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March 15, 2011

Medicaid Funding Cliff Looming April 1st

New CSG Report Analyzes How Enhanced Medicaid Recovery Act Funding Affected the States

LEXINGTON, Ky.—It is no April Fool’s joke for states desperately trying to balance their budgets. A new analysis by The Council of State Governments’ of enhanced Medicaid match rates under the American Reinvestment and Recovery Act found that the average state will lose 21 cents in federal funding for every dollar the state puts towards paying Medicaid bills beginning April 1. This decrease follows on the heels of a 37-cent loss states suffered on January 1.
The Recovery Act provided fiscal relief to states struggling with rapidly increasing Medicaid rolls by increasing the federal match for states’ Medicaid programs. As Recovery Act funding comes to an end, starts are beginning to see the increased federal Medicaid funding being phased out.
“On July 1, 2011, when most states begin a new fiscal year, the enhanced match rate will no longer be available to states and they will revert back to the same funding levels they had before the recession,” said Debra Miller, CSG’s director of health policy. “The average state will lose another 50 cents for each state dollar it spends on July 1. The total loss to states from the end of the Recovery Act funding for enhanced Medicaid matches is, on average, $1.08 for every state dollar spent.”
Miller said states can expect to see a flurry of activity from their Medicaid departments as the April and July deadlines approach.
“States are going to be trying to pay as many claims as possible before those funding decreases happen to try to capture as many federal dollars as possible,” she said. “This decrease in funding will hit them hard. Revenues have yet to rebound significantly in the states and most of them are still facing much higher Medicaid enrollment numbers than normal as residents continue to struggle with high unemployment rates.”
In its analysis of Medicaid match rates before, during and after the Recovery Act, CSG interprets Medicaid matching rates in a straight-forward way: for every dollar a state spends for Medicaid, we calculate how many federal dollars flow to the state through the federal match. To see the analysis, visit CSG’s Knowledge Center.


The Council of State Governments is our nation’s only organization serving all three branches of state government. CSG is a region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy. This offers unparalleled regional, national and international opportunities to network, develop leaders, collaborate and create problem-solving partnerships.