula produces an FMAP of 50.39%. In state B with a below-average per capita income of
$38,000 compared to a U.S. per capita income of $40,000, the FMAP formula produces an FMAP of 59.39%. If the
formula did not include a squaring of per capita income, it would instead produce FMAPs of 52.75% for state A (higher
than current law) and 57.25% for state B (lower than current law).
ȱȱȱ
Řȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
FY03
FY03
FY04
FY04
first 2
last 2
first 3
last
State
quarters quartersa quartersa quarter FY05 FY06 FY07 FY08 FY09 FY10
Nebraska
59.52 62.50 62.84 59.89 59.64 59.68 57.93 58.02 59.54 60.56
Nevada
52.39 55.34 57.88 54.93 55.90 54.76 53.93 52.64 50.00 50.16
New
Hampshire
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
New
Jersey
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
New
Mexico
74.56 77.51 77.80 74.85 74.30 71.15 71.93 71.04 70.88 71.35
New
York
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
North
Carolina
62.56 65.51 65.80 62.85 63.63 63.49 64.52 64.05 64.60 65.13
North
Dakota
68.36 72.82 71.31 68.31 67.49 65.85 64.72 63.75 63.15 63.01
Ohio
58.83 61.78 62.18 59.23 59.68 59.88 59.66 60.79 62.14 63.42
Oklahoma
70.56 73.51 73.51 70.24 70.18 67.91 68.14 67.10 65.90 64.43
Oregon
60.16 63.11 63.76 60.81 61.12 61.57 61.07 60.86 62.45 62.74
Pennsylvania
54.69 57.64 57.71 54.76 53.84 55.05 54.39 54.08 54.52 54.81
Rhode
Island
55.40 58.35 58.98 56.03 55.38 54.45 52.35 52.51 52.59 52.63
South
Carolina
69.81 72.76 72.81 69.86 69.89 69.32 69.54 69.79 70.07 70.32
South
Dakota
65.29 68.88 68.62 65.67 66.03 65.07 62.92 60.03 62.55 62.72
Tennessee
64.59 67.54 67.54 64.40 64.81 63.99 63.65 63.71 64.28 65.57
Texas
59.99 63.12 63.17 60.22 60.87 60.66 60.78 60.56c 59.44 58.73
Utah
71.24 74.19 74.67 71.72 72.14 70.76 70.14 71.63 70.71 71.68
Vermont
62.41 66.01 65.36 61.34 60.11 58.49 58.93 59.03 59.45 58.73
Virginia
50.53 54.40 53.48 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Washington
50.00 53.32 52.95 50.00 50.00 50.00 50.12 51.52 50.94 50.12
West
Virginia
75.04 78.22 78.14 75.19 74.65 72.99 72.82 74.25 73.73 74.04
Wisconsin
58.43 61.52 61.38 58.41 58.32 57.65 57.47 57.62 59.38 60.21
Wyoming
61.32 64.92 64.27 59.77 57.90 54.23 52.91 50.00 50.00 50.00
American
Samoa 50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Guam
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
N.
Mariana
Islands 50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Puerto
Rico
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Virgin
Islands
50.00 52.95 52.95 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Number with
decrease from
previous year
17
—a
—a 11d 19e
28 27 20 17 14
Source: Department of Health and Human Services (HHS) notices published in the Federal Register.
a. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27) temporarily increased Medicaid
FMAPs to provide $10 billion in state fiscal relief. States also received an additional $10 billion in direct
grants.
b. Alaska’s Medicaid FMAP used an alternative formula for FY2001-FY2005 (P.L. 106-554) and did not decrease
in FY2006-FY2007 because of a provision in the Deficit Reduction Act of 2005 (DRA, P.L. 109-171). Prior
to DRA, Alaska had reverted to using the same FMAP calculation as other states, providing an FY2006
FMAP of 50.16% and FY2007 FMAP of 51.07%.
c. This FY2008 value of 60.56% was provided by HHS implementation of a DRA provision related to
Hurricane Katrina (see discussion under “Statutory Exceptions” in this report). Using the regular FMAP
formula, the state’s FY2008 value would have been 60.53%.
d. Compared to regular FMAPs that applied in the first two quarters of FY2003.
e. Compared to regular FMAPs that applied in the last quarter of FY2004.
ȱȱȱ
řȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
¢ȱ¡ȱ
Although the FMAP is generally determined by a formula set in statute, there are exceptions
made for certain states and situations:
• As of FY1998, the District of Columbia’s Medicaid FMAP is set at 70%.6
• The territories (Puerto Rico, American Samoa, the Northern Mariana Islands,
Guam, and the Virgin Islands) have FMAPs set at 50% and, unlike the 50 states
and the District of Columbia, are subject to federal spending caps.7
• Alaska’s Medicaid FMAP was set in statute for FY1998-FY2000, used an
alternative formula for FY2001-FY2005, and was held at its FY2005 level for
FY2006-FY2007.8
• The Deficit Reduction Act of 2005 (P.L. 109-171) provided that in computing
Medicaid FMAPs for any year after 2006 for a state that the Secretary of HHS
determines has a significant number of Hurricane Katrina evacuees as of October
1, 2005, the Secretary will disregard such evacuees and their incomes.9
• Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27),
all states and territories received a temporary increase. Medicaid FMAPs for the
last two quarters of FY2003 and the first three quarters of FY2004 were held
harmless from annual declines and were increased by an additional 2.95
percentage points.10
• As noted earlier, the FMAP does not apply to certain Medicaid services that
receive a higher federal match (e.g., those provided through an Indian Health
Service facility).

6 P.L. 105-33 (Balanced Budget Act of 1997). The 70% also applies for purposes of computing an enhanced FMAP for
SCHIP.
7 For more information, see Government Accountability Office, U.S. Insular Areas: Multiple Factors Affect Federal
Health Care Funding, GAO-06-75, October 2005, at http://www.gao.gov/new.items/d0675.pdf.
8 P.L. 105-33 set Alaska’s Medicaid and SCHIP FMAPs for FY1998-FY2000 at 59.80%. P.L. 106-554 provided that its
FMAPs for FY2001-FY2005 would be calculated using the state’s per capita income deflated by 1.05 (thereby
increasing the FMAPs). P.L. 109-171 provided that its FMAPs for FY2006-FY2007 would not fall below the state’s
FY2005 level.
9 The Alaska and Katrina DRA provisions also apply for purposes of computing enhanced FMAPs for SCHIP.
Although it was described as a “hold harmless for Katrina impact” in DRA, the language of the Katrina provision
requires evacuees to be disregarded even if their inclusion would increase a state’s FMAP. Due to lags in the
availability of data used to calculate FMAPs, FY2008 is the first year for which the provision applies. In 2007, HHS
proposed and then finalized a methodology for implementation of the provision that would prevent the lowering of any
FY2008 FMAPs and increase the FY2008 FMAP for one state (Texas). The methodology takes advantage of a data
timing issue that will not apply after FY2008. Although HHS had initially expressed concern that some states could see
lower FMAPs in later years as a result of the DRA provision, the final methodology indicates that there is no reliable
way to track the number and income of evacuees on an ongoing basis and therefore no basis for adjusting FMAPs after
FY2008. See 72 Federal Register 3391 (January 25, 2007) and 72 Federal Register 44146 (August 7, 2007).
10 Although Medicaid disproportionate share hospital (DSH) payments (i.e., payments to hospitals that serve large
numbers of low-income and Medicaid patients and are subject to federal spending caps) are reimbursed using the
FMAP, this increase did not apply to DSH. In addition, states had to meet certain requirements in order to receive an
increase (e.g., they could not restrict eligibility after a certain date).
ȱȱȱ
Śȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
ȱȱȱȱȱȱ
As specified in Section 1905(b) of the Social Security Act, the per capita income amounts used in
the FMAP formula are equal to the average of the three most recent calendar years of data
available from the Department of Commerce. In its most recent (FY2010) FMAP calculations,
HHS used state per capita personal income data for 2005, 2006, and 2007 that became available
from the Department of Commerce’s Bureau of Economic Analysis (BEA) in September 2008.
The use of a three-year average helps to moderate fluctuations in a state’s FMAP over time.
BEA revises its most recent estimates of state per capita personal income on an annual basis to
incorporate revised and newly available source data on population and income.11 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 (as defined in BEA’s national income and product accounts, or NIPA). These
components include
• earnings (wages and salaries, employer contributions for employee pension and
insurance funds, and proprietors’ income);
• dividends, interest, and rent; and
• personal current transfer receipts (e.g., government social benefits such as Social
Security, Medicare, Medicaid, state unemployment insurance, etc.).12
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 2004
state per capita personal income data published by BEA in September 2006 (used in the
calculation of FY2008 FMAPs) differed from the 2004 state per capita personal income data
published in September 2007 (used in the calculation of FY2009 FMAPs).
It should be noted that the NIPA definition of personal income used by BEA is not the same as the
definition used for personal income tax purposes. Among other differences, NIPA personal
income excludes capital gains (or losses) and includes transfer receipts (e.g., government social
benefits), while income for tax purposes includes capital gains (or losses) and excludes most of
these transfers.
ȱȱȱȱ
Several factors influence state FMAPs. The first is the nature of the state economy and its ability
to respond to economic changes (i.e., downturns or upturns). The impact of a national economic
downturn or upturn will be related to the structure of the state economy and the business sectors
causing the upturn or downturn. For example, a national decline in automobile sales, while

11 Preliminary estimates of state per capita personal income for the latest available calendar year—as well as revised
estimates for the two preceding calendar years—are released in April. Revised estimates for all three years are released
in September.
12 Employer and employee contributions for government social insurance (e.g., Social Security, Medicare,
unemployment insurance, etc.) are excluded from personal income, and earnings are counted based on residency (i.e.,
for individuals who live in one state and work in another, their income is counted in the state where they reside).
ȱȱȱ
śȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
having an impact on automobile sales and all state economies, will have a larger impact in states
that manufacture automobiles, as production is reduced and workers are laid off.
Second, the FMAP formula relies on per capita personal income to reflect state economies and
their response to economic changes in relation to the U.S. average per capita personal income.
The national economy is basically the sum of all state economies. As a result, the national
response to an economic change is the sum of the state responses to economic change. If more
states (or larger states) experience an economic decline, the national economy reflects this decline
to some extent. However, the national decline will be lower than the state declines because the
total decline has been offset by states with increases (i.e., states with growing economies). The
U.S. per capita personal income, because of this balancing of positive and negative, has only a
small percentage change each year. The FMAP formula compares state changes in per capita
personal income (which can have large changes each year) to the U.S. per capita personal income
(which has very small changes each year). This comparison can result in significant state FMAP
changes.
In addition to annual revisions of per capita personal income data, comprehensive NIPA revisions
undertaken every four to five years may also influence FMAPs (for example, because of changes
in the definition of personal income). The impact on state FMAPs will depend on whether the
changes are broad (affecting all states) or more selective (affecting only certain states or
industries).
As noted earlier, statutory changes may also affect FMAPs.
ȱȱȱȱ
ŗŖŞȱȱ
In the 108th Congress, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA, P.L.
108-27) provided temporary fiscal relief for states and local governments through a combination
of $10 billion in FMAP increases and $10 billion in direct grants. Medicaid FMAPs for the last
two quarters of FY2003 and the first three quarters of FY2004 were held harmless from annual
declines and were increased by an additional 2.95 percentage points, so long as a state did not
restrict eligibility after a specified date (none did) and met certain other requirements.13 To
accommodate the FMAP increase, caps that apply to federal Medicaid spending in the territories
were raised by 5.9%. JGTRRA also provided states with an additional $10 billion in direct grants
based on population.14
ŗŖşȱȱ
In the 109th Congress, the Deficit Reduction Act of 2005 (P.L. 109-171) included provisions to
exclude certain Hurricane Katrina evacuees and their incomes from FMAP calculations, prevent
Alaska’s FY2006-FY2007 FMAPs from falling below the state’s FY2005 level, and provide $2

13 For a discussion, see Department of Health and Human Services, Centers for Medicare and Medicaid Services, Dear
State Medicaid Director letter, June 13, 2003, http://www.cms.hhs.gov/smdl/downloads/smd061303.pdf.
14 See http://www.treas.gov/press/releases/js453.htm.
ȱȱȱ
Ŝȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
billion to help pay for (among other things) the state share of certain Katrina-related Medicaid
and SCHIP costs. Other provisions that would have temporarily increased FMAPs for states
affected by Hurricane Katrina, limited FY2006 FMAP reductions for all states, and disregarded
employer contributions toward pensions in the calculation of FMAPs if they exceeded a certain
threshold were debated but not included in the final bill.15
ŗŗŖȱȱ
In the 110th Congress, a temporary FMAP increase was included in economic stimulus legislation
that was debated but not adopted at the end of 2008.16 One bill failed a motion to proceed in the
Senate (S. 3604), another passed the House (H.R. 7110), and a third was introduced in the Senate
(S. 3689). Over five years, the bills would have increased federal Medicaid spending by an
estimated $19.6 billion,17 $14.7 billion,18 and $37.8 billion,19 respectively.
For FY2009 and the first quarter of FY2010, S. 3604 would have held all states harmless from
any decline in their regular Medicaid FMAPs and provided all states and territories with an
additional increase of four percentage points. S. 3689 was similar, except that it would have
provided an increase of eight percentage points instead of four.
For FY2009 and the first two months of FY2010, H.R. 7110 would have held all states harmless,
provided all states and territories with an additional increase of one percentage point, and
provided qualifying states with an additional increase of up to three percentage points based on
employment, food stamp, and foreclosure data. Separate from the temporary Medicaid FMAP
increase, the House bill would have excluded certain employer pension and insurance fund
contributions from the calculation of Medicaid FMAPs beginning with FY2006; as noted below,
this provision is included in versions of an SCHIP reauthorization bill that have passed the House
and Senate in the 111th Congress.
ŗŗŗȱȱ
¢ȱȱȱ
In the 111th Congress, a temporary FMAP increase is currently under consideration in the House
and Senate as part of the American Recovery and Reinvestment Act of 2009. The House passed
its version as part of H.R. 1 on January 28, 2009. The Senate Finance Committee agreed to its
own version of a temporary FMAP increase on January 27,20 with consideration by the full Senate

15 See CRS Report RS22333, Budget Reconciliation FY2006: Provisions Affecting the Medicaid Federal Medical
Assistance Percentage (FMAP), by April Grady.
16 Additional legislation that would have provided a temporary Medicaid FMAP increase was introduced earlier in
2008 (S. 2586, H.R. 5268, S. 2620, S. 2819).
17 U.S. Congress, Senate Committee on Appropriations, Byrd Statement in Support of Economic Recovery and Stimulus
Package, September 26, 2008, at http://appropriations.senate.gov/news.cfm.
18 Congressional Budget Office, Estimated Cost of H.R. 7110, The Job Creation and Unemployment Relief Act of 2008,
as Introduced on September 26, 2008, at http://cbo.gov/ftpdocs/98xx/doc9816/hr7110.pdf.
19 Congressional Budget Office, letter to the Honorable Robert C. Byrd, November 18, 2008, at http://www.cbo.gov/
ftpdocs/99xx/doc9918/SenateStimulusInfrastructureByrdLtr.pdf.
20 U.S. Congress, Senate Committee on Finance, Legislative Text of The Senate Finance Committee Provisions for The
(continued...)
ȱȱȱ
ŝȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
expected the first week of February. Preliminary estimates from the Congressional Budget Office
(CBO) indicate that over five years, the House-passed version would increase federal spending by
$87.7 billion and the Senate Finance version would increase federal spending by $86.6 billion.21
Although the House-passed and Senate Finance versions are broadly similar, they differ on the
degree to which funds are targeted at states experiencing unemployment rate increases and
whether the temporary FMAP increase applies to expenditures for individuals who are eligible for
Medicaid because of an increase in a state’s income eligibility standards:
• For a recession adjustment period that begins with the first quarter of FY2009
and runs through the first quarter of FY2011, the House-passed version would
hold all states harmless from any decline in their regular FMAPs, provide all
states with an additional across-the-board increase of 4.9 percentage points, and
provide qualifying states with an additional unemployment-related increase.22 It
would allow each territory to choose between an FMAP increase of 4.9
percentage points along with a 10% increase in its spending cap, or its regular
FMAP along with a 20% increase in its spending cap.
• During the same nine quarters, the Senate Finance version would also hold all
states harmless. However, it would provide a larger across-the-board increase of
7.6 percentage points and a smaller unemployment-related increase.23 It would
increase spending caps in the territories by 15.2%.

(...continued)
American Recovery and Reinvestment Act of 2009, January 30, 2009,
http://finance.senate.gov/sitepages/legislation.htm.
21 Congressional Budget Office, CBO Preliminary Estimate of the Effects on Direct Spending on Title V of the Energy
and Commerce Stimulus Draft (based on language provided 1/22/2009) and Congressional Budget Office, Preliminary
CBO estimate of providing fiscal relief to states through higher Medicaid FMAP rates (based on language provided
1/23/2009). A more recent cost estimate for the House-passed version of H.R. 1 does not break out the Medicaid
provisions in Title V (which total an estimated at $89.659 billion over five years) separately; see
http://www.cbo.gov/ftpdocs/99xx/doc9976/hr1aspassed.pdf.
22 States would be evaluated on a quarterly basis for the unemployment-related FMAP increase, which would equal a
percentage reduction in the state share. The percentage reduction would be applied to the state share after the hold
harmless increase and before the across-the-board increase of 4.9 percentage points. For example, after applying the
across-the-board increase, a state with a regular FMAP of 50% (state share of 50%) would have an FMAP of 54.90%.
If the state share were further reduced by 6%, the state would receive an additional FMAP increase of 3 percentage
points (50.00 * 0.06 = 3.00). The state’s total FMAP increase would be 7.9 points (4.9 + 3 = 7.9), providing an FMAP
of 57.90%. A state would be evaluated based on its unemployment rate in the most recent 3-month period for which
data are available (except for the first two and last two quarters of the temporary FMAP increase, for which the 3-
month period would be specified) compared to its lowest unemployment rate in any 3-month period beginning on or
after January 1, 2006. The criteria would be as follows: unemployment rate increase of at least 1.5 but less than 2.5
percentage points = 6% reduction in state share; increase of at least 2.5 but less than 3.5 percentage points = 12%
reduction; increase of at least 3.5 percentage points = 14% reduction. A state’s percentage reduction could increase
over time as its unemployment rate increases, but it would not be allowed to decrease until the fourth quarter of
FY2010 (for most states, this corresponds with the first quarter of SFY2011).
23 As in the House-passed version, the Senate Finance version would calculate the unemployment-related increase as a
percentage reduction in the state share. However, the percentage reduction would be applied to the state share after the
across-the-board increase of 7.6 percentage points. The Senate Finance version would evaluate states based on the same
unemployment data, except that it would not specify the 3-month period to be used for the first two and last two
quarters of the temporary FMAP increase. The criteria would be as follows: unemployment rate increase of at least 1.5
but less than 2.5 percentage points = 2.5% reduction in state share; increase of at least 2.5 but less than 3.5 percentage
points = 4.5% reduction; increase of at least 6.5 percentage points = 6.5% reduction. Similar to the House-passed
version, a state’s percentage reduction could increase over time as its unemployment rate increases, but it would not be
(continued...)
ȱȱȱ
Şȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
• According to statements made during the Senate Finance Committee markup on
January 27, it is estimated that the House-passed version would provide about
half of its spending via the hold harmless and across-the-board increases, and
about half via the unemployment-related increase. In contrast, the version
approved by the Senate Finance Committee on January 27 is estimated to provide
80% via the hold harmless and across-the-board increases, and 20% via the
unemployment-related increase.24
• Both versions would apply the temporary FMAP increase to Medicaid and Title
IV-E foster care and adoption assistance costs only,25 require states to maintain
Medicaid eligibility standards, procedures, and methodologies as in effect on July
1, 2008, in order to be eligible for the increase,26 prohibit states from using the
additional federal funds paid as a result of a temporary FMAP increase to
increase any reserve or rainy day fund that they maintain, and require states to
ensure that local governments do not pay a larger percentage of nonfederal
expenditures than otherwise would have been required.27
• The Senate Finance version would not apply the temporary FMAP increase to
expenditures for individuals who are eligible for Medicaid because of an increase
in a state’s income eligibility standards above what was in effect on July 1, 2008.
It would also prohibit states from receiving the temporary increase if they are not
in compliance with existing requirements for prompt payment of health care
providers under Medicaid, and require them to report to the Secretary of HHS on
their compliance with such requirements.
Tables 2 and 3 show estimated increases in FMAPs and federal Medicaid funding for the first
two quarters of FY2009 under the House-passed and Senate Finance proposals. FMAP increases
could be larger in the last two quarters of FY2009 for states whose unemployment rates continue
to increase (unless the state has a current unemployment rate increase of at least 3.5 percentage
points, in which case they would already be receiving the maximum FMAP increase). FMAP
increases in FY2010 and the first quarter of FY2011 would differ depending on the state’s current
law FMAP and its unemployment rate increase. Depending on the assumptions that are made,
estimated increases in federal Medicaid funding for all nine quarters (not shown here) can vary.28

(...continued)
allowed to decrease until the last quarter of FY2010.
24 Prior to being amended in the Senate Finance markup, the Chairman’s mark was estimated to provide a 60%/40%
split.
25 However, the increase would not apply to Medicaid DSH payments. In addition, only part of the increase (hold
harmless plus across-the-board) would apply to Title IV-E.
26 States that have restricted their eligibility standards, procedures, or methodologies would not be denied the temporary
FMAP increase until the fourth quarter of FY2009 and could reinstate them in order to receive the increase in any
quarter. For the temporary FMAP increase enacted in 2003, the law referred only to “eligibility” and the HHS
interpretation did not include procedural changes (e.g., increasing the frequency of eligibility redeterminations was not
considered an eligibility restriction); see http://www.cms.hhs.gov/smdl/downloads/smd061303.pdf. The current House-
passed and Senate Finance versions are more stringent.
27 Some states require local governments to finance part of the nonfederal (i.e., state) share of Medicaid costs. Since a
temporary FMAP increase would reduce a state’s nonfederal share, a local government whose required contribution is a
specified dollar amount (or some other amount that is not a fixed percentage of the nonfederal share) could pay a larger
percentage of the nonfederal share than it otherwise would have without the FMAP increase.
28 For estimated increases based on a state-specific forecast of unemployment rates, see Iris J. Lav et al., Preliminary
(continued...)
ȱȱȱ
şȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
Table 2. Estimated Increase in FMAPs and Federal Medicaid Funding Under House-
passed Proposal, First Two Quarters of FY2009
(dollars in millions)
Estimated increase in FMAPs for first two
Estimated
Current
quarters of FY09
increase in
percentage
Projected federal
point
Medicaid funding for
Current increase in
Unemploy-
expendi- first two
law FMAPs unemploy-
Hold
Across-
ment-
tures for quarters of
State
for FY09 ment ratea harmless the-board relatedd Total FY09b
FY09c
Alabama
67.98 2.7% 0.00 4.90 3.84 8.74
$3,829 $167
Alaska
50.53 1.3% 1.95 4.90 0.00 6.85
$1,002 $34
Arizona
65.77 2.8% 0.43 4.90 4.06 9.39
$8,160 $383
Arkansas
72.81 1.0% 0.13 4.90 0.00 5.03
$3,595 $90
California
50.00 3.8% 0.00 4.90 7.00 11.90
$40,480
$2,409
Colorado
50.00 2.2% 0.00 4.90 3.00 7.90
$3,415 $135
Connecticut
50.00 2.5% 0.00 4.90 6.00 10.90
$4,970 $271
Delaware
50.00 2.5% 0.00 4.90 6.00 10.90
$1,190 $65
District of Columbia
70.00
2.4%
0.00
4.90
1.80
6.70 $1,501
$50
Florida
55.40 4.1% 1.43 4.90 6.04 12.37
$15,057 $931
Georgia
64.49 3.2% 0.00 4.90 4.26 9.16
$7,216 $330
Hawaii
55.11 2.8% 1.39 4.90 5.22 11.51
$1,291 $74
Idaho
69.77 3.1% 0.10 4.90 3.62 8.62
$1,255 $54
Illinois
50.32 3.1% 0.00 4.90 5.96 10.86
$10,496 $570
Indiana
64.26 2.8% 0.00 4.90 4.29 9.19
$5,556 $255
Iowa
62.62 0.9% 0.00 4.90 0.00 4.90
$2,940 $72
Kansas
60.08 1.1% 0.00 4.90 0.00 4.90
$2,279 $56
Kentucky
70.13 2.0% 0.00 4.90 1.79 6.69
$4,997 $167
Louisiana
71.31 2.1% 1.16 4.90 1.65 7.71
$5,475 $211
Maine
64.41 1.9% 0.00 4.90 2.14 7.04
$2,199 $77
Maryland
50.00 1.9% 0.00 4.90 3.00 7.90
$6,265 $247
Massachusetts
50.00 1.8% 0.00 4.90 3.00 7.90
$12,540 $495
Michigan
60.27 3.1% 0.00 4.90 4.77 9.67
$9,582 $463
Minnesota
50.00 2.6% 0.00 4.90 6.00 10.90
$7,353 $401
Mississippi
75.84 1.5% 0.45 4.90 1.42 6.77
$3,776 $128
Missouri
63.19 2.2% 0.00 4.90 2.21 7.11
$6,836 $243
Montana
68.04 1.9% 0.49 4.90 1.89 7.28
$819 $30
Nebraska
59.54 0.9% 0.00 4.90 0.00 4.90
$1,611 $39
Nevada
50.00 4.2% 2.64 4.90 6.63 14.17
$1,323 $94
New
Hampshire 50.00 1.0% 0.00 4.90 0.00 4.90
$1,122 $27
New
Jersey
50.00 2.2% 0.00 4.90 3.00 7.90
$8,308 $328
New
Mexico
70.88 1.3% 0.16 4.90 0.00 5.06
$3,167 $80
New
York
50.00 1.9% 0.00 4.90 3.00 7.90
$49,128
$1,941
North
Carolina 64.60 3.4% 0.00 4.90 4.25 9.15
$9,977 $456

(...continued)
Analysis of Medicaid Assistance for States in the House Economic Recovery Package, Center on Budget and Policy
Priorities, January 30, 2009, http://www.cbpp.org/1-22-09sfp.htm and Iris J. Lav et al., Senate’s Medicaid Assistance
for States Less Targeted than in House Recovery Bill, Center on Budget and Policy Priorities, January 30, 2009,
http://www.cbpp.org/1-26-09bud.htm. For a similar analysis whose data and assumptions produce different results for
some states, see Vic Miller, Estimated Impacts of House Stimulus FMAP Provisions, Federal Funds Information for
States, Issue Brief 09-02, January 23, 2009.
ȱȱȱ
ŗŖȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
Estimated increase in FMAPs for first two
Estimated
Current
quarters of FY09
increase in
percentage
Projected federal
point
Medicaid funding for
Current increase in
Unemploy-
expendi- first two
law FMAPs unemploy-
Hold
Across-
ment-
tures for quarters of
State
for FY09 ment ratea harmless the-board relatedd
Total
FY09b
FY09c
North
Dakota
63.15 0.3% 0.60 4.90 0.00 5.50
$557 $15
Ohio
62.14 2.1% 0.00 4.90 2.27 7.17
$13,127 $471
Oklahoma
65.90 1.5% 1.20 4.90 1.97 8.07
$3,786 $153
Oregon
62.45 3.0% 0.00 4.90 4.51 9.41
$3,538 $166
Pennsylvania
54.52 1.9% 0.00 4.90 2.73 7.63
$16,586 $633
Rhode
Island
52.59 4.6% 0.00 4.90 6.64 11.54
$1,720 $99
South
Carolina
70.07 2.9% 0.00 4.90 3.59 8.49
$3,873 $164
South
Dakota
62.55 0.9% 0.00 4.90 0.00 4.90
$666 $16
Tennessee
64.28 2.8% 0.00 4.90 4.29 9.19
$7,024 $323
Texas
59.44 1.6% 1.09 4.90 2.37 8.36
$21,646 $905
Utah
70.71 1.4% 0.92 4.90 0.00 5.82
$1,593 $46
Vermont
59.45 2.2% 0.00 4.90 2.43 7.33
$1,127 $41
Virginia
50.00 2.0% 0.00 4.90 3.00 7.90
$5,735 $227
Washington
50.94 2.1% 0.58 4.90 2.91 8.39
$7,183 $301
West
Virginia
73.73 0.3% 0.52 4.90 0.00 5.42
$2,353 $64
Wisconsin
59.38 1.2% 0.00 4.90 0.00 4.90
$5,646 $138
Wyoming
50.00 0.5% 0.00 4.90 0.00 4.90
$503 $12
American Samoa
50.00 NA
0.00
e NA
e $18.3 $0.9
Guam 50.00
NA
0.00
e NA
e $25.7 $1.3
N. Mariana Islands
50.00 NA
0.00
e NA
e $9.7
$0.5
Puerto Rico
50.00 NA
0.00
e NA
e $1,262.9 $27.2
Virgin Islands
50.00 NA
0.00
e NA
e $20.6 $1.4
Total
$346,707 $15,184
Source: Congressional Research Service.
Notes: FMAP increases could be larger in the last two quarters of FY2009 for states whose unemployment
rates continue to increase (unless the state has a current unemployment rate increase of at least 3.5 percentage
points, in which case they would already be receiving the maximum FMAP increase). FMAP increases in FY2010
and the first quarter of FY2011 would differ depending on the state’s current law FMAP and its unemployment
rate increase. NA indicates that unemployment rates are not applicable for the territories. Sum of components
may not equal totals due to rounding.
a. Based on Oct-Dec 2008 Bureau of Labor Statistics data compared to lowest 3-month period since Jan 2006.
b. State projection of total (federal and state) expenditures reported to the Centers for Medicare and
Medicaid Services in November 2008. Includes Medicaid services and excludes disproportionate share
hospital payments, administrative costs, and the vaccines for children program. Some territories (e.g.,
Puerto Rico) have total expenditures exceeding the amount that can be reimbursed under current law
federal spending caps.
c. For states, based on total FMAP increases applied to half (in order to approximate two quarters) of
projected Medicaid expenditures for FY2009. For territories, based on a 20% (but note that territories
could instead opt for 10% along with an FMAP increase) increase in actual FY2009 federal spending caps.
Excludes Title IV-E foster care and adoption assistance, to which the hold harmless and across-the-board
FMAP increases would apply.
d. The unemployment-related FMAP increase equals a percentage reduction that is applied to the state share
after the hold harmless increase and before the across-the-board increase. For example, after applying the
across-the-board increase, a state with a regular FMAP of 50% (state share of 50%) would have an FMAP of
54.90%. If the state share were further reduced by 6%, the state would receive an additional FMAP increase
of 3 percentage points (50.00 * 0.06 = 3.00). An unemployment rate increase of at least 1.5 but less than 2.5
ȱȱȱ
ŗŗȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
percentage points = 6% reduction in state share; increase of at least 2.5 but less than 3.5 percentage points
= 12% reduction; increase of at least 3.5 percentage points = 14% reduction
e. Each territory could choose between an FMAP increase of 4.9 percentage points along with a 10% increase
in its federal spending cap, or its regular FMAP along with a 20% increase in its cap.
Table 3. Estimated Increase in FMAPs and Federal Medicaid Funding Under Senate
Finance Proposal, First Two Quarters of FY2009
(dollars in millions)
Estimated increase in FMAPs for the first two
Estimated
quarters of FY09
increase in
Current
federal
percentage
Projected funding for
point
Medicaid the first
Current increase in
Unemploy
expendi-
two
law FMAPs unemploy-
Hold
Across-
ment-
tures for quarters of
State
for FY09 ment ratea harmless the-board relatedd Total FY09b
FY09c
Alabama 67.98
2.7%
0.00
7.60
1.10
8.70
$3,829
$167
Alaska 50.53
1.3%
1.95
7.60
0.00
9.55
$1,002
$48
Arizona 65.77
2.8%
0.43
7.60
1.18
9.21
$8,160
$376
Arkansas 72.81
1.0%
0.13
7.60
0.00
7.73
$3,595
$139
California 50.00
3.8%
0.00
7.60
2.76
10.36
$40,480
$2,097
Colorado 50.00
2.2%
0.00
7.60
1.06
8.66
$3,415
$148
Connecticut 50.00
2.5%
0.00
7.60
1.91
9.51
$4,970
$236
Delaware 50.00
2.5%
0.00
7.60
1.91
9.51
$1,190
$57
District of Columbia
70.00
2.4%
0.00
7.60
0.56
8.16 $1,501
$61
Florida 55.40
4.1%
1.43
7.60
2.31
11.34
$15,057
$854
Georgia 64.49
3.2%
0.00
7.60
1.26
8.86
$7,216
$320
Hawaii 55.11
2.8%
1.39
7.60
1.62
10.61
$1,291
$68
Idaho 69.77
3.1%
0.10
7.60
1.01
8.71
$1,255
$55
Illinois 50.32
3.1%
0.00
7.60
1.89
9.49
$10,496
$498
Indiana 64.26
2.8%
0.00
7.60
1.27
8.87
$5,556
$246
Iowa 62.62
0.9%
0.00
7.60
0.00
7.60
$2,940
$112
Kansas 60.08
1.1%
0.00
7.60
0.00
7.60
$2,279
$87
Kentucky 70.13
2.0%
0.00
7.60
0.56
8.16
$4,997
$204
Louisiana 71.31
2.1%
1.16
7.60
0.50
9.26
$5,475
$254
Maine 64.41
1.9%
0.00
7.60
0.70
8.30
$2,199
$91
Maryland 50.00
1.9%
0.00
7.60
1.06
8.66
$6,265
$271
Massachusetts 50.00
1.8%
0.00
7.60
1.06
8.66
$12,540
$543
Michigan 60.27
3.1%
0.00
7.60
1.45
9.05
$9,582
$434
Minnesota 50.00
2.6%
0.00
7.60
1.91
9.51
$7,353
$350
Mississippi 75.84
1.5%
0.45
7.60
0.40
8.45
$3,776
$160
Missouri 63.19
2.2%
0.00
7.60
0.73
8.33
$6,836
$285
Montana 68.04
1.9%
0.49
7.60
0.60
8.69
$819
$36
Nebraska 59.54
0.9%
0.00
7.60
0.00
7.60
$1,611
$61
Nevada 50.00
4.2%
2.64
7.60
2.58
12.82
$1,323
$85
New Hampshire
50.00
1.0%
0.00
7.60
0.00
7.60 $1,122
$43
New Jersey
50.00
2.2%
0.00
7.60
1.06
8.66 $8,308
$360
New Mexico
70.88
1.3%
0.16
7.60
0.00
7.76 $3,167
$123
New York
50.00
1.9%
0.00
7.60
1.06
8.66 $49,128
$2,127
North Carolina
64.60
3.4%
0.00
7.60
1.25
8.85 $9,977
$441
North Dakota
63.15
0.3%
0.60
7.60
0.00
8.20
$557
$23
Ohio 62.14
2.1%
0.00
7.60
0.76
8.36
$13,127
$549
ȱȱȱ
ŗŘȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
Estimated increase in FMAPs for the first two
Estimated
quarters of FY09
increase in
Current
federal
percentage
Projected funding for
point
Medicaid the first
Current increase in
Unemploy
expendi-
two
law FMAPs unemploy-
Hold
Across-
ment-
tures for quarters of
State
for FY09 ment ratea harmless the-board relatedd Total
FY09b
FY09c
Oklahoma 65.90
1.5%
1.20
7.60
0.63
9.43
$3,786
$179
Oregon 62.45
3.0%
0.00
7.60
1.35
8.95
$3,538
$158
Pennsylvania 54.52
1.9%
0.00
7.60
0.95
8.55
$16,586
$709
Rhode Island
52.59
4.6%
0.00
7.60
2.59
10.19 $1,720
$88
South Carolina
70.07
2.9%
0.00
7.60
1.00
8.60 $3,873
$167
South Dakota
62.55
0.9%
0.00
7.60
0.00
7.60
$666
$25
Tennessee 64.28
2.8%
0.00
7.60
1.27
8.87
$7,024
$312
Texas 59.44
1.6%
1.09
7.60
0.80
9.49
$21,646
$1,027
Utah 70.71
1.4%
0.92
7.60
0.00
8.52
$1,593
$68
Vermont 59.45
2.2%
0.00
7.60
0.82
8.42
$1,127
$47
Virginia 50.00
2.0%
0.00
7.60
1.06
8.66
$5,735
$248
Washington 50.94
2.1%
0.58
7.60
1.02
9.20
$7,183
$330
West Virginia
73.73
0.3%
0.52
7.60
0.00
8.12 $2,353
$96
Wisconsin 59.38
1.2%
0.00
7.60
0.00
7.60
$5,646
$215
Wyoming 50.00
0.5%
0.00
7.60
0.00
7.60
$503
$19
American Samoa
50.00 NA
0.00
7.60
NA
7.60
$18.3
$0.7
Guam 50.00
NA
0.00
7.60
NA
7.60
$25.7
$1.0
N. Mariana Islands
50.00 NA
0.00
7.60
NA
7.60
$9.7
$0.4
Puerto Rico
50.00 NA
0.00
7.60
NA
7.60 $1,262.9
$20.7
Virgin Islands
50.00 NA
0.00
7.60
NA
7.60
$20.6
$1.0
Total
$346,707 $15,716
Source: Congressional Research Service.
Notes: FMAP increases could be larger in the last two quarters of FY2009 for states whose unemployment
rates continue to increase (unless the state has a current unemployment rate increase of at least 3.5 percentage
points, in which case they would already be receiving the maximum FMAP increase). FMAP increases in FY2010
and the first quarter of FY2011 would differ depending on the state’s current law FMAP and its unemployment
rate increase. NA indicates that unemployment rates are not applicable for the territories. Sum of components
may not equal totals due to rounding.
a. Based on Oct-Dec 2008 Bureau of Labor Statistics data compared to lowest 3-month period since Jan 2006.
b. State projection of total (federal and state) expenditures reported to the Centers for Medicare and
Medicaid Services in November 2008. Includes Medicaid services and excludes disproportionate share
hospital payments, administrative costs, and the vaccines for children program. Some territories (e.g.,
Puerto Rico) have total expenditures exceeding the amount that can be reimbursed under current law
federal spending caps.
c. For states, based on total FMAP increases applied to half (in order to approximate two quarters) of
projected Medicaid expenditures for FY2009. For territories, based on a 15.2% increase in actual FY2009
federal spending caps. Excludes Title IV-E foster care and adoption assistance, to which the hold harmless
and across-the-board FMAP increases would apply.
d. The unemployment-related FMAP increase equals a percentage reduction that is applied to the state share
after the hold harmless increase and after the across-the-board increase. For example, after applying the
across-the-board increase, a state with a regular FMAP of 50% (state share of 50%) would have an FMAP of
57.60%. If the state share were further reduced by 2.5%, the state would receive an additional FMAP
increase of 1.06 percentage points (42.40 * 0.025 = 1.06). An unemployment rate increase of at least 1.5 but
less than 2.5 percentage points = 2.5% reduction in state share; increase of at least 2.5 but less than 3.5
percentage points = 4.5% reduction; increase of at least 3.5 percentage points = 6.5% reduction.
ȱȱȱ
ŗřȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ
FMAP increases would reduce the amount of state funding that is required to maintain a given
level of Medicaid services. For states that are contemplating cuts in order to slow the growth of or
reduce Medicaid spending (e.g., by restricting eligibility, eliminating coverage of certain benefits,
freezing or reducing provider reimbursement rates, increasing cost-sharing or premiums for
beneficiaries, etc.), increased federal funding could enable them to avoid those cuts. For others,
the state savings that result from an FMAP increase could be used for a variety of purposes that
are not limited to Medicaid.29 Many states implemented or planned Medicaid expansions and
enhancements in SFY2008 and SFY2009.30 However, more than half of all states currently report
that Medicaid enrollment and spending trends are above projected levels and many are facing the
prospect of mid-year cutbacks.31
In addition to avoiding cuts to Medicaid, CBO has indicated that providing additional federal aid
to states that are facing fiscal pressures or a recession would probably stimulate the economy.
However, federal aid to states whose budgets are relatively healthy might provide little stimulus if
it is used to build up rainy day funds (which would be prohibited under the current versions of a
temporary FMAP increase), rather than increase spending or reduce taxes.32
¡ȱȱȱ¢ȱȱȱȱȱ
As noted earlier, a provision that would exclude certain employer pension and insurance fund
contributions from the calculation of Medicaid FMAPs beginning with FY2006 is included in
versions of an SCHIP reauthorization bill (H.R. 2) that have passed the House and Senate. For
purposes of calculating Medicaid FMAPs only, the provision would have the effect of reducing
certain states’ per capita personal income relative to the national average, which in turn could
increase their Medicaid FMAPs.33

29 For example, 27 states reported that they used funds from the FMAP increase enacted in 2003 to avoid, minimize, or
postpone Medicaid cuts or freezes. However, the funds also helped many states fill shortfalls in their overall general
fund budgets. See Kaiser Commission on Medicaid and the Uninsured, Financing the Medicaid Program: The Impact
of Federal Fiscal Relief, April 2004, at http://kff.org/medicaid/upload/Financing-the-Medicaid-Program-The-Impact-
of-Federal-Fiscal-Relief-April-2004.pdf and Vernon Smith et al., States Respond to Fiscal Pressure: A 50-State Update
of State Medicaid Spending Growth and Cost Containment Actions, Kaiser Commission on Medicaid and the
Uninsured, January 2004, at http://www.kff.org/medicaid/7001.cfm. For another assessment of how Medicaid was
treated in FY2004 in the budgets of ten states, see James W. Fossett and Courtney E. Burke, Medicaid and State
Budgets in FY2004: Why Medicaid Is So Hard to Cut, Rockefeller Institute of Government, July 2004, at
http://www.rockinst.org/pdf/health_care/2004-07-
medicaid_and_state_budgets_in_fy_2004_why_medicaid_is_hard_to_cut.pdf.
30 Vernon Smith et al., Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an
Economic Downturn, Kaiser Commission on Medicaid and the Uninsured, September 2008, at http://www.kff.org/
medicaid/7815.cfm.
31 Vernon Smith et al., Medicaid in a Crunch: A Mid-FY 2009 Update on State Medicaid Issues in a Recession, Kaiser
Commission on Medicaid and the Uninsured, January 2009, http://kff.org/medicaid/kcmu010909pkg.cfm. Additional
information on state fiscal conditions is available from a number of sources, including the National Association of State
Budget Officers and the National Governors Association, which jointly publish a variety of publications
(http://www.nasbo.org/); the National Conference of State Legislatures (http://www.ncsl.org/summit/budgetmap.htm);
and the Center on Budget and Policy Priorities (http://www.cbpp.org/pubs/sfp.htm).
32 Statement of Peter R. Orszag, Director, Congressional Budget Office, before the Committee on Finance, U.S. Senate,
Options for Responding to Short-Term Economic Weakness, January 22, 2008, at http://cbo.gov/ftpdocs/89xx/doc8932/
01-22-TestimonyEconStimulus.pdf.
33 See CRS Congressional Distribution Memorandum, Estimated Medicaid FMAPs Under a Proposal to Disregard
Certain Employer Pension and Insurance Fund Contributions, by April Grady (available upon request).
ȱȱȱ
ŗŚȱ

ǱȱȱȱȱȱȱǻǼȱ
ȱ

ȱȱȱ

April Grady

Analyst in Health Care Financing
agrady@crs.loc.gov, 7-9578

ȱȱȱ
ŗśȱ