AARP AARP States Nebraska

10 reasons to support Medicaid expansion - #7

Retirement Savings
The federal government has been a reliable partner in providing coverage to low-income Nebraskans

Medicaid is a partnership between state and federal government.  The federal government provides aid in the form of federal financial participation.

  • The federal share of the cost of the program is called the Federal Medical Assistance Percentage (FMAP).  The process for calculating FMAP for the existing program is found in Section 1905(b) of the Social Security Act.1

 

  • The primary factor in determining FMAP is a state’s per capita income in relation to that of other states.  States with higher per capita personal income will have lower FMAP rates.  By law, FMAP for the existing program cannot fall below 50% or above 83%.2

 

  • For Federal Fiscal Year 2013, Nebraska’s FMAP is 55.76%.3  That is the lowest FMAP for Nebraska since 1979 when it was 53.46%.4

Concern has been raised that the federal government will fail to meet its obligation to provide FMAP for Medicaid expansion.  But history doesn’t show that.  The federal government has never failed to meet its statutory FMAP responsibility to the states.  In fact, the federal government has over performed.

  • For the Medicaid expansion, the FMAP will be 100% in 2014, 2015 and 2016.  In 2017, it will be 95%.  In 2018, it will be 94%.  In 2019, it will be 93%.  In 2020 and thereafter, the FMAP for Medicaid expansion will be 90%.5

 

  • The American Recovery and Reinvestment Act of 2009 increased FMAP to states to help alleviate the impact of the recession on state revenue receipts.6  In FY-09, FY-10 and FY-11, the federal government paid Nebraska more than $350,000,000 in supplemental federal financial participation than it was obligated to provide under Section 1905(b).That is roughly equivalent to Nebraska’s projectedCash Reserve Fund at the end of FY-138

 

  • In response to the recession of 2001, FMAP was increased by 2.95 percentage points for the last quarter of FY-04 and all of FY-05.9  During that period Nebraska’s total Medicaid expenditures were about $1.7 billion.  The increased FMAP reduced state spending by about $50 million.10

This fact sheet is brought to you by AARP Nebraska.  For more information, contact

Mark Intermill at 402-323-5424 or mintermill@aarp.org.


 

Footnotes

 

1 http://www.ssa.gov/OP_Home/ssact/title19/1905.htm

2 States at 50% FMAP include Alaska, California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Virginia, Washington and Wyoming.  In 2013, Mississippi has the highest FMAP at 73.43%.

3 The history of FMAP in Nebraska and all other states may be found on the website of the Assistant Secretary of Policy and Evaluation at the US Department of Health and Human Services.  http://aspe.hhs.gov/health/fmapearly.htm

4 Other than periods when the federal government provided supplemental FMAP, the highest FMAP that Nebraska has received was 64.5% in FY-92.

5 A compilation of the ACA can be found at this website.  The section that addresses match rates is found on Page 180 of the compilation.   http://housedocs.house.gov/energycommerce/ppacacon.pdf

6 Kaiser Family Foundation has published an overview of FMAP.  The publication includes a list of the services that are matched at a higher rate than the regular FMAP.  In Nebraska the general fund paid 39% of Medicaid costs in FY-12.   http://www.kff.org/medicaid/upload/8352.pdf

7 The estimate of $370,000,000 in savings was derived by comparing the actual Federal expenditure for the three fiscal years to the expenditures that would have been made if the effective match rate for the three years had been comparable to the effective match rates in FY-08 and in FY-12.  Expenditures were found in the Budgetary Report prepared by the Department of Administrative Services Accounting Division. http://das.nebraska.gov/accounting/budrept/contents.htm

8 http://www.nebraskalegislature.gov/FloorDocs/Current/PDF/Budget/status.pdf

9 Kaiser Family Foundation.  Medicaid Financing:  An Overview of the Medicaid Matching Rate (FMAP) http://www.kff.org/medicaid/upload/8352.pdf

10 In the five quarters in which the additional federal financial participation was provided, Nebraska’s Medicaid expenditures were about $1.7 billion.  The $50 million estimate is 2.95% of that total.  Expenditures are from the Department of Administrative Services Budgetary Report.  http://das.nebraska.gov/accounting/budrept/contents.htm

 

 

 

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