Background
Medicaid is the nation’s largest publicly financed health insurance program for people with low incomes. It is a means-tested program. That means eligibility is based on income and assets. It is funded jointly by the federal government and states, but it is managed by the states. The federal share of Medicaid financing is determined by the Federal Medical Assistance Percentage (FMAP) formula. The FMAP—which is set by federal statute— is derived by comparing a state’s per capita personal income relative to the U.S. per capita personal income. The formula, which has not been updated since 1965, is designed so that no state receives an FMAP of less than 50 percent.