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Medicaid expenditure continues to grow and is projected to surpass ** U.S. dollars for the first time in 2027. It is estimated that the federal government will continue to pay around ** percent of total Medicaid costs over the coming years, with states picking up the other ** percent.

Federal government pays a higher share

The Medicaid expenditure forecasts are similar to spending patterns of recent years, with an approximate split between the federal government and the states. In 2017, the federal government spent around *** billion U.S. dollars on Medicaid costs, while states paid nearly *** billion U.S. dollars. Total Medicaid expenditure increased for * consecutive years between 2006 and 2017, and much of the growth is the result of higher enrollment numbers.

How are state costs matched by the federal government?

Although the federal government establishes a framework for all states to follow, each state can administer its own Medicaid program differently. The costs of operating the program are shared between the two, with the federal government matching state spending for eligible beneficiaries based on a formula called the federal medical assistance percentage (FMAP). This calculation is designed so that the federal government pays a larger share of costs in poorer states, such as West Virginia and Mississippi. In 2020, the FMAP ranged from a base level of ** percent up to ** percent.