Federal Medical Assistance Percentage (FMAP) for Medicaid

Federal Medical Assistance Percentage (FMAP) for Medicaid

Order Code RS21262
Updated March 1, 2005
CRS Report for Congress
Received through the CRS Web
Federal Medical Assistance Percentage
(FMAP) for Medicaid
Christine Scott
Specialist in Tax Economics
Domestic Social Policy Division
Summary
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 Medicaid 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 FY2005, state FMAPs range from 50% to 77%;
that is, the federal government’s share of Medicaid costs for FY2005 ranges from 50%
to 77% depending on the state. For FY2006, the state FMAPs range from 50% to 76%.
The current fiscal situation of the states has focused attention on Medicaid costs.
In the 107th Congress, legislation to increase the FMAP passed the Senate. Legislation
was introduced in the House but did not pass. In the 108th Congress, the Jobs and
Growth Tax Relief Reconciliation Act of 2003 (JGTRRA, P.L. 108-027) contained a
provision for temporary fiscal relief to states that included increased payments under
Medicaid. This report will be updated as legislative activities warrant.
Introduction
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 is determined by a formula included in statute;
states must contribute the remaining portion of costs in order to qualify for federal funds.
Congressional Research Service ˜ The Library of Congress

CRS-2
Federal Medical Assistance Percentage (FMAP)
The federal government’s share of a state’s expenditures for Medicaid is called the
federal medical assistance percentage (FMAP). The FMAP for each of the 50 states and
the District of Columbia is determined annually based on a statutory formula that uses the
average per capita income of each state and the United States for the three most recent
calendar years for which data are available from the Department of Commerce. This
formula is designed to pay a higher FMAP to states with lower per capita income relative
to the national average (and vice versa for states with higher per capita incomes). The
Secretary of Health and Human Services (HHS) must promulgate the FMAP between
October 1 and November 1 of each year. This FMAP is in effect for the one-year period
beginning the following October. Thus, the FMAP for FY2003, the year beginning
October 2002, was promulgated in 2001. FMAPs must not fall below 50% or exceed
83%.1 Overall, the federal government finances about 57% of all Medicaid costs
annually.
In the 50 states and the District of Columbia, Medicaid is an individual entitlement.
There are no limits on the federal payments for Medicaid as long as the state is able to
contribute its share of the matching funds. In contrast, Medicaid programs in the
territories are subject to spending caps. The spending caps for FY2003 are $201.4 million
for Puerto Rico, $6.14 million for Guam, $6.35 million for the Virgin Islands, $3.62
million for American Samoa, and $2.19 million for the Northern Mariana Islands. For
subsequent fiscal years, these caps are increased by the percentage change in the medical
care component of the Consumer Price Index for All Urban Consumers (as published by
the Bureau of Labor Statistics). The FMAP is statutorily set at 50% for the territories.
Therefore, the federal government pays 50% of the cost of Medicaid items and services
in the territories up to the spending caps. In addition, for disproportionate share to
hospital (DSH) adjustments, the federal government matches state payments using the
FMAP, but the total DSH adjustment payments in a state are subject to an annual limit
at the state and facility level.
Legislative Developments
The recent fiscal crisis for states has focused attention on the impact of Medicaid
spending on state budgets.2
During the 107th Congress, the Senate passed legislation (S. 812) that would have
provided fiscal relief to the states through a temporary increase in the federal
government’s share of Medicaid program costs by increasing each state’s FMAP. The
Senate-passed bill would have maintained a state’s FY2002 FMAP for FY2003 if the
FY2003 FMAP was lower (“hold-harmless”). In addition, each state would have received
an increase in their FMAP of 1.35 percentage points for FY2003. Although bills were
1 For the District of Columbia, the FMAP is permanently set to 70.00% starting in FY1998. For
Alaska, the state percentage is calculated using the three-year average per capita income for the
state divided by 1.05, for FY2001 through FY2005 only. For FY2006, the FMAP for Alaska is
calculated using the standard formula.
2 For more information on the role of Medicaid in state budgets, see CRS Report RL31773,
Medicaid and the Current State Fiscal Crisis, by Christine Scott.

CRS-3
introduced in the House to also provide a temporary increase in the FMAP, no further
action occurred. Other proposals were considered that would have provided grants to
states for general fiscal relief but did not specify that funds would be for Medicaid
purposes.
In the 108th Congress, the Jobs and Growth Tax Relief Reconciliation Act of 2003
(JGTRRA, P.L. 108-027) contained a provision providing temporary fiscal relief for states
and local governments. JGTRRA provided $10 billion to the states through changes in
Medicaid financing and direct grants. The FMAPs for the last two quarters of FY2003
and the first three quarters of FY2004 were held harmless for declines from the prior year,
and 2.95 percentage points were added to the FMAPs. In addition, the spending caps for
the territories were raised by 5.9% for the last two quarters of FY2003 and first three
quarters of FY2004. JGTRRA also provided $5 billion in grants to the states (including
the District of Columbia, Puerto Rico, and the territories) in both FY2003 and FY2004
based on population. The grant funds had to be used for improving education or job
training, health care services, transportation or other infrastructure, law enforcement or
public safety, and maintaining essential government services.
Table 1 provides the FMAP for each state, the District of Columbia, and the
territories for FY2003-FY2006, including the rates under H.R. 2 for FY2003 and FY2004.

CRS-4
Table 1. Federal Medical Assistance Percentage (FMAP)
for FY2003-FY2006, by State
FY2003
FY2004
FY2003
FY2004
Last 2
First 3
State
First 2
Last
FY2005 FY2006
Quarters
Quarters
Quarters
Quarter
(H.R. 2)
(H.R. 2)
Alabama
70.60
73.55
73.70
70.75
70.83
69.51
Alaska
58.27
61.22
61.34
58.39
57.58
50.16
Arizona
67.25
70.20
70.21
67.26
67.45
66.98
Arkansas
74.28
77.23
77.62
74.67
74.75
73.77
California
50.00
54.35
52.95
50.00
50.00
50.00
Colorado
50.00
52.95
52.95
50.00
50.00
50.00
Connecticut
50.00
52.95
52.95
50.00
50.00
50.00
Delaware
50.00
52.95
52.95
50.00
50.38
50.09
District of Columbia
70.00
72.95
72.95
70.00
70.00
70.00
Florida
58.83
61.78
61.88
58.93
58.90
58.89
Georgia
59.60
62.55
62.55
59.58
60.44
60.60
Hawaii
58.77
61.72
61.85
58.90
58.47
58.81
Idaho
70.96
73.97
73.91
70.46
70.62
69.91
Illinois
50.00
52.95
52.95
50.00
50.00
50.00
Indiana
61.97
64.99
65.27
62.32
62.78
62.98
Iowa
63.50
66.45
66.88
63.93
63.55
63.61
Kansas
60.15
63.15
63.77
60.82
61.01
60.41
Kentucky
69.89
72.89
73.04
70.09
69.60
69.26
Louisiana
71.28
74.23
74.58
71.63
71.04
69.79
Maine
66.22
69.53
69.17
66.01
64.89
62.90
Maryland
50.00
52.95
52.95
50.00
50.00
50.00
Massachusetts
50.00
52.95
52.95
50.00
50.00
50.00
Michigan
55.42
59.31
58.84
55.89
56.71
56.59
Minnesota
50.00
52.95
52.95
50.00
50.00
50.00
Mississippi
76.62
79.57
80.03
77.08
77.08
76.00
Missouri
61.23
64.18
64.42
61.47
61.15
61.93
Montana
72.96
75.91
75.91
72.85
71.90
70.54
Nebraska
59.52
62.50
62.84
59.89
59.64
59.68
Nevada
52.39
55.34
57.88
54.93
55.90
54.76
New Hampshire
50.00
52.95
52.95
50.00
50.00
50.00
New Jersey
50.00
52.95
52.95
50.00
50.00
50.00
New Mexico
74.56
77.51
77.80
74.85
74.30
71.15
New York
50.00
52.95
52.95
50.00
50.00
50.00
North Carolina
62.56
65.51
65.80
62.85
63.63
63.49
North Dakota
68.36
72.82
71.31
68.31
67.49
65.85
Ohio
58.83
61.78
62.18
59.23
59.68
59.88
Oklahoma
70.56
73.51
73.51
70.24
70.18
67.91
Oregon
60.16
63.11
63.76
60.81
61.12
61.57
Pennsylvania
54.69
57.64
57.71
54.76
53.84
55.05
Rhode Island
55.40
58.35
58.98
56.03
55.38
54.45

CRS-5
FY2003
FY2004
FY2003
FY2004
Last 2
First 3
State
First 2
Last
FY2005 FY2006
Quarters
Quarters
Quarters
Quarter
(H.R. 2)
(H.R. 2)
South Carolina
69.81
72.76
72.81
69.86
69.89
69.32
South Dakota
65.29
68.88
68.62
65.67
66.03
65.07
Tennessee
64.59
67.54
67.54
64.40
64.81
63.99
Texas
59.99
63.12
63.17
60.22
60.87
60.66
Utah
71.24
74.19
74.67
71.72
72.14
70.76
Vermont
62.41
66.01
65.36
61.34
60.11
58.49
Virginia
50.53
54.40
53.48
50.00
50.00
50.00
Washington
50.00
53.32
52.95
50.00
50.00
50.00
West Virginia
75.04
78.22
78.14
75.19
74.65
72.99
Wisconsin
58.43
61.52
61.38
58.41
58.32
57.65
Wyoming
61.32
64.92
64.27
59.77
57.90
54.23
America Samoa
50.00
52.95
52.95
50.00
50.00
50.00
Guam
50.00
52.95
52.95
50.00
50.00
50.00
N. Marina Islands
50.00
52.95
52.95
50.00
50.00
50.00
Puerto Rico
50.00
52.95
52.95
50.00
50.00
50.00
Virgin Islands
50.00
52.95
52.95
50.00
50.00
50.00
Source: Table prepared by the Congressional Research Service (CRS).