How Is Medicaid Funded?
Medicaid is what is known as a joint federal-state program. This means that funding come from both the federal government and individual state governments. Every state runs its own Medicaid program, but must adhere to specific guidelines set by the federal government in order to be able to receive federal government funding.
Federal funding is received through a matching formula that differs from state to state. This formula offers a different amount to every state–run program that depends upon each state’s poverty level. The wealthiest states can receive a maximum of 50% funds matching while states with less money are eligible to receive larger matches.
Medicaid spending has become a major budgetary issue for states. Every state spends on average 16.8% of its annual budget on Medicaid. If you include the amount matched by the federal government, Medicaid takes up 22% of each state’s budget, on average.
Altogether, the federal government pays roughly 57% of all Medicaid expenses. During 2008, it is estimated that $204 billion dollars of federal money was spent on Medicaid programs.
Budget Cuts
In 2008, the federal government had planned to reduce the amount of federal funding that would be dedicated to Medicaid. According to the old plan, federal Medicaid funding was to be reduced by $17 billion over the next five years, greatly reducing the amount of help given to the poor in need of medical care. These budget cuts were to be taken by reducing the federal match rate for several services, including long-tem care and prescription drug reimbursement.
These changes were repealed in 2009 with the introduction of the American Recovery and reinvestment Act.
Stimulus Plan
On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act, also known as the Stimulus Plan. The Stimulus Plan pumped $787 billion dollars into the United States economy to create new programs and opportunities to boost out country’s economy.
$147 billion of the Stimulus Plan was dedicated to healthcare. $86.6 billion of this is to be used for federal funding of Medicare. And if you’re wondering about eligibility for medicaid you can apply for medicaid online.