Medicaid is jointly funded by the federal government and individual state/territory governments, with the federal government typically covering a higher percentage (roughly 69% on average) through the Federal Medical Assistance Percentage (FMAP). States finance their share using general revenue and provider taxes, while the federal government matches these funds without a cap based on per capita income.
Medicaid, the public health insurance program covering more than 72 million people with low income, is jointly funded by states and the federal government. Medicaid spending totaled around $890 billion in the 2023 federal fiscal year, with the federal government paying 69 percent and states paying 31 percent.
Overview of Medicaid Financing
The federal medical assistance percentage (FMAP) governs most federal funding for states and takes into account a state's per capita income. For 2025, the FMAP ranges from a minimum of 50 percent in wealthier states such as California to 77 percent in Mississippi.
The Medicaid program is jointly funded by the federal government and states. The federal government pays states for a specified percentage of program expenditures, called the Federal Medical Assistance Percentage (FMAP).
It is funded jointly by the federal government and the states. Within federal guidelines, each state has considerable flexibility in how it operates its own Medicaid program. Eligibility and covered benefits vary substantially by state.
CMS is the federal agency that provides health coverage to more than 160 million through Medicare, Medicaid, the Children's Health Insurance Program, and the Health Insurance Marketplace.
These FMAPs are determined by a formula set in statute and are for services used by people eligible through traditional Medicaid, which includes individuals who are eligible as children, low-income parents, because of disability, or because of age (65+).
The Federal Government Paid Over Two-Thirds of Total Medicaid Spending in FFY 2023 Though the Share and Amount Varies By State. Note: FFY = federal fiscal year. The federal government paid 69% ($606 billion) and states paid 31% ($274 billion) of the costs of Medicaid ($880 billion) in FFY 2023.
Although the Centers for Medicare & Medicaid Services (CMS) is responsible for Medicaid program administration at the federal level, individual state Medicaid agencies establish many policies and manage their own programs on a day-to-day basis.
Created in 1965, Medicaid provides health coverage to low-income families and individuals, including children, parents, pregnant people, seniors, and people with disabilities. It is funded jointly by the federal government and the states.
The federal government and the states share responsibility for financing Medicaid. States receive federal matching funds for allowable state expenditures on an open-ended basis. As state spending increases or decreases, so does federal spending.
Ultimately, spending on Medicaid services is determined by the number of people enrolled in a Medicaid program, the amount and type of services they utilize, and the cost of these services. Medicaid agencies must also account for the costs required to administer the program, including staff and IT systems.
Medicaid provides health care coverage to one in five Americans — more than 70 million people — including 40% of all children and 60% of all nursing home residents. The federal and state governments jointly finance Medicaid.
Medicaid provides free or low-cost medical benefits to eligible: Adults with a low income. Children. Pregnant women.
Medicaid is jointly financed by the federal government and the states, with the federal government guaranteeing states federal matching payments with no pre-set limit. In federal fiscal year (FFY) 2024, the federal government paid 65% and states paid 35% of total Medicaid costs.
The Center for Medicaid and CHIP Services (CMCS) is one of six Centers within the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services (HHS).
The federal government reimburses states for a portion of each state's Medicaid program costs. Federal Medicaid funding is an open-ended entitlement to states, which means there is no upper limit or cap on the amount of federal Medicaid matching funds a state may receive.
Yes, reports from early 2025 indicate that around 37% of U.S. hospitals were still operating at a loss, a persistent financial challenge driven by high inflation, soaring labor costs (despite efforts to reduce reliance on expensive contract staff), and inadequate reimbursement rates, leading to potential service cuts, layoffs, and increased financial strain, especially for rural and community hospitals, as noted by Kaufman Hall.
While Medicaid covers 1 in 5 people living in the United States, Medicaid is a key source of coverage for certain populations. In 2023, Medicaid covered nearly 4 in 10 children, over 8 in 10 children in poverty, 1 in 6 adults, and almost half of adults in poverty.
While children and low-income adults make up the largest share of Medicaid enrollees, people eligible due to age (65+) or disability account for over half of all Medicaid spending, due to higher healthcare needs and use of costly long-term care services. Children are the biggest group by enrollment numbers, while low-income adults (especially through ACA expansion) and the elderly/disabled are key populations.
For example, polling by the Kaiser Family Foundation highlights persistent ideological divides in how Americans perceive Medicaid. While a majority of Democrats (79%) and Independents (60%) view Medicaid primarily as a health insurance program, most Republicans (54%) see it as a government welfare program [8].