Policy Research Institute
NAMI POLICY RESEARCH INSTITUTE
STATE ACTION ALERT
February 21, 2003
INCREASING STATE MEDICAID FUNDING MATCHES:
A GUIDE FOR ADVOCATES
The federal government reimburses states for a substantial portion of their Medicaid costs. The Medicaid budget problems that states are experiencing are being exacerbated by reductions in federal Medicaid matching payments to some states. These payments are based on the "Federal Medical Assistance Percentage" or FMAP. The FMAP is determined by historical economic data.
The current FMAP rates are based on data from years prior to the recession, placing a number of states in the position of having to fund their Medicaid programs with fewer federal dollars at a time when states are facing record state revenue shortfalls.
Realizing the service, infrastructure, and community economic impacts of the loss of federal funds if states cut back on their Medicaid spending, governors are aggressively supporting initiatives in Congress that will increase the federal match rates.
State Medicaid spending brings federal funds into a state’s economy. For every $1 a state spends on Medicaid, between $1 and $3.30 in federal funds is brought into the state.
Governors are also aware that there are serious implications regarding the safety of patients, cooperation of unions and loss of accreditation for Medicaid funds as state hospital staff cuts reach dangerous levels. Proponents of an FMAP increase contend that increased federal support will temper the need for drastic cuts in Medicaid programs.
NAMI is supporting congressional legislative efforts to increase FMAP in 2003, and working closely with the National Governors’ Association, Association of County Commissioners and Association of State Legislators as they work to increase federal Medicaid matching rates.
Contact your senator and representative to seek their support in temporarily increasing the FMAP to assist states in this difficult financial time.
- Indicate that a temporary increase in the federal share will help compensate states for losses in tax revenue and state budget deficits caused by increases in Medicaid costs.
- Indicate that immediate financial assistance in the form of an increased FMAP will alleviate the pressures that are growing in many states to make drastic cuts in benefits and eligibility in the program.
- Indicate the increase in the federal share will help states absorb the enormous burden that the recession will place on the Medicaid program.
- Indicate that the FMAP increase will reduce the pressure on states to cut spending and raise taxes.
- Indicate that it will have the additional benefit of reducing the need to cut Medicaid eligibility and benefits such mental health services, at a time of greater need.
- Indicate that the FMAP increase would help states meet their current commitments to the Medicaid program and also be able to withstand future enrollment increases that will occur as a result of the recession.