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“The federal government and the states jointly finance Medicaid.⁵⁶ The federal government reimburses states for a portion (i.e., the federal share) of each state’s Medicaid program costs. Because federal Medicaid funding is an open-ended entitlement to states, there is no upper limit or cap on the amount of federal Medicaid funds a state may receive. In FY2023, Medicaid expenditures totaled $894 billion. The federal share totaled $614 billion and the state share was $280 billion.⁵⁷“

Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated April 30, 2025, last accessed February 12, 2026.

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“The federal government’s share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate, which generally is determined annually and varies by state according to each state’s per capita income relative to the U.S. per capita income.⁵⁸ The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes.

“FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%.⁵⁹ For a state with an FMAP of 60%, the state gets 60 cents back from the federal government for every dollar the state spends on its Medicaid program. In FY2025, FMAP rates range from 50% (10 states) to 76.9% (Mississippi).⁶⁰

“The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures. Exceptions to the regular FMAP rate have been made for certain states (e.g., the District of Columbia and the territories), situations (e.g., during economic downturns), populations (e.g., the ACA Medicaid expansion population and certain women with breast or cervical cancer), providers (e.g., Indian Health Service facilities), and services (e.g., family planning and home health services). In addition, the federal share for most Medicaid administrative costs does not vary by state and is generally 50%.

“While most federal Medicaid funding is provided on an open-ended basis, certain types of federal Medicaid funding are capped. For instance, federal disproportionate share hospital (DSH)⁶¹ funding to states cannot exceed a state-specific annual allotment. Also, Medicaid programs in the territories (i.e., American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands) are subject to annual spending caps.⁶²

“Medicaid is a federal entitlement to states, and in federal-budget parlance entitlement spending is categorized as mandatory spending, which is also referred to as direct spending. Although most mandatory spending programs bypass the annual appropriations process and automatically receive funding each year according to either permanent or multiyear appropriations in the substantive law, Medicaid is funded in the annual appropriations acts. For this reason, Medicaid is referred to as an appropriated entitlement.⁶³“

Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated April 30, 2025, last accessed February 12, 2026.

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“The federal government provides broad guidelines to states regarding allowable funding sources for the state share (also referred to as the nonfederal share) of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources.

“States can use state general funds (i.e., personal income, sales, and corporate income taxes) and other state funds (e.g., provider taxes,⁶⁴ local government funds, tobacco settlement funds) to finance the state share of Medicaid. Federal statute allows as much as 60% of the state share to come from local government funding.⁶⁵ Federal regulations also stipulate that the state share not be funded with federal funds (Medicaid or otherwise).⁶⁶ In state FY2024, on average, 68% of the state share of Medicaid expenditures was financed by state general funds, and the remaining 32% was financed by other state funds.⁶⁷“

Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated April 30, 2025, last accessed February 12, 2026.

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World Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems and policies in the US and sixteen other nations.

Page last updated February 12, 2026 by Doug McVay, Editor.