National Health Policy Forum

The Basics

Date: FEBRUARY 13, 2013
Title: Medicaid Financing
Author: Kathryn Linehan
Summary: This publication provides an overview of how the Medicaid program is financed. It explains how the federal and state shares of funding are determined, briefly describes disproportionate share hospital payments and how those are affected by the Patient Protection and Affordable Care Act of 2010, and outlines financing mechanisms states have used to maximize federal Medicaid matching funds.
Related
Materials:
See also "Medicaid Eligibility and Benefits" (The Basics, January 28, 2011).

For a more in-depth discussion of FMAP, see "Medicaid Financing: How the FMAP Formula Works and Why It Falls Short" (Issue Brief No. 828, December 11, 2008).