“Enrollment increases due to expansions of eligibility and economic downturns account for much of Medicaid’s expenditure growth over time. However, Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates,64 and individuals’ wages. Demographic factors include population growth and the age distribution of the population. Programmatic factors include state decisions regarding optional eligibility groups, optional services, and provider payment rates. Other factors include the number of eligible individuals who enroll, utilization of covered services, and enrollment in other health insurance programs (including Medicare and private health insurance).
“Figure 6 shows actual Medicaid expenditures from FY1997 to FY2019 and projected Medicaid expenditures from FY2020 through FY2027 broken down by state and federal expenditures. In FY2019, Medicaid spending on services and administrative activities in the 50 states, the District of Columbia, and the territories totaled $627 billion.65 Medicaid expenditures are estimated to grow to $1,008 billion in FY2027, but these estimates were prepared prior to the COVID-19 public health emergency.66
“Historically, in a typical year, the average federal share of Medicaid expenditures was about 57%, which means the average state share was about 43%. However, the federal government’s share of Medicaid expenditures increased with the implementation of the ACA Medicaid expansion, because the federal government is funding a vast majority of the cost of the expansion through the enhanced federal matching rates.67 In FY2019, the average federal share of Medicaid is estimated to have been 65%.68 The federal share of Medicaid expenditures were projected to decrease to 62% for FY2020 through FY2027.69 However, these estimates were prepared prior to the COVID-19 public health emergency. With the FFCRA 6.2-percentage-point increase to the FMAP rates, the federal share of Medicaid is expected to be higher than previously estimated.”
Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC, updated Feb 22, 2021.