Contents

• Introduction
• Medicaid Financing
• Federal Share
• The Federal Medical Assistance Percentage
• Medicaid and the Federal Budget Process
• State Share
• Medicaid Expenditures
• Medicaid and National Health Expenditures
• Trend in Medicaid Expenditures
• Federal and State Shares of Expenditures
• Medicaid Expenditures by Service Type
• Per-Enrollee Medicaid Expenditures
• Factors Affecting Medicaid Expenditures
• State Variability in Medicaid Spending
• Conclusion

Summary

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports (LTSS). Medicaid is a federal and state partnership that is jointly financed by both the federal government and the states.

The federal government's share for most Medicaid expenditures is called the federal medical assistance percentage (FMAP). Generally determined annually, the FMAP formula is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). Federal Medicaid funding to states is open ended.

The federal government provides states flexibility in determining the composition of the state share (also referred to as the nonfederal share) of Medicaid expenditures. As a result, there is significant variation from state to state in how the state share of Medicaid expenditures is financed.

In 2023, Medicaid represented 18% of national health expenditures; in that year, private health insurance and Medicare accounted for 30% and 21% of national health expenditures, respectively. Medicaid is a significant payer in the categories of health spending that includes LTSS and hospital expenditures. For the other services (such as durable medical equipment, physician and clinical services, prescription drugs, and dental services), Medicaid accounts for a smaller share of the national expenditures.

In FY2023, Medicaid expenditures totaled $894 billion, with the federal government paying $614 billion, or about 69% of the total. Spending on managed care comprised 56% of Medicaid expenditures on benefits in FY2023, and LTSS accounted for 19% Medicaid expenditures on benefits. Per-enrollee Medicaid expenditures for individuals with disabilities and the elderly are significantly higher than per-enrollee expenditures for adults and children, due in part to the higher utilization of LTSS among individuals with disabilities and the elderly.

Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates, and individuals' wages. In addition, state-specific factors, such as programmatic decisions and demographics, affect Medicaid expenditures and cause Medicaid spending to vary widely from state to state.

In recent years, Medicaid expenditures have increased significantly due to the Family First Coronavirus Response Act (FFCRA; P.L. 116-127) FMAP increase and the associated continuous coverage requirement. As a result, both Medicaid enrollment and Medicaid expenditures rose sharply from FY2020 through FY2023. With the expiration of the FFCRA FMAP increase and the continuous coverage requirement, Medicaid enrollment is estimated to have declined from 96 million in FY2023 to 83 million in FY2024—a decrease of almost 14%. This reduction in Medicaid enrollment is expected to result in slower growth in total Medicaid expenditures.

Currently, Congress is discussing policy options for reducing federal Medicaid expenditures. The House of Representatives adopted the House FY2025 budget resolution (H.Con.Res. 14) on April 10, 2025. H.Con.Res. 14 includes reconciliation instructions directing the Committee on Energy and Commerce to reduce the deficit by not less than $880 billion for FY2025 through FY2034. Some press reports suggest that much of the $880 billion in reductions could come from reductions to federal Medicaid expenditures.

Introduction

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports (LTSS).¹ Medicaid is a federal and state partnership with both the federal government and the states financing Medicaid. In FY2023, Medicaid provided health care services to 96 million individuals at a total cost of $894 billion (including federal and state expenditures).²

Participation in Medicaid is voluntary. All states, the District of Columbia, and the territories choose to participate. The federal government sets some basic requirements for Medicaid, and states have the flexibility to design their own version of Medicaid within the federal government's basic framework.

States incur Medicaid costs by making payments to service providers (e.g., for beneficiaries' doctor visits) and performing administrative activities (e.g., making eligibility determinations). The federal government reimburses states for a share of each dollar spent in accordance with their federally approved Medicaid state plans.

Medicaid is an entitlement for both states and individuals. The Medicaid entitlement to states ensures that, so long as states operate their programs within the federal requirements, states are entitled to federal Medicaid matching funds. Medicaid is also an individual entitlement, which means that anyone eligible for Medicaid under their state's eligibility standards is guaranteed Medicaid coverage, should they apply.

This report's first section, "Medicaid Financing" provides an overview of Medicaid's financing structure, including both federal and state financing issues. The "Medicaid Expenditures" section of the report discusses Medicaid in terms of national health expenditures, trends in Medicaid expenditures, economic factors affecting Medicaid, and state variability in spending.

Medicaid Financing

The federal government and the states share the cost of Medicaid. The federal government reimburses states for a portion (i.e., the federal share or the federal financial participation) of each state's Medicaid program costs. Federal Medicaid funding is an open-ended entitlement to states, which means there is no upper limit or cap on the amount of federal Medicaid funds a state may receive.

Federal Share

A primary goal of the federal Medicaid matching arrangement is to share the cost of providing health care services to low-income residents with the states. The Medicaid financing structure represents a fiscal commitment on the part of the federal government toward paying at least half (but not all) of the cost of Medicaid.³

The federal government's open-ended financial commitment to Medicaid provides a fiscal incentive for states to extend Medicaid coverage to more low-income individuals than a state might choose to fund without the federal Medicaid funding. However, this incentive is counterbalanced by the requirement for states to share in the cost of Medicaid.⁴

Although most federal Medicaid funding is provided on an open-ended basis, certain types of federal Medicaid funding are capped. For instance, federal disproportionate share hospital (DSH) funding to states cannot exceed a state-specific annual allotment.⁵ In addition, Medicaid programs in the territories (i.e., American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the Virgin Islands) are subject to annual federal capped funding.⁶ Another exception to open-ended federal Medicaid funding is the Qualified Individuals program.⁷

The Federal Medical Assistance Percentage

The federal government's share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate, which generally is determined annually and varies by state according to each state's per capita income relative to the U.S. per capita income.⁸ The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes. FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. In FY2025, FMAP rates range from 50% (10 states) to 76.9% (Mississippi).⁹

The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states (e.g., the District of Columbia and the territories), situations (e.g., during economic downturns), populations (e.g., individuals covered by the Patient Protection and Affordable Care Act's [ACA, P.L. 111-148 as amended] Medicaid expansion and certain women with breast or cervical cancer), providers (e.g., Indian Health Service facilities), and services (e.g., family planning and home health services). In addition, the federal share for most Medicaid administrative costs does not vary by state and is generally 50%.

During the Coronavirus Disease 2019 (COVID-19) public health emergency period, the Family First Coronavirus Response Act (FFCRA; P.L. 116-127) provided a 6.2-percentage-point increase to the regular FMAP rates for all states, the District of Columbia, and the territories that meet certain conditions.¹⁰ The FFCRA FMAP increase of 6.2 percentage points began on January 1, 2020, and the FFCRA FMAP increase began to phase down on April 1, 2023, and ended December 31, 2023.¹¹

Medicaid and the Federal Budget Process

As discussed above, Medicaid is a federal entitlement to states, and in federal-budget parlance entitlement spending is categorized as mandatory spending, which is also referred to as direct spending. Although most mandatory spending programs bypass the annual appropriations process and automatically receive funding each year according to either permanent or multiyear appropriations in the substantive law, Medicaid is funded in the annual appropriations acts. For this reason, Medicaid is referred to as an appropriated entitlement.¹²

The level of spending for appropriated entitlements, similar to other entitlements, is based on the benefit and eligibility criteria established in law. The amount of budget authority provided in appropriations acts for Medicaid is based on budget projections for meeting the funding needs of the program. Although most changes to the Medicaid program are made through statute, the fact that Medicaid is subject to the annual appropriations process provides an opportunity for Congress to place funding limitations on specified activities in Medicaid, such as the circumstances under which federal funds can be used to pay for abortions.¹³

The appropriations bill usually provides Medicaid with (1) funding for the fiscal year considered in the appropriations bill and (2) an advance appropriation for the first quarter of the following fiscal year.¹⁴ For instance, the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 119-4), provided Medicaid with funding for three quarters of FY2025 and an advance appropriation of $261.1 billion for the first quarter of FY2026.

State Share

The federal government provides broad guidelines to states regarding allowable funding sources for the state share of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources.

States can use state general funds (i.e., personal-income, sales, and corporate-income taxes) and "other state funds" (e.g., provider taxes,¹⁵ local government funds,¹⁶ tobacco settlement funds) to finance the state share of Medicaid. Federal statute allows as much as 60% of the state share to come from local government funding.¹⁷ Federal regulations also stipulate that the state share not be funded with federal funds (Medicaid or otherwise).¹⁸ In state FY2024, on average, 68% of the state share of Medicaid expenditures was financed by state general funds, and the remaining 32% was financed by other state funds.¹⁹

A few funding sources have received a great deal of attention over the past couple decades because states have used these funds in financing mechanisms designed to maximize the amount of federal Medicaid funds coming to the state. For example, some states have used financing mechanisms that involve the coordination of fund sources, such as provider taxes, intergovernmental transfers (IGTs), or certified public expenditures (CPEs), and payment policies, such as DSH and non-DSH supplemental payments, to draw down federal Medicaid funds without expending much, if any, state general funds.²⁰

Medicaid Expenditures²¹

Medicaid expenditures account for a significant and growing portion of total health expenditures in the United States. Enrollment increases due to expansions of eligibility and economic downturns account for much of Medicaid's expenditure growth over time. However, Medicaid expenditures also are influenced by economic, demographic, and programmatic factors. In addition, there is considerable variation in Medicaid spending from state to state due to demographic differences, state policy choices, utilization of services, and provider payment rates.

Medicaid and National Health Expenditures

In 2023, Medicaid represented almost 18% of national health expenditures; in that same year, private health insurance and Medicare accounted for 30% and 21% of national health expenditures, respectively.²² Figure 1 shows Medicaid as a percentage of national health expenditures from 1966 (the first year Medicaid was in operation) through 2023.

Figure 1. Medicaid as a Percentage of National Health Expenditures (1966-2023)

Source: Centers for Medicare & Medicaid Services (CMS), "National Health Expenditures by Type of Service and Source of Funds, CY1960-2023," National Health Expenditure Accounts, December 18, 2024.

Over time, Medicaid has become one of the largest payers in the U.S. health care system. Since the start-up years (i.e., 1966 through 1971), Medicaid expenditures have grown as a percentage of national health expenditures, with just a few exceptions.²³ From 2015 through 2020, Medicaid expenditures as a percentage of national health expenditures decreased slightly each year. In each year from 2015 through 2020, Medicaid spending increased, but at slower rate than other categories of national health expenditures, mainly due to a slower rate of growth for Medicaid enrollment.²⁴ For 2021 through 2023, Medicaid expenditures as a percentage of national health expenditures increased each year. This is primarily due to Medicaid enrollment increases for 2021 and 2022; for 2023, CMS attributed the increase to "provider rate or cost increases, as well as the growing use of state-directed payments to providers via managed care organizations."²⁵

Medicaid is a major payer in some categories of national health expenditures and accounts for a smaller share of other categories of expenditures. Figure 2 shows that in 2023, Medicaid was a major payer in the categories of spending that include LTSS,²⁶ with Medicaid paying 60% of expenditures in the other health, residential, and personal care category;²⁷ 35% of home health expenditures; and 30% of nursing care facilities and continuing care retirement communities.²⁸ Medicaid accounted for 19% of hospital expenditures. For the other services, in 2023, Medicaid accounted for a smaller share of the national expenditures, with Medicaid paying 14% of durable medical equipment, 12% of physician and clinical expenditures, 11% of prescription drugs, 11% of dental expenditures, and 8% of other professional expenditures. Medicaid did not have any expenditures for non-durable medical products in 2023.

Figure 2. Percentage Distribution of National Health Expenditures by Type of Service and Source of Funds (2023)

Source: CMS, "National Health Expenditures by Source of Funds and Type of Expenditure: Calendar Years 2011-2023," National Health Expenditure Accounts, December 18, 2024. Notes: Personal health care expenditures are outlays for goods and services relating directly to patient care, such as hospital care, physicians' services, prescription drugs, and nursing home care. Other third-party payers and programs includes worksite health care, Indian Health Services, workers' compensation, the Maternal and Child Health program, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration grants, other state and local programs, and school health. The categories of spending that include long-term services and supports expenditures are other health, residential, and personal care expenditures; home health expenditures; and nursing care facilities and continuing care retirement communities. Medicaid estimates are based primarily on financial information reports filed by the state Medicaid agencies on Form CMS-64. These data have a category for capitated payments (including managed care), but the information does not break down managed care spending by service. For the National Health Expenditure Accounts (NHEA), Medicaid managed care payments are reduced by administrative costs and then allocated to NHEA service categories based on the distribution of Medicaid fee-for-service spending for selected services in the state. CHIP: State Children's Health Insurance Program DOD: Department of Defense VA: Department of Veterans Affairs

Trend in Medicaid Expenditures

Figure 3 shows Medicaid expenditures from FY1997 through FY2023 broken down by state and federal expenditures. In FY2023, Medicaid spending on services and administrative activities in the 50 states, the District of Columbia, and the territories totaled $894 billion (see Table A-1 for FY2023 state-by-state expenditures). Of this amount, federal Medicaid expenditures totaled $614 billion and state Medicaid expenditures were $280 billion.

Figure 3. Federal and State Actual and Projected Medicaid Expenditures (FY1997 to FY2023)

Source: CMS, Form CMS-64 Data as reported by states to the Medicaid Budget and Expenditure System, as of May 29, 2024, at https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes/index.html. Notes: The expenditures shown in this figure include all Medicaid expenditures, which include both administrative and benefit spending. These expenditures exclude state Medicaid Fraud Control Units, Medicaid survey and certification of nursing and intermediate care facilities, and the Vaccines for Children program. Recession-related additional federal Medicaid funding was provided in response to the 2001 recession, the 2007-2009 recession, and the COVID-19 public health emergency period. For more information about the recession-related additional federal Medicaid funding, see CRS Report R46346, Medicaid Recession-Related FMAP Increases.

Over time, much of Medicaid's expenditure growth has been due to federal or state expansions of Medicaid eligibility criteria. For instance, the implementation of the ACA Medicaid expansion increased Medicaid expenditures for FY2014 and FY2015.²⁹

During the COVID-19 public health emergency period, Medicaid enrollment increased significantly. Initially, the recession at the beginning of the pandemic caused Medicaid enrollment to increase. Then, the continuous coverage requirement for the FFCRA FMAP increase drove Medicaid enrollment increases for FY2020 through FY2023.³⁰ These enrollment increases also contributed to a significant increase in Medicaid expenditures. The FFCRA FMAP increase ended December 31, 2023, and, with the end of the continuous coverage requirement, Medicaid enrollment is expected to decrease; this is expected to slow the growth in Medicaid expenditures.

Federal and State Shares of Expenditures

The FFCRA FMAP increase impacted the federal and state shares of Medicaid expenditures. Historically, the federal government financed about 57% of total Medicaid expenditures, but the federal share has increased since FY2014 due to the enhanced federal matching rate for the ACA Medicaid expansion.³¹ From FY2014 through FY2019, the federal share of total Medicaid expenditures ranged from 60% to 65%.

The federal share of total Medicaid expenditures increased further with the FFCRA FMAP increase in effect from January 1, 2020, through December 31, 2023. The federal share of Medicaid expenditures rose to 67% in FY2020, 69% in FY2021, and 71% in FY2022. The FFCRA FMAP increase began to phase down on April 1, 2023, resulting in a reduction in the federal share of Medicaid expenditures to 69% of total Medicaid spending in FY2023.³²

The federal share of Medicaid expenditures is expected to decrease in FY2024 because the FFCRA FMAP increase ended on December 31, 2023. The Congressional Budget Office projects federal Medicaid expenditures will decrease slightly in FY2024 and FY2025,³³ and the state share of Medicaid expenditures is expected to increase over this time period.

Medicaid Expenditures by Service Type

Most Medicaid expenditures (i.e., 96% in FY2023) are for medical assistance (or non-administrative) payments. Figure 4 shows medical assistance payments by service type for FY2023. Managed care, which includes payments to managed care organizations,³⁴ primary care case management,³⁵ and non-comprehensive prepaid health plans,³⁶ accounted for 56% of Medicaid expenditures. The remaining expenditures are fee-for-service expenditures.³⁷ LTSS, which include nursing facility and home- and community-based services, made up 19% of all Medicaid expenditures.³⁸ Hospitals received 5% of total Medicaid expenditures in return for services provided to Medicaid fee-for-service enrollees at the payment rates set by states.³⁹

Figure 4. Medicaid Benefit Expenditures by Service Type (FY2023)

Source: Congressional Research Service (CRS) analysis of CMS, Form CMS-64 Data as reported by states to the Medicaid Budget and Expenditure System, as of May 29, 2024, at https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes/index.html. Notes: Prescription drug expenditures are net of rebates. The other service category includes any expenditure type that amounts to less than 1% of total Medicaid expenditures, such as laboratory services, school-based services, physical therapy, etc. Long-term services and supports comprise spending for nursing facility services, home health services, home- and community-based services, personal care services, etc. Managed care is a system for delivering care in which Medicaid enrollees get most or all of their services through an organization under contract with the state, and all expenditures that are not under managed care are under fee-for-service. ICF/IID is an optional Medicaid benefit that enables states to provide comprehensive and individualized health care and rehabilitation services to individuals to promote their functional status and independence. DSH and non-DSH supplemental payments are Medicaid payments made to providers that are separate from and in addition to the standard payment rates for services rendered to Medicaid enrollees. DSH: Disproportionate Share Hospital ICF/DD: Intermediate care facility for individuals with developmental disabilities

Per-Enrollee Medicaid Expenditures

In Medicaid, there are five main eligibility groups: children, adults, expansion adults,⁴⁰ the aged, and individuals with disabilities. Per-enrollee Medicaid expenditures across these groups averaged an estimated $8,813 in FY2022.⁴¹ However, as shown in Figure 5, per-enrollee expenditures varied significantly by eligibility group, with the estimated per-enrollee expenditures by eligibility group ranging from $3,786 for children to $25,483 for individuals with disabilities.

Figure 5. Estimated Expenditures Per Medicaid Enrollee by Major Eligibility Groups (FY2022)

Source: Medicaid and CHIP Payment and Access Commission, "EXHIBIT 19. Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by Eligibility Group and Service Category, FY2022," December 2024 MACStats: Medicaid and CHIP Data Book, December 2024, at https://www.macpac.gov/publication/medicaid-benefit-spending-per-full-year-equivalent-fye-enrollee-by-eligibility-group-and-service-category/. Notes: Enrollment is measured in full-year equivalents, which is the average enrollment over the course of the year. This chart does not include expenditures for DSH and certain incentive and uncompensated care pool payments made under waiver expenditure authority of Section 1115 of the Social Security Act.

One reason the aged and disabled populations have higher per-enrollee expenditures is because these populations consume most of the LTSS, which comprise 19% of all Medicaid expenditures (see Figure 4). Another reason for the difference in per-enrollee expenditures by eligibility group is that children and adults tend to be healthier and therefore tend to have lower health care costs than the aged and disabled populations, even though a significant number of nondisabled adults are pregnant women, who have higher costs on average than other nondisabled adults.

In 2020, the aged and disabled populations together accounted for about 22% of Medicaid enrollment and 54% of Medicaid expenditures. In comparison, the other populations (i.e., children, adults, and expansion adults) accounted for about 78% of Medicaid enrollment and 46% of Medicaid expenditures.⁴²

Even though these differences are substantial, the estimates understate the total health expenditures for the aged and disabled populations because many aged and disabled individual also are enrolled in Medicare (referred to as dual-eligible individuals). For dual-eligible individuals, Medicare is the primary payer before Medicaid. The per-enrollee expenditures shown in Figure 5 reflect only the Medicaid expenditures, and Medicare expenditures for the dual-eligible individuals are not included.

Factors Affecting Medicaid Expenditures

Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates, and individuals' wages. Demographic factors include population growth and the age distribution of the population. Programmatic factors include state decisions regarding which optional eligibility groups and services to cover and how much to pay providers. Other factors include the number of eligible individuals who enroll and their utilization of covered services.

Medicaid enrollment is affected by economic factors, which in turn impact Medicaid expenditures. Medicaid is a countercyclical program, which means Medicaid enrollment growth tends to accelerate when the economy weakens and tends to slow when the economy gains strength. People become eligible for Medicaid during economic downturns because they lose their jobs, experience reductions in income, or lose access to health benefits.⁴³

State Variability in Medicaid Spending

Figure 6 shows that total Medicaid spending is highly concentrated, with the seven most populous states (California, New York, Texas, Pennsylvania, Florida, Ohio, and Illinois) accounting for almost half of Medicaid expenditures in FY2023 (see Table A-1 for FY2023 state-by-state expenditures).⁴⁴ State variation in Medicaid per-enrollee expenditures is significant, with per-enrollee Medicaid expenditures ranging from $5,337 in South Carolina to $14,112 in the District of Columbia for FY2023.⁴⁵

Figure 6. States' Share of Total Medicaid Expenditures (FY2023)

Source: CMS, Form CMS-64 Data as reported by states to the Medicaid Budget and Expenditure System, as of May 29, 2024, at https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes/index.html. Notes: The expenditures shown in this figure include all Medicaid expenditures, which include both administrative and benefit spending. These expenditures exclude state Medicaid Fraud Control Units, Medicaid survey and certification of nursing and intermediate care facilities, and the Vaccines for Children program.

Some of the state variation in Medicaid per-enrollee expenditures is due to demographic differences across states. For instance, states with lower-than-average proportions of elderly and disabled Medicaid enrollees and higher-than-average proportions of Medicaid enrollees who are children and adults would be expected to have lower-than-average per-enrollee Medicaid expenditures. However, state policy choices regarding optional populations and services cause variation in Medicaid spending. Other reasons for state variation in Medicaid per-enrollee expenditures include variation in utilization and provider payment rates.

Conclusion

Medicaid continues to be a significant and growing component of national health expenditures. In FY2023, Medicaid expenditures totaled $894 billion, with the federal government paying $614 billion, or about 69% of the total. States paid the remaining $280 billion, or 31%, of Medicaid expenditures.

In recent years, Medicaid expenditures have increased significantly due to the temporary FFCRA FMAP increase and the associated continuous coverage requirement. As a result, both Medicaid enrollment and expenditures rose sharply from FY2020 through FY2023. With the end of the FFCRA FMAP increase on December 31, 2023, Medicaid enrollment is estimated to have fallen from 96 million in FY2023 to 83 million in FY2024, almost a 14% decrease. This reduction in Medicaid enrollment is expected to result in slower growth in total Medicaid expenditures.

Currently, Congress is discussing policy options for reducing federal Medicaid expenditures. The House of Representatives adopted the House FY2025 budget resolution (H.Con.Res. 14) on April 10, 2025. H.Con.Res. 14 includes reconciliation instructions directing the Committee on Energy and Commerce to reduce the deficit by not less than $880 billion for FY2025 through FY2034.⁴⁶ Some press reports suggest that much of the $880 billion in reductions could come from reductions to federal Medicaid expenditures.⁴⁷

Detail has not been provided regarding how the $880 billion in reductions to federal Medicaid expenditures would be achieved. However, the following policy options have been discussed in the media as possibly being included in the budget reconciliation package: structural reforms to Medicaid financing, such as implementing Medicaid per capita caps (i.e., limiting federal Medicaid funding to states on per enrollee basis), as well as limiting or eliminating states' use of Medicaid provider taxes; amending the FMAP; limiting or eliminating state Medicaid directed payments; and implementing work requirements.

Some of these policy options would have implications for state budgets, and states would need to make decisions about how to respond to the reductions in federal Medicaid funding. States could choose to backfill the loss of federal funding with state funding, or states could choose to make cuts to their Medicaid programs in terms of Medicaid payment rates, income eligibility levels, or benefits. As policymakers consider potential reforms, the structure and variability of Medicaid expenditures, which are shaped by demographic, economic, and policy choices, highlight the tradeoffs involved in balancing fiscal sustainability with Medicaid's role in supporting health coverage for low-income populations.

Appendix. Medicaid Expenditures by State

Table A-1 provides the most recent Medicaid expenditures for each state, the District of Columbia, and the territories, including both the federal and state shares of spending on benefits, administrative services, and total Medicaid expenditures. These Medicaid expenditures exclude spending for State Medicaid Fraud Control Units, Medicaid survey and certification of nursing and intermediate care facilities, and the Vaccines for Children program.

Alice Choi, CRS Research Assistant, provided data support for the update to this report.

Footnotes