Tuesday, May 14, 2013

The GAO Says the Medicaid Matching Rate is Unfair

The Government Accountability Office (GAO), a nonpartisan congressional watchdog group, released a report this month arguing for a new Medicaid matching rate. The GAO says this rate, currently calculated using the Federal Medical Assistance Percentage (FMAP), is unfair because it doesn’t take into account factors other than per capita income.

According to a CQ article, the FAMP is based on each state’s per capita income in comparison to the national per capita income. Currently, states on average get a federal matching rate of 57 percent, but the share varies widely among states. The report says that a funding allocation mechanism should take into account the demand for services in each state, geographic cost differences among states, and individual state resources,  in order to be equitable from the perspective of beneficiaries and allow states to provide a comparable level of services to each person in need.

Specifically, the GAO suggests creating new measures based on those three criteria. To assess the demand for Medicaid services, the government could use federal surveys such as the American Community Survey and the Current Population Survey to target the population in need of services. The program could account for geographic health care cost differences by looking at the provider costs from the Occupational Employment Statistics survey. Finally, state resources can be taken into account by using data in the Total Taxable Resources measure.

The report is non-binding, and any changes to the program would have to come via congressional legislation. That could pose issues with lawmakers from states that would lose matching funds with the new criteria.

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