$15 Billion in Medicaid Relief Headed To States

Federal Medical Assistance Percentage (FMAP)

Funding by State

Medicaid is a federal/state partnership program to provide health benefits to certain low income Americans including children, their parents, pregnant women, the elderly and those with disabilities. Over the course of the year, some 63 million people who would otherwise not have access to regular health care rely on Medicaid.

Because it is a partnership, states and the federal government each have a role in designing and paying for each state’s program. While states have some flexibility in determining what benefits they provide, who will be eligible and how much they will pay health care providers, they must work within federal guidelines. In turn, the federal government pays a portion of each state’s Medicaid costs. These matching dollars are referred to as Federal Medical Assistance Percentage (FMAP) payments.

The amount of FMAP a state receives is based upon its relative wealth with lower per capita income states receiving higher FMAPs. Medicaid funding percentages can range from a minimum of 50 percent of costs, to as high as 83 percent. (For 2009, the highest state matching rate is nearly 76 percent for Mississippi).While adjusted incrementally each year based on economic changes in the states, Congress can increase FMAP funding across the board at any time.

As part of the American Recovery and Reinvestment Act of 2009 (ARRA), Congress acted to increase FMAP payments by a flat 6.2 percentage points for all states on a temporary basis to help states during the current recession. Funding increases will be in effect from FY 2009 until the first quarter of FY 2011.

This money—which could total $15 billion—was made available to states by President Obama on February 25. This funding could help 20 million more Americans get Medicaid benefits.

"This plan will also help ensure that you don’t need to make cuts to essential services Americans rely on now more than ever," the President said to national governors.

Read the White House news release and state by state chart.