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History Rebuts Claim That Federal Medicaid Matching Rates Are Unstable

February 3, 2014 at 9:14 AM

As I explained last week, there’s no evidence to support claims that the federal government will renege on its commitment to finance nearly all of the costs of health reform’s Medicaid expansion.  Some critics also assert that Congress frequently changes the formula that determines what share of states’ Medicaid costs the federal government will cover (also known as the FMAP).  But a look at Medicaid’s history shows the exact opposite.

The federal government picks up about 57 percent of state Medicaid costs on average, and that average has remained remarkably steady for decades.  (Federal matching rates for individual states can vary from year to year, but that’s because the formula takes into account changes in states’ per capita income.)

In fact, the federal government has only modified the overall FMAP formula three times in the last 35 years.  And the past two times, it raised matching rates temporarily (for fiscal years 2003-2004 and 2008-2011) to provide state fiscal relief in response to economic downturns.

The only time the federal government cut Medicaid matching rates was in 1981, when President Reagan and Congress enacted a temporary reduction for 1982-1984.  The rates, however, returned to their previous levels in 1985.

That’s hardly a pattern of arbitrary cuts in federal Medicaid funding.