Medicaid Formula Alternative

HRD-93-17R: Published: Mar 2, 1993. Publicly Released: Mar 2, 1993.

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Pursuant to a congressional request, GAO provided information on states' Medicaid funding levels under different formulas. GAO noted that: (1) the current Medicaid funding formula is meant to reduce medical care coverage differences among states and fairly distribute the burden of financing program benefits; (2) benefits and financing burdens varied among states, partly due to the current formula not targeting funds to states with the greatest needs; (3) replacing per capita income with total taxable resources and people in poverty factors and reducing the minimum federal reimbursement percentage below 50 percent would achieve a more equitable distribution of funds to all states; and (4) the new formula would reallocate about $2.71 billion, or 5.15 percent of all Medicaid assistance, resulting in 23 states receiving reimbursements at an increased rate, and 28 states at a lower rate.

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