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 (FMAPThe percentage of a state’s Medicaid costs that will be paid by the federal government. It is determined by a formula designed to ensure that no state receives an FMAP lower than 50 percent. ) formula. The FMAPThe percentage of a state’s Medicaid costs that will be paid by the federal government. It is determined by a formula designed to ensure that no state receives an FMAP lower than 50 percent. —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 FMAPThe percentage of a state’s Medicaid costs that will be paid by the federal government. It is determined by a formula designed to ensure that no state receives an FMAP lower than 50 percent. of less than 50 percent.