Alternatives for Improving the Distribution of Funds

HRD-91-66FS: Published: May 20, 1991. Publicly Released: May 20, 1991.

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Pursuant to a congressional request, GAO reviewed alternatives designed to improve the equitable distribution of Medicaid funds among the states.

GAO found that: (1) federal and state Medicaid spending totalled about $71 billion for fiscal year (FY) 1990; (2) one alternative reduced the statutorily guaranteed state minimum reimbursement rate from 50 to 40 percent and considered a state's ability to finance program services from state revenues and the number of people in poverty; (3) a budget-neutral 40-percent alternative would have reallocated 4.2 percent of the $34.3-billion federal share of Medicaid distributed to states in FY 1989, with 24 states gaining additional funds and 26 losing funds; (4) the 40-percent alternative assuming a 1-percent increase and a 40-percent alternative assuming a 1.5-percent increase in the federal share would both result in 26 states gaining funds; (5) a budget-neutral 50-percent alternative and a 50-percent alternative assuming a 1-percent increase would result in 28 states losing funds; and (6) a 50-percent alternative assuming a 1.5-percent increase would result in 27 states losing some Medicare funds.

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