Medicaid Expenditures, FY2002 and FY2003

Publication Date: February 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

Medicaid is a health insurance program jointly funded by the states and the federal government. Generally, eligibility is limited to low-income children, pregnant women, parents of dependent children, people with disabilities, and the elderly. Each state designs and administers its own program within broad federal guidelines.

The federal government shares in a state's Medicaid costs by means of a statutory formula based on a state's per capita income, adjusted annually. The federal medical assistance percentage (FMAP) is the percentage of Medicaid benefit costs paid for by the federal government. FMAPs must not fall below 50% and may not exceed 83%. During FY2002, the federal government financed about 57% of all Medicaid costs. During FY2003, the federal government financed about 59% of all Medicaid costs. This increase in FY2003 is likely the result of the temporary FMAP increase enacted in May 2003 (P.L. 108-27).

Federal payments for health care services and administration of the Medicaid program totaled $146 billion in FY2002, 12.9% higher than in FY2001. Combined state and federal spending for Medicaid totaled $258 billion in FY2002, a 13.2% increase over FY2001.

Federal payments for health care services and administration of the Medicaid program totaled $161 billion in FY2003, 9.7% higher than in FY2002. Combined state and federal spending in FY2003 for Medicaid totaled $275 billion, a 6.9% increase over FY2002. This report will be updated when new data are available.