Medicaid
Prototype Formula Would Provide Automatic, Targeted Assistance to States during Economic Downturns Gao ID: GAO-12-38 November 10, 2011In response to the recession of 2007, Congress passed the American Recovery and Reinvestment Act of 2009 (Recovery Act). Recovery Act funds provided states with fiscal relief and helped to maintain state Medicaid programs through a temporary increase to the federal share of Medicaid funding-the Federal Medical Assistance Percentage (FMAP)-from October 2008 through December 2010. In March 2011, GAO reported that states' ability to fund Medicaid was hampered due to increased Medicaid enrollment and declines in states' revenues that typically occur during a national downturn. The Recovery Act mandated that GAO provide recommendations for modifying the increased FMAP formula to make it more responsive to state Medicaid program needs during future economic downturns. In this report, GAO presents a prototype formula for a temporary increased FMAP and evaluates its effects on the allocation of assistance to states. To evaluate the three components of the prototype formula--starting assistance, targeting assistance, and ending assistance-- GAO uses the 2007 recession.
GAO's prototype formula offers a timely and targeted option for providing states temporary Medicaid assistance during a national economic downturn. Once a threshold number of states--26 in GAO's prototype formula--show a sustained decrease in their employment-to-population (EPOP) ratio, temporary increases to states' FMAPs would be triggered automatically. The EPOP ratio compares the number of employed persons in a state to the working age population aged 16 and older. This assistance would end when fewer than the threshold number of states shows a decline in their EPOP ratio. Because the prototype formula relies on labor market data as an automatic trigger rather than legislative action, assistance would have begun earlier and extended longer than the assistance provided by the Recovery Act. The prototype formula would have triggered assistance to begin in January 2008 and end in September 2011, compared with the Recovery Act which provided an increased FMAP from October 2008 through June 2011. Once the increased FMAP is triggered, targeted state assistance would be calculated based on two components: (1) increases in unemployment, as a proxy for changes in Medicaid enrollment; and (2) reductions in total wages and salaries, as a proxy for changes in states' revenues. GAO's prototype formula provides a baseline of funding for state Medicaid needs during an economic downturn by offering automatic, timely, and targeted assistance to states. Such assistance would facilitate state budget planning, provide states with greater fiscal stability, and better align federal assistance with the magnitude of the economic downturn's effects on individual states. In commenting on a draft of this report, the Department of Health and Human Services (HHS) agreed with the analysis and goals of the report and emphasized the importance of aligning changes to the FMAP formula with individual state circumstances. HHS noted the complexity of the prototype formula and offered several considerations to guide policy choices regarding appropriate thresholds for timing and targeting of increased FMAP funds. To ensure that federal funding efficiently and effectively responds to the countercyclical nature of the Medicaid program, Congress could consider enacting an increased FMAP formula that targets variable state Medicaid needs and provides automatic, timely, and temporary assistance in response to national economic downturns.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Carolyn L. Yocom Team: Government Accountability Office: Health Care Phone: (202) 512-4931GAO-12-38, Medicaid: Prototype Formula Would Provide Automatic, Targeted Assistance to States during Economic Downturns
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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
November 2011:
Medicaid:
Prototype Formula Would Provide Automatic, Targeted Assistance to
States during Economic Downturns:
GAO-12-38:
GAO Highlights:
Highlights of GAO-12-38, a report to congressional committees.
Why GAO Did This Study:
In response to the recession of 2007, Congress passed the American
Recovery and Reinvestment Act of 2009 (Recovery Act). Recovery Act
funds provided states with fiscal relief and helped to maintain state
Medicaid programs through a temporary increase to the federal share of
Medicaid funding–the Federal Medical Assistance Percentage (FMAP)–from
October 2008 through December 2010. In March 2011, GAO reported that
states‘ ability to fund Medicaid was hampered due to increased
Medicaid enrollment and declines in states‘ revenues that typically
occur during a national downturn. The Recovery Act mandated that GAO
provide recommendations for modifying the increased FMAP formula to
make it more responsive to state Medicaid program needs during future
economic downturns. In this report, GAO presents a prototype formula
for a temporary increased FMAP and evaluates its effects on the
allocation of assistance to states. To evaluate the three components
of the prototype formula-”starting assistance, targeting assistance,
and ending assistance-”GAO uses the 2007 recession.
What GAO Found:
GAO‘s prototype formula offers a timely and targeted option for
providing states temporary Medicaid assistance during a national
economic downturn. Once a threshold number of states”26 in GAO‘s
prototype formula”show a sustained decrease in their employment-to-
population (EPOP) ratio, temporary increases to states‘ FMAPs would be
triggered automatically. The EPOP ratio compares the number of
employed persons in a state to the working age population aged 16 and
older. (See figure.) This assistance would end when fewer than the
threshold number of states shows a decline in their EPOP ratio.
Figure: GAO Prototype Formula for Temporary Increased FMAP Assistance
to States:
[Refer to PDF for image: illustration]
First month:
Does EPOP ratio indicate a national recession?
If no: No action;
If Yes:
Calculate states' FMAP increases;
Pay FMAP increase to states.
Later months:
Does EPOP ratio indicate a continued economic slowdown?
If no: Terminate increased FMAP;
If Yes:
Calculate states' FMAP increases;
Pay FMAP increase to states.
Source: GAO.
[End of figure]
Because the prototype formula relies on labor market data as an
automatic trigger rather than legislative action, assistance would
have begun earlier and extended longer than the assistance provided by
the Recovery Act. The prototype formula would have triggered
assistance to begin in January 2008 and end in September 2011,
compared with the Recovery Act which provided an increased FMAP from
October 2008 through June 2011. Once the increased FMAP is triggered,
targeted state assistance would be calculated based on two components:
(1) increases in unemployment, as a proxy for changes in Medicaid
enrollment; and (2) reductions in total wages and salaries, as a proxy
for changes in states‘ revenues.
GAO‘s prototype formula provides a baseline of funding for state
Medicaid needs during an economic downturn by offering automatic,
timely, and targeted assistance to states. Such assistance would
facilitate state budget planning, provide states with greater fiscal
stability, and better align federal assistance with the magnitude of
the economic downturn‘s effects on individual states.
In commenting on a draft of this report, the Department of Health and
Human Services (HHS) agreed with the analysis and goals of the report
and emphasized the importance of aligning changes to the FMAP formula
with individual state circumstances. HHS noted the complexity of the
prototype formula and offered several considerations to guide policy
choices regarding appropriate thresholds for timing and targeting of
increased FMAP funds.
What GAO Recommends:
To ensure that federal funding efficiently and effectively responds to
the countercyclical nature of the Medicaid program, Congress could
consider enacting an increased FMAP formula that targets variable
state Medicaid needs and provides automatic, timely, and temporary
assistance in response to national economic downturns.
View GAO-12-38 or key components. For more information, contact
Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov; or Thomas J.
McCool at (202) 512-2642 or mccoolt@gao.gov.
[End of section]
Contents:
Letter:
Background:
Prototype FMAP Formula Offers Automatic, Timely, and Targeted
Assistance:
Conclusions:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Some Design Elements in the Prototype Formula and
Alternatives:
Appendix III: The Recovery Act's Across-the-board and Hold-harmless
Provisions Were Not Targeted for States' Medicaid Needs:
Appendix IV: Temporary Increased FMAP Data by State, GAO Prototype
Formula:
Appendix V: Comments from the Department of Health and Human Services:
Appendix VI: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: Estimated Prototype Formula Assistance Periods and Federal
Costs during Recent National Recessions:
Table 2: Choices of Formula Design Elements Contained in GAO Prototype
Formula and Alternatives:
Table 3: Choices of Formula Design Elements Not Contained in GAO
Prototype Formula that could be Applied:
Table 4: Hold-harmless FMAP Increases and Economic Variables, by State
in Descending Order of FMAP Increase:
Table 5: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Component and State, GAO Prototype Formula, 2009, Fourth
Quarter:
Table 6: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Quarter and State, GAO Prototype Formula, 2008 to 2009:
Table 7: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Quarter and State, GAO Prototype Formula, 2009 to 2011:
Figures:
Figure 1: GAO Prototype Formula for Temporary Increased FMAP
Assistance to States:
Figure 2: Number of States with Declining Employment-to-population
Ratios (EPOP) by Year, 1978-2011:
Figure 3: Number of States with Declining Employment-to-population
Ratios (EPOP) by month, 2007-2011:
Figure 4: Increase in Unemployment Rate and Increased Federal Medical
Assistance Percentages by State, GAO formula (2009, 4th quarter):
Figure 5: Decrease in Total State Wages and Salaries and Increased
Federal Medical Assistance Percentages by State, GAO Formula (2009,
4th quarter):
Figure 6: Total Weighted National Average FMAP Increase by Component,
GAO Formula Assistance Period, by Quarter, 2008-2011:
Figure 7: Number of States with Unemployment-based and Wage-based FMAP
Increases, GAO Formula Assistance Period, by Quarter, 2008-2011:
Figure 8: Look-back period for Calculation of Unemployment-based and
Wage-based Federal Medical Assistance Percentage Increases:
Abbreviations:
BEA: Bureau of Economic Analysis:
EPOP: Employment-to-population:
FMAP: Federal Medical Assistance Percentage:
HHS: Department of Health and Human Services:
NBER: National Bureau of Economic Research:
PCI: Per capita income:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
November 10, 2011:
Congressional Committees:
During economic downturns, states' employment and tax revenues
typically fall as enrollment in the Medicaid program, a federal-state
health financing program for low-income populations, tends to
increase. The most recent national recession, as defined by the
National Bureau of Economic Research (NBER), lasted from December 2007
through June 2009.[Footnote 1] However, as of July 2011, 20 states and
the District of Columbia continued to experience unemployment rates
above 9 percent, and more than 13.9 million people were considered
unemployed. State budget challenges--due to increased unemployment and
lowered tax revenues--can persist well beyond the end of a recession.
To provide states with fiscal relief and to help maintain state
Medicaid programs so beneficiaries are assured continuity of services
during this most recent recession, the American Recovery and
Reinvestment Act of 2009 (Recovery Act) provided states with $89
billion through an increased federal share of Medicaid funding from
October 2008 through December 2010.[Footnote 2] The federal funding
states receive for Medicaid is determined by a statutory formula, the
Federal Medical Assistance Percentage (FMAP). While the Medicaid FMAP
formula was the mechanism used for delivering federal aid under the
Recovery Act, the level of funding was intended to assist states with
fiscal needs beyond Medicaid.[Footnote 3] The Recovery Act also
mandated that we conduct an analysis of past national economic
downturns, including the effects of any increased FMAP during these
periods, and provide recommendations for modifying the increased FMAP
formula to make it more responsive to state Medicaid program needs
during future downturns.[Footnote 4] The mandate specifically called
for recommendations to improve the starting and ending of temporary
assistance, and to account for variations in state economic conditions.
In a March 2011 report, we reviewed how past economic downturns
affected states' ability to fund Medicaid, examined the responsiveness
of past increased FMAP assistance to state Medicaid needs, and
identified options for adjusting the increased FMAP formula for use
during future economic downturns.[Footnote 5] We found that past
economic downturns hampered states' ability to fund increased Medicaid
enrollment and maintain existing services, and that the Recovery Act
assistance began during the national recession while nearly all states
were experiencing Medicaid enrollment increases.[Footnote 6] However,
we also found that the increased FMAP funds provided through the
Recovery Act did not distinguish among states with varying degrees of
reduced revenue in the allocation of assistance. We outlined a
prototype formula and key design decisions for modifying the FMAP that
could improve its responsiveness to state Medicaid needs during an
economic downturn. The formula was designed to provide assistance to
states during periods of national economic downturns, not for
downturns limited to an individual state or group of states.
In this report, we present additional detail on the prototype formula
and simulations of its effects on the allocation of assistance to
states. Our overall objective is to evaluate how our prototype formula
would have responded during the most recent economic downturns. Our
evaluation of the formula includes both the timing and targeting of
funds for state Medicaid needs during a national economic downturn.
[Footnote 7] In keeping with the general framework provided in our
past reports, we use the period of the most recent national economic
downturn--from December 2007 through June 2009--to evaluate the three
components of our prototype formula, including the start of
assistance, the methods used to target funds based on states' Medicaid
program needs, and the end of assistance. A detailed discussion of our
scope and methodology is presented in appendix I.
In the development of our prototype formula we made a number of
choices about specific elements of the formula design for the timing
and targeting of funds. For example, in contrast to the Recovery Act,
which provided funds for broad state fiscal relief in addition to
supporting state Medicaid programs, our formula was calibrated to
provide a baseline of funding only for state Medicaid needs during a
downturn. However, this formula could be scaled up to address broader
state needs or scaled down to meet only a portion of state Medicaid
needs. A discussion of these and other alternative choices and
considerations is presented in appendix II.
We conducted this performance audit from April 2011 to October 2011 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
Although every economic downturn reflects varied economic
circumstances at the national level and among states, evaluations of
prior federal fiscal assistance strategies have identified
considerations to guide policymakers as they consider the design of
future legislative responses to national economic downturns.[Footnote
8] These include timing assistance so that aid begins to flow as the
economy is contracting and targeting assistance based on the magnitude
of the economic downturn's effects on individual states. To be
effective at stabilizing state funding of Medicaid programs,
assistance should be provided, or at least authorized, close to the
beginning of a downturn.[Footnote 9] Additionally, to be efficient,
funds should be targeted to states commensurate with their level of
need due to the downturn. States that experience greater stress in
their Medicaid programs--due to increased enrollment or decreased
revenues--should receive a larger share of aid than states less
severely affected. In addition, economists at the Federal Reserve Bank
of Chicago have described the ideal countercyclical assistance program
as one having an automatically activated,[Footnote 10] prearranged
triggering mechanism that could remove some of the political
considerations from the program's design and eliminate delays inherent
in the legislative process.[Footnote 11]
Past economic downturns hampered states' ability to fund their
Medicaid programs, as Medicaid enrollment increased and tax revenues
declined. Medicaid enrollment increases during and after national
economic downturns, when the number of people with incomes low enough
to qualify for coverage rises as state economies weaken.[Footnote 12]
States also experience declines in tax revenues as a result of
declines in wages, salaries, and consumer spending. Most, if not all
states are affected by national recessions, although the timing and
duration of state economic downturns can vary. States have different
industry mixes and resources, which can affect when they enter an
economic downturn and when they recover. Therefore, some states may
enter an economic downturn in the early stages of a national
recession, while other states enter long after the recession has set
in. The timing and depth of state economic downturns affects their
ability to maintain their Medicaid programs.
Under the regular FMAP, the federal government pays a larger portion
of Medicaid expenditures in states with low per capita income (PCI)
relative to the national average, and a smaller portion for states
with higher PCIs.[Footnote 13] To provide states with fiscal relief
and to help states meet additional Medicaid needs during the 2001 and
2007 economic downturns, Congress passed legislation temporarily
increasing the FMAP for states. The FMAP is a readily available
mechanism for providing temporary assistance to states because
assistance can be distributed quickly, with states obtaining funds
through Medicaid's existing payment system. The Recovery Act was the
second time Congress temporarily increased the FMAP to provide fiscal
relief to states during a national economic downturn. Following the
2001 recession, the Jobs and Growth Tax Relief Reconciliation Act of
2003 (Reconciliation Act) provided states $10 billion in assistance
through an increased FMAP from April 2003 through June 2004. In August
2010, Congress extended the increased FMAP provided by the Recovery
Act by providing states with an additional $16.1 billion in assistance
from January through June 2011.[Footnote 14]
In March 2011, we reported that overall the Recovery Act funds were
better timed for state Medicaid funding needs than were funds provided
following the 2001 recession;[Footnote 15] assistance began during the
recession while nearly all states were experiencing Medicaid
enrollment increases and revenue decreases.[Footnote 16] Nonetheless,
19 states implemented or proposed eligibility restrictions in response
to the economic downturn prior to the passage of the Recovery Act some
15 months after the beginning of the national recession as identified
by NBER.[Footnote 17] In order to be eligible for Recovery Act funds,
these states had to reverse the restrictions on eligibility to come
into compliance with the Recovery Act's maintenance of eligibility
requirements.[Footnote 18]
The Recovery Act formula incorporated three components for calculating
the increased FMAP: a hold-harmless provision that maintained each
state's regular FMAP to at least its highest rate since fiscal year
2008; an across-the-board increase of 6.2 percentage points; and an
additional increase in each state's FMAP based on a qualifying
increase in the state's rate of unemployment.[Footnote 19] In our
March 2011 report we also reported that the unemployment-based
component of the Recovery Act formula targeted assistance to states
with greater Medicaid enrollment growth as indicated by increases in
their unemployment rate. However, the across-the-board increase and
the hold-harmless components did not distinguish among states that
experienced varying degrees of increased unemployment. (See appendix
III for more information about the Recovery Act's across-the-board and
hold-harmless provisions.) Furthermore, none of the Recovery Act
provisions distinguished among states with varying degrees of reduced
revenue in the allocation of assistance.
The prototype formula we outlined in our March 2011 report provides a
more targeted approach than the increased FMAP formula used in the
Recovery Act. It also improves the responsiveness of assistance
provided, in part by having an automatic trigger to begin and end
assistance. In particular, we discussed mechanisms that (1) improve
the timing for starting assistance, (2) better target for state needs,
and (3) taper off the end of assistance. More responsive federal
assistance can aid states in addressing increased Medicaid enrollment
resulting from a national economic downturn, as well as addressing
reductions in states' revenues. Improving targeting is essential to
meet the goals of providing assistance to states in an efficient and
effective manner.
Prototype FMAP Formula Offers Automatic, Timely, and Targeted
Assistance:
In response to the mandate, our prototype formula offers an automatic,
timely, and targeted option for providing states temporary assistance
during national economic downturns. Once a threshold number of states
show a sustained decrease in their employment-to-population (EPOP)
ratio,[Footnote 20] temporary increases to states' FMAPs would be
triggered automatically and targeted to each state's Medicaid program.
Our prototype formula uses two targeting components: (1) unemployment,
and (2) wages and salaries. The amount of Medicaid assistance states
receive would be commensurate with their increases in unemployment and
decreases in wages and salaries. The prototype formula would end the
temporary assistance once fewer than the threshold number of states
shows a decline in their EPOP ratio over 2 consecutive months.
Prototype Formula Automatically Triggers Targeted Assistance to States:
Our prototype formula uses the monthly EPOP ratio and a threshold
number of states to identify the start of a national economic
downturn, and to automatically trigger the start of the increased FMAP
assistance. (See figure 1.) The automatic trigger would use readily
available economic data to begin assistance rather than rely on
legislative action at the time of a future national economic downturn.
Once the increased FMAP is triggered, targeted state assistance would
be calculated based on (1) increases in state unemployment, as a proxy
for increased Medicaid enrollment; and (2) reductions in total wages
and salaries, as a proxy for decreased revenues for maintaining state
Medicaid programs. The increased FMAP would end when the EPOP ratio
indicated that less than the threshold number of states was in an
economic downturn.
Figure 1: GAO Prototype Formula for Temporary Increased FMAP
Assistance to States:
[Refer to PDF for image: illustration]
First month:
Does EPOP ratio indicate a national recession?
If no: No action;
If Yes:
Calculate states' FMAP increases;
Pay FMAP increase to states.
Later months:
Does EPOP ratio indicate a continued economic slowdown?
If no: Terminate increased FMAP;
If Yes:
Calculate states' FMAP increases;
Pay FMAP increase to states.
Source: GAO.
Note: The employment-to-population (EPOP) ratio is the ratio of the
number of jobs in a state to the working age population aged 16 and
older. The Federal Medical Assistance Percentage (FMAP) is used to
determine the percentage of federal assistance for most state Medicaid
expenditures.
[End of figure]
Under our prototype formula, states would have received increased
Medicaid funding in response to each of the past three national
recessions. For example, in response to the most recent national
recession, states would have received up to 15 quarters of assistance
that would have begun in January 2008 and extended through September
2011.[Footnote 21] The total federal cost of this assistance for state
Medicaid needs would have been approximately $36 billion. Table 1
provides information on when states would have received assistance in
response to the past three national recessions under our prototype
formula and the total cost of this assistance for state Medicaid needs.
Table 1: Estimated Prototype Formula Assistance Periods and Federal
Costs during Recent National Recessions:
National recession[A]: July 1990 - Mar. 1991;
Prototype assistance period: Apr. 1991 - Sept. 1992;
Total quarters of increased FMAP: 6;
Total federal cost of assistance: $9 billion.
National recession[A]: Mar. 2001 - Nov. 2001;
Prototype assistance period: July 2001 - Sept. 2004;
Total quarters of increased FMAP: 13;
Total federal cost of assistance: $17 billion.
National recession[A]: Dec. 2007 - June 2009;
Prototype assistance period: Jan. 2008 - Sept. 2011;
Total quarters of increased FMAP: 15;
Total federal cost of assistance: $36 billion.
Source: GAO.
Note: The prototype formula was designed to provide support for state
Medicaid needs only. Thus, the estimated cost of assistance under our
formula is not directly comparable to the cost of assistance under the
Recovery Act or the Reconciliation Act because the increased FMAPs
provided through the acts were not limited to providing fiscal support
to Medicaid.
[A] National recession period as defined by the National Bureau of
Economic Research.
[End of table]
Prototype Formula Provides Timely Notice of the Start of an Economic
Downturn:
Based on our simulations, the EPOP ratio is a reliable, timely
indicator of the start of national economic downturns. At the start of
each of the last five national recessions, as defined by NBER, we
found a sharp increase in the number of states with declining EPOP
ratios. A timely automatic trigger for temporary FMAP assistance would
be based on a threshold number of states that show a decrease in their
monthly EPOP ratio. We found the beginning of each of these recessions
approximately coincided with 26 states having declining EPOP ratios.
(See figure 2.)
Figure 2: Number of States with Declining Employment-to-population
Ratios (EPOP) by Year, 1978-2011:
[Refer to PDF for image: line graph]
26-state threshold:
Year: 1978;
Number of states with declining EPOP, each month:
3;
2;
2;
2;
2;
1;
1;
1;
1;
1;
1;
1.
Year: 1979;
Number of states with declining EPOP, each month:
1;
1;
1;
1;
0;
2;
6;
13;
14;
12;
13;
13.
Year: 1980;
Number of states with declining EPOP, each month:
13 (NBER recession);
15 (NBER recession);
20 (NBER recession);
26 (NBER recession);
34 (NBER recession);
36 (NBER recession);
41 (NBER recession);
43;
44;
43;
42;
42.
Year: 1981;
Number of states with declining EPOP, each month:
42;
44;
44;
42;
42;
38;
30 (NBER recession);
26 (NBER recession);
27 (NBER recession);
33 (NBER recession);
39 (NBER recession);
40 (NBER recession).
Year: 1982;
Number of states with declining EPOP, each month:
43 (NBER recession);
45 (NBER recession);
46 (NBER recession);
46 (NBER recession);
47 (NBER recession);
47 (NBER recession);
50 (NBER recession);
50 (NBER recession);
50 (NBER recession);
50 (NBER recession);
51 (NBER recession);
51.
Year: 1983;
Number of states with declining EPOP, each month:
50;
50;
50;
48;
43;
38;
29;
24;
15;
14;
6;
6.
Year: 1984;
Number of states with declining EPOP, each month:
5;
5;
3;
2;
0;
0;
0;
2;
2;
3;
2;
2.
Year: 1985;
Number of states with declining EPOP, each month:
1;
2;
1;
1;
2;
3;
7;
6;
5;
6;
7;
11.
Year: 1986;
Number of states with declining EPOP, each month:
11;
10;
12;
13;
14;
14;
15;
14;
13;
12;
11;
12.
Year: 1987;
Number of states with declining EPOP, each month:
12;
12;
11;
10;
10;
10;
10;
9;
7;
3;
1;
1.
Year: 1988;
Number of states with declining EPOP, each month:
1;
1;
0;
0;
0;
0;
1;
1;
0;
0;
1;
1.
Year: 1989;
Number of states with declining EPOP, each month:
1;
0;
0;
1;
2;
2;
2;
3;
5;
5;
6;
8.
Year: 1990;
Number of states with declining EPOP, each month:
12;
15;
19;
18;
18;
18;
18 (NBER recession);
18 (NBER recession);
19 (NBER recession);
21 (NBER recession);
22 (NBER recession);
24 (NBER recession).
Year: 1991;
Number of states with declining EPOP, each month:
25 (NBER recession);
32; (NBER recession);
35 (NBER recession);
37;
40;
44;
42;
41;
40;
42;
42;
43.
Year: 1992;
Number of states with declining EPOP, each month:
40;
35;
33;
30;
25;
25;
23;
24;
24;
21;
18;
15.
Year: 1993;
Number of states with declining EPOP, each month:
13;
12;
10;
9;
8;
5;
5;
4;
4;
4;
4;
4.
Year: 1994;
Number of states with declining EPOP, each month:
4;
4;
5;
3;
3;
2;
2;
1;
1;
1;
2;
2.
Year: 1995;
Number of states with declining EPOP, each month:
3;
3;
3;
3;
4;
5;
5;
7;
7;
6;
7;
7.
Year: 1996;
Number of states with declining EPOP, each month:
15;
16;
18;
12;
9;
8;
10;
9;
9;
8;
8;
7.
Year: 1997;
Number of states with declining EPOP, each month:
6;
7;
6;
3;
5;
3;
2;
2;
3;
2;
2;
3.
Year: 1998;
Number of states with declining EPOP, each month:
3;
3;
3;
3;
3;
3;
3;
3;
5;
5;
4;
4.
Year: 1999;
Number of states with declining EPOP, each month:
4;
4;
5;
5;
5;
4;
3;
2;
3;
4;
2;
1.
Year: 2000;
Number of states with declining EPOP, each month:
1;
0;
0;
0;
1;
2;
2;
1;
4;
6;
7;
12.
Year: 2001;
Number of states with declining EPOP, each month:
14;
17;
22 (NBER recession);
26 (NBER recession);
35 (NBER recession);
41 (NBER recession);
43 (NBER recession);
42 (NBER recession);
45 (NBER recession);
46 (NBER recession);
48 (NBER recession);
49.
Year: 2002;
Number of states with declining EPOP, each month:
49;
48;
48;
48;
48;
50;
49;
48;
48;
47;
46;
45.
Year: 2003;
Number of states with declining EPOP, each month:
45;
45;
44;
47;
47;
45;
46;
46;
46;
44;
45;
44.
Year: 2004;
Number of states with declining EPOP, each month:
45;
39;
33;
26;
20;
16;
12;
7;
7;
8;
7;
3.
Year: 2005;
Number of states with declining EPOP, each month:
3;
5;
6;
5;
2;
5;
10;
10;
9;
12;
12;
14.
Year: 2006;
Number of states with declining EPOP, each month:
12;
8;
7;
10;
12;
12;
12;
14;
16;
16;
16;
14.
Year: 2007;
Number of states with declining EPOP, each month:
14;
15;
19;
24;
23;
25;
23;
24;
26;
27;
31;
27 (NBER recession).
Year: 2008;
Number of states with declining EPOP, each month:
32 (NBER recession);
33 (NBER recession);
32 (NBER recession);
35 (NBER recession);
36 (NBER recession);
39 (NBER recession);
41 (NBER recession);
43 (NBER recession);
44 (NBER recession);
44 (NBER recession);
47 (NBER recession);
49 (NBER recession).
Year: 2009;
Number of states with declining EPOP, each month:
50 (NBER recession);
50 (NBER recession);
51 (NBER recession);
51 (NBER recession);
51 (NBER recession);
51 (NBER recession);
51;
51;
51;
51;
51;
51.
Year: 2010;
Number of states with declining EPOP, each month:
51;
51;
51;
50;
50;
49;
45;
45;
43;
39;
37;
33.
Year: 2011;
Number of states with declining EPOP, each month:
29;
26;
21;
21;
28.
Source: GAO analysis of Bureau of Labor Statistics data.
Note: The National Bureau of Economic Research (NBER) identifies
recessions on the basis of several indicators, including employment,
sales in the manufacturing and trade sectors, and industrial
production. A recession begins just after the economy reaches a peak
of activity and ends as the economy reaches its lowest point.
[End of figure]
Therefore, our prototype formula identifies the start of a national
economic downturn when 26 states show a decrease in their 3-
month average EPOP ratio, compared to the same 3-
month period in the previous year, over 2 consecutive
months.[Footnote 22] For the most recent national recession, our
prototype would have identified the beginning of the downturn in
October 2007 (i.e., the fourth quarter of 2007) and triggered
temporary assistance to states beginning in January 2008 (the first
quarter of 2008).[Footnote 23] (See figure 3.) The increased FMAP
payments to states would begin in the first calendar quarter following
the quarter in which the EPOP measure indicated the start of an
economic downturn. The period of temporary assistance would end after
the 26-state threshold is no longer met. In the case of our prototype,
the end would have been triggered in April 2011 and would make the
third quarter of 2011 the last quarter of the assistance period. The
last quarter of payment would be the first calendar quarter following
the quarter in which the EPOP threshold was no longer met for 2
consecutive
months. The threshold trigger may need to be adjusted periodically,
however, because the EPOP ratio is projected to slowly drift downward
over the next 30 years due to the aging of the population.[Footnote 24]
Figure 3: Number of States with Declining Employment-to-population
Ratios (EPOP) by month, 2007-2011:
[Refer to PDF for image: line graph]
26-state threshold:
GAO prototype formula payment period: January 2008 through September
2011.
Recovery Act payment period: October 2008 through December 2010;
Extension[A] through June 2011.
Month-Year: Jan.-07;
Number of states with declining EPOP: 14;
Number of states with declining EPOP: 15;
Number of states with declining EPOP: 19.
Month-Year: Apr.-07;
Number of states with declining EPOP: 24;
Number of states with declining EPOP: 23;
Number of states with declining EPOP: 25.
month-Year: July-07;
Number of states with declining EPOP: 23;
Number of states with declining EPOP: 24;
Number of states with declining EPOP: 26.
Month-Year: Oct.-07;
Number of states with declining EPOP: 27;
Number of states with declining EPOP: 31;
Number of states with declining EPOP: 27.
Month-Year: Jan.-08;
Number of states with declining EPOP: 32;
Number of states with declining EPOP: 33;
Number of states with declining EPOP: 32.
Month-Year: Apr.-08;
Number of states with declining EPOP: 35;
Number of states with declining EPOP: 36;
Number of states with declining EPOP: 39.
Month-Year: July-08;
Number of states with declining EPOP: 41;
Number of states with declining EPOP: 43;
Number of states with declining EPOP: 44.
Month-Year: Oct.-08;
Number of states with declining EPOP: 44;
Number of states with declining EPOP: 47;
Number of states with declining EPOP: 49.
Month-Year: Jan.-09;
Number of states with declining EPOP: 50;
Number of states with declining EPOP: 50;
Number of states with declining EPOP: 51.
Month-Year: Apr.-09;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51.
Month-Year: July-09;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51.
Month-Year: Oct.-09;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51.
Month-Year: Jan.-10;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51;
Number of states with declining EPOP: 51.
Month-Year: Apr.-10;
Number of states with declining EPOP: 50;
Number of states with declining EPOP: 50;
Number of states with declining EPOP: 49.
Month-Year: July-10;
Number of states with declining EPOP: 45;
Number of states with declining EPOP: 45;
Number of states with declining EPOP: 43.
Month-Year: Oct.-10;
Number of states with declining EPOP: 39;
Number of states with declining EPOP: 37;
Number of states with declining EPOP: 33.
Month-Year: Jan.-11;
Number of states with declining EPOP: 29;
Number of states with declining EPOP: 26;
Number of states with declining EPOP: 21.
Month-Year: Apr.-11;
Number of states with declining EPOP: 21;
Number of states with declining EPOP: 28.
Source: GAO analysis of Bureau of Labor Statistics data.
[A] The Education, Jobs and Medicaid Assistance Act (2010) extended
the Recovery Act increased FMAP providing two additional quarters of
assistance from January through June 2011.
[End of figure]
If our EPOP measure had been used to determine the beginning and end
of assistance during the most recent national recession, temporary
increased FMAP assistance would have been provided for a total of 15
quarters, from the first quarter of 2008 (January-March) through the
third quarter of 2011 (July-September). This compares to an 11-quarter
assistance period under the Recovery Act (9 quarters) and extension (2
quarters), from the fourth quarter of 2008 (October-December) through
the second quarter of 2011 (April-June). Because our prototype formula
relies on readily available labor market data to automatically trigger
the beginning and end of the increased FMAP, assistance would have
begun earlier and extended longer than that provided by the Recovery
Act during the most recent national recession. As with the Recovery
Act, relying on NBER to obtain sufficient data to identify the
beginning of a national recession and then providing fiscal assistance
through the legislative process results in a time lag before aid is
available; the Recovery Act was passed in February 2009, nearly 5
quarters after the national recession began in December 2007.
Prototype Formula Targets Assistance Based on Increased Enrollment and
Losses in Revenue:
States' efforts to fund Medicaid during an economic downturn face two
main challenges: financing increased enrollment and replacing lost
revenue. To assist states in addressing both challenges, our prototype
formula includes two components for targeting funding: one for a
state's increase in unemployment as a proxy for increased Medicaid
enrollment, and a second for a state's decrease in total wages and
salaries as a proxy for the loss of revenue. The total assistance for
a state would be the sum of the employment-and wage-based components.
Unemployment-based assistance:
Our prototype formula provides states with a reduction in their
financial contribution for Medicaid proportional to their increase in
unemployment during the national economic downturn. This component is
based on data showing a 1 percentage point increase in a state's
unemployment rate produces approximately a 1 percent increase in state
Medicaid spending due to increased enrollment.[Footnote 25] The
unemployment rate change used to calculate assistance for a given
quarter is the unemployment rate for that quarter compared to the
lowest unemployment rate in the prior 8 calendar quarters. As shown in
the formula below, the unemployment-based FMAP increase (FMAP
increaseU) for a given quarter is the product of the state share of
Medicaid (100-FMAP) and the change in the unemployment rate (UR).
FMAP increaseU = (100-FMAP) * UR.
For example, under our prototype formula, a 10 percentage point
increase in the unemployment rate would result in a 10 percent
decrease in the state share of Medicaid. If a state had a 60 percent
FMAP, and a 40 percent state share, the state share would fall by 4
percentage points (40 percent multiplied by 10 percent) to 36 percent,
and commensurately its FMAP would rise to 64 percent.
Figure 4 illustrates the targeting of FMAP increases the formula would
have provided to states based on their increases in unemployment
during the fourth quarter of 2009 (October-December). It indicates a
strong proportional relationship between the FMAP increases and
increases in unemployment. During the fourth quarter of 2009, FMAP
increases due to changes in unemployment ranged from a low of 0.52
percentage points in North Dakota, which had a 1.4 point increase in
the unemployment rate, to a high of 5.03 percentage points in Nevada,
which experienced a 10.1 percentage point rise in unemployment. (See
table 5 in appendix IV for the state-by-state data on which this
simulation is based, and the state-by-state results of the simulation.)
Figure 4: Increase in Unemployment Rate and Increased Federal Medical
Assistance Percentages by State, GAO formula (2009, 4th quarter):
[Refer to PDF for image: plotted point graph]
Each pair of data points represents a state.
FMAP increase: 2.3%;
Percentage point increase in unemployment rate: 7.1%.
FMAP increase: 1.1%;
Percentage point increase in unemployment rate: 2.2%.
FMAP increase: 2.3%;
Percentage point increase in unemployment rate: 6.8%.
FMAP increase: 0.8%;
Percentage point increase in unemployment rate: 2.9%.
FMAP increase: 3.7%;
Percentage point increase in unemployment rate: 7.4%.
FMAP increase: 2.6%;
Percentage point increase in unemployment rate: 5.1%.
FMAP increase: 2.3%;
Percentage point increase in unemployment rate: 4.5%.
FMAP increase: 2.6%;
Percentage point increase in unemployment rate: 5.2%.
FMAP increase: 1.5%;
Percentage point increase in unemployment rate: 4.9%.
FMAP increase: 3.5%;
Percentage point increase in unemployment rate: 7.8%.
FMAP increase: 2.1%;
Percentage point increase in unemployment rate: 6%.
FMAP increase: 2.2%;
Percentage point increase in unemployment rate: 4.7%.
FMAP increase: 1.8%;
Percentage point increase in unemployment rate: 6%.
FMAP increase: 3.3%;
Percentage point increase in unemployment rate: 6.6%.
FMAP increase: 2.1%;
Percentage point increase in unemployment rate: 6.1%.
FMAP increase: 0.9%;
Percentage point increase in unemployment rate: 2.4%.
FMAP increase: 1.3%;
Percentage point increase in unemployment rate: 3.3%.
FMAP increase: 1.6%;
Percentage point increase in unemployment rate: 5.4%.
FMAP increase: 1.1%;
Percentage point increase in unemployment rate: 3.4%.
FMAP increase: 1.3%;
Percentage point increase in unemployment rate: 3.8%.
FMAP increase: 2.1%;
Percentage point increase in unemployment rate: 4.1%.
FMAP increase: 2.2%;
Percentage point increase in unemployment rate: 4.4%.
FMAP increase: 2.7%;
Percentage point increase in unemployment rate: 7.2%.
FMAP increase: 2%;
Percentage point increase in unemployment rate: 4%.
FMAP increase: 1.1%;
Percentage point increase in unemployment rate: 4.7%.
FMAP increase: 1.8%;
Percentage point increase in unemployment rate: 5%.
FMAP increase: 1.2%;
Percentage point increase in unemployment rate: 3.8%.
FMAP increase: 0.9%;
Percentage point increase in unemployment rate: 2.2%.
FMAP increase: 5%;
Percentage point increase in unemployment rate: 10.1%.
FMAP increase: 1.7%;
Percentage point increase in unemployment rate: 3.3%.
FMAP increase: 2.8%;
Percentage point increase in unemployment rate: 5.5%.
FMAP increase: 1.3%;
Percentage point increase in unemployment rate: 4.5%.
FMAP increase: 2.3%;
Percentage point increase in unemployment rate: 4.6%.
FMAP increase: 2.3%;
Percentage point increase in unemployment rate: 6.6%.
FMAP increase: 0.5%;
Percentage point increase in unemployment rate: 1.4%.
FMAP increase: 1.9%;
Percentage point increase in unemployment rate: 5.2%.
FMAP increase: 1.4%;
Percentage point increase in unemployment rate: 4%.
FMAP increase: 2.2%;
Percentage point increase in unemployment rate: 6%.
FMAP increase: 2%;
Percentage point increase in unemployment rate: 4.4%.
FMAP increase: 3.2%;
Percentage point increase in unemployment rate: 6.8%.
FMAP increase: 1.9%;
Percentage point increase in unemployment rate: 6.3%.
FMAP increase: 0.9%;
Percentage point increase in unemployment rate: 2.4%.
FMAP increase: 2%;
Percentage point increase in unemployment rate: 5.9%.
FMAP increase: 1.6%;
Percentage point increase in unemployment rate: 3.8%.
FMAP increase: 1.5%;
Percentage point increase in unemployment rate: 5.3%.
FMAP increase: 1.3%;
Percentage point increase in unemployment rate: 3.1%.
FMAP increase: 2.1%;
Percentage point increase in unemployment rate: 4.2%.
FMAP increase: 2.7%;
Percentage point increase in unemployment rate: 5.4%.
FMAP increase: 1.2%;
Percentage point increase in unemployment rate: 4.7%.
FMAP increase: 1.9%;
Percentage point increase in unemployment rate: 4.7%.
FMAP increase: 2.6%;
Percentage point increase in unemployment rate: 5.1%.
Source: GAO analysis of Bureau of Labor Statistics data.
Note: Data include 50 states and the District of Columbia.
[End of figure]
Wage-and salary-based assistance:
Our prototype formula provides states with a separate reduction in
their financial contribution for Medicaid that is proportional to
their decrease in wages and salaries during the economic downturn.
This component is based on data showing that a 1 percent decrease in
total state wages and salaries corresponds to approximately a 1
percent decrease in state tax revenues.[Footnote 26] The total state
wage and salary level used to calculate assistance for a given quarter
is the total wage and salary level for that quarter compared to the
highest wage and salary level in the prior eight quarters, expressed
as a percent change. As shown in the formula below, the wage-based
FMAP increase (FMAP increaseW) for a given quarter is the product of
the state share of Medicaid (100-FMAP) and the percent change in total
state wages and salaries (%W).
FMAP increaseW = (100-FMAP) * %W.
For example, under our prototype formula, a 20 percent decline in
state wages and salaries would result in a 20 percent decrease in the
state share of Medicaid. If a state had a 60 percent FMAP, and
therefore a 40 percent state share, the state share would fall by 8
percentage points (40 percent multiplied by 20 percent) to 32 percent,
and its FMAP would rise to 68 percent.
Figure 5 illustrates the FMAP increases our prototype formula would
have provided to states based on their decreases in wages and salaries
during the fourth quarter of 2009 (October-December). It indicates a
strong proportional relationship between the FMAP increases and
decreases in wages and salaries, as the formula was designed to do.
During the fourth quarter of 2009, FMAP increases due to declines in
state wages and salaries would have ranged from a high of 8.64
percentage points in Nevada, which experienced a 17.3 percent decline
in wages and salaries, to a low of 0.0 in three states--Alaska, the
District of Columbia, and North Dakota--which experienced no decline
in wages and salaries during the period. (See table 5 in appendix IV
for the state-by-state data on which this simulation is based, and the
state-by-state results of the simulation.)
Figure 5: Decrease in Total State Wages and Salaries and Increased
Federal Medical Assistance Percentages by State, GAO Formula (2009,
4th quarter):
[Refer to PDF for image: plotted point graph]
Each pair of data points represents a state.
FMAP increase: 1.9%;
Percent decline in wages and salaries: 5.95
FMAP increase: 0%;
Percent decline in wages and salaries: %. 0
FMAP increase: 3.47%;
Percent decline in wages and salaries: 10.14%.
FMAP increase: 1.76%;
Percent decline in wages and salaries: 6.45%.
FMAP increase: 4.21%;
Percent decline in wages and salaries: 8.42%.
FMAP increase: 2.98%;
Percent decline in wages and salaries: 5.95%.
FMAP increase: 3.65%;
Percent decline in wages and salaries: 7.31%.
FMAP increase: 4.22%;
Percent decline in wages and salaries: 8.48%.
FMAP increase: 0%;
Percent decline in wages and salaries: 0%.
FMAP increase: 4.32%;
Percent decline in wages and salaries: 9.59%.
FMAP increase: 2.86%;
Percent decline in wages and salaries: 8.19%.
FMAP increase: 2.43%;
Percent decline in wages and salaries: 5.31%.
FMAP increase: 2.73%;
Percent decline in wages and salaries: 8.91%.
FMAP increase: 4.13%;
Percent decline in wages and salaries: 8.29%.
FMAP increase: 2.61%;
Percent decline in wages and salaries: 7.67%.
FMAP increase: 1.49%;
Percent decline in wages and salaries: 4.09%.
FMAP increase: 1.91%;
Percent decline in wages and salaries: 4.82%.
FMAP increase: 1.15%;
Percent decline in wages and salaries: 3.97%.
FMAP increase: 1.3%;
Percent decline in wages and salaries: 4.01%.
FMAP increase: 1.55%;
Percent decline in wages and salaries: 4.42%.
FMAP increase: 1.24%;
Percent decline in wages and salaries: 2.48%.
FMAP increase: 3.22%;
Percent decline in wages and salaries: 6.44%.
FMAP increase: 4.78%;
Percent decline in wages and salaries: 12.99%.
FMAP increase: 3.78%;
Percent decline in wages and salaries: 7.57%.
FMAP increase: 1.37%;
Percent decline in wages and salaries: 5.65%.
FMAP increase: 2.91%;
Percent decline in wages and salaries: 8.2%.
FMAP increase: 1.31%;
Percent decline in wages and salaries: 4.02%.
FMAP increase: 1.15%;
Percent decline in wages and salaries: 2.92%.
FMAP increase: 8.64%;
Percent decline in wages and salaries: 17.34%.
FMAP increase: 3.62%;
Percent decline in wages and salaries: 7.23%.
FMAP increase: 3.6%;
Percent decline in wages and salaries: 7.21%.
FMAP increase: 1.04%;
Percent decline in wages and salaries: 3.64%.
FMAP increase: 4.5%;
Percent decline in wages and salaries: 9
FMAP increase: 2.3%;
Percent decline in wages and salaries: 6.6%.
FMAP increase: 0%;
Percent decline in wages and salaries: 0%.
FMAP increase: 3.12%;
Percent decline in wages and salaries: 8.53%.
FMAP increase: 1.91%;
Percent decline in wages and salaries: 5.38%.
FMAP increase: 3.19%;
Percent decline in wages and salaries: 8.57%.
FMAP increase: 1.43%;
Percent decline in wages and salaries: 3.17%.
FMAP increase: 3.02%;
Percent decline in wages and salaries: 6.37%.
FMAP increase: 1.81%;
Percent decline in wages and salaries: 6.09%.
FMAP increase: 0.91%;
Percent decline in wages and salaries: 2.45%.
FMAP increase: 2.67%;
Percent decline in wages and salaries: 7.76%.
FMAP increase: 1.99%;
Percent decline in wages and salaries: 4.81%.
FMAP increase: 1.67%;
Percent decline in wages and salaries: 5.91%.
FMAP increase: 1.18%;
Percent decline in wages and salaries: 2.87%.
FMAP increase: 1.23%;
Percent decline in wages and salaries: 2.46%.
FMAP increase: 2.38%;
Percent decline in wages and salaries: 4.76%.
FMAP increase: 0.73%;
Percent decline in wages and salaries: 2.83%.
FMAP increase: 2.58%;
Percent decline in wages and salaries: 6.48%.
FMAP increase: 4.25%;
Percent decline in wages and salaries: 8.5%.
Source: GAO analysis of Bureau of Labor Statistics data.
Note: Data include 50 states and the District of Columbia.
[End of figure]
Total increased FMAP assistance:
The total FMAP increase a state would receive for a given quarter
would be the sum of the FMAP increases for the unemployment-based and
wage-based components.
FMAP increaseTotal = FMAP increaseU + FMAP increaseW.
For example, during the fourth quarter of 2009, Nevada would have
received the largest total FMAP increase of 13.68 percentage points,
combining its 5.03 percentage point unemployment increase and 8.64
percentage point wage-based increase; its FMAP would have increased
from 50.16 to 63.84. North Dakota would have received the smallest
total increase of 0.52 percentage points, combining its 0.52
percentage point increase for unemployment and 0.00 percentage point
increase for wage declines; its FMAP would have increased from 63.01
to 63.53.
As shown in figure 6, the national average increased FMAP for both the
unemployment-based and wage-based components combined is less than 1
percentage point during the first quarter of the assistance period. It
rises to 5.6 percentage points in the third quarter of 2009 (July-
September) and begins to fall beginning in the fourth quarter of 2009
(October-December). State Medicaid needs resulting from declining
revenues exceed state Medicaid needs due to increased Medicaid
enrollment through most quarters of the economic downturn.
Consequently, the wage-based FMAP increase exceeds the unemployment-
based increase through most quarters of the assistance period. Tables
6 and 7 in appendix IV present the results of a simulation of the
total temporary increased FMAP provided by our prototype formula by
quarter, by state, in response to the most recent national economic
downturn.
Figure 6: Total Weighted National Average FMAP Increase by Component,
GAO Formula Assistance Period, by Quarter, 2008-2011:
[Refer to PDF for image: stacked vertical bar graph]
Quarter of temporary FMAP assistance: 2008.1;
Unemployment-based FMAP increase: 0.25%;
Wage-based FMAP increase: 0.12%.
Quarter of temporary FMAP assistance: 2008.2;
Unemployment-based FMAP increase: 0.44%;
Wage-based FMAP increase: 0.69%.
Quarter of temporary FMAP assistance: 2008.3;
Unemployment-based FMAP increase: 0.72%;
Wage-based FMAP increase: 1.19%.
Quarter of temporary FMAP assistance: 2008.4;
Unemployment-based FMAP increase: 1.1%;
Wage-based FMAP increase: 1.57%.
Quarter of temporary FMAP assistance: 2009.1;
Unemployment-based FMAP increase: 1.67%;
Wage-based FMAP increase: 3.4%.
Quarter of temporary FMAP assistance: 2009.2;
Unemployment-based FMAP increase: 2.08%;
Wage-based FMAP increase: 3.09%.
Quarter of temporary FMAP assistance: 2009.3;
Unemployment-based FMAP increase: 2.26%;
Wage-based FMAP increase: 3.3%.
Quarter of temporary FMAP assistance: 2009.4;
Unemployment-based FMAP increase: 2.32%;
Wage-based FMAP increase: 3.09%.
Quarter of temporary FMAP assistance: 2010.1;
Unemployment-based FMAP increase: 2.08%;
Wage-based FMAP increase: 3.07%.
Quarter of temporary FMAP assistance: 2010.2;
Unemployment-based FMAP increase: 1.81%;
Wage-based FMAP increase: 2.04%.
Quarter of temporary FMAP assistance: 2010.3;
Unemployment-based FMAP increase: 1.47%;
Wage-based FMAP increase: 1.51%.
Quarter of temporary FMAP assistance: 2010.4;
Unemployment-based FMAP increase: 1.05%;
Wage-based FMAP increase: 0.99%.
Quarter of temporary FMAP assistance: 2011.1;
Unemployment-based FMAP increase: 0.43%;
Wage-based FMAP increase: 0.2%.
Quarter of temporary FMAP assistance: 2011.2;
Unemployment-based FMAP increase: N/A[A];
Wage-based FMAP increase: N/A[A].
Quarter of temporary FMAP assistance: 2011.3;
Unemployment-based FMAP increase: N/A[A];
Wage-based FMAP increase: N/A[A].
Source: GAO.
[A] Data for these quarters are not yet available.
Note: Data in figure represent a weighted national average increased
Federal Medical Assistance Percentage (FMAP) for all states where the
weights are states' shares of Medicaid expenditures. A weighted
average accounts for the wide differences in state size, and the wide
differences in the amount of Medicaid expenditures among states, by
giving greater weight to the FMAPs of those states with a larger share
of the nation's Medicaid expenditures.
[End of figure]
For a given quarter, a state could receive an unemployment-based
increase, a wage-based increase, both, or neither, depending on its
need. Therefore, not every state would receive an unemployment-based
or a wage-based increase in every quarter. As shown in figure 7, for
the first quarter of 2008, 40 states would have received assistance
based on an increase in unemployment, and 14 states would have
received assistance based on a decline in wages.[Footnote 27] However,
the majority of states would have received increases for both
components during most quarters of the assistance period.
Figure 7: Number of States with Unemployment-based and Wage-based FMAP
Increases, GAO Formula Assistance Period, by Quarter, 2008-2011:
[Refer to PDF for image: stacked vertical bar graph]
Quarter of temporary FMAP assistance: 2008.1;
Wage-based FMAP increase: 14;
Unemployment-based FMAP increase: 40.
Quarter of temporary FMAP assistance: 2008.2;
Wage-based FMAP increase: 44;
Unemployment-based FMAP increase: 50.
Quarter of temporary FMAP assistance: 2008.3;
Wage-based FMAP increase: 48;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2008.4;
Wage-based FMAP increase: 45;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2009.1;
Wage-based FMAP increase: 51;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2009.2;
Wage-based FMAP increase: 50;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2009.3;
Wage-based FMAP increase: 49;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2009.4;
Wage-based FMAP increase: 48;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2010.1;
Wage-based FMAP increase: 49;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2010.2;
Wage-based FMAP increase: 48;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2010.3;
Wage-based FMAP increase: 45;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2010.4;
Wage-based FMAP increase: 45;
Unemployment-based FMAP increase: 51.
Quarter of temporary FMAP assistance: 2011.1;
Wage-based FMAP increase: 24;
Unemployment-based FMAP increase: 38.
Quarter of temporary FMAP assistance: 2011.2;
Wage-based FMAP increase: N/A[A];
Unemployment-based FMAP increase: N/A[A].
Quarter of temporary FMAP assistance: 2011.3;
Wage-based FMAP increase: N/A[A];
Unemployment-based FMAP increase: N/A[A].
Source: GAO.
[A] Data for these quarters are not yet available.
[End of figure]
Temporary FMAP Assistance Would End Gradually under Prototype Formula:
Under our prototype formula, temporary FMAP assistance to states would
be triggered off when fewer than 26 states show a decline in their
monthly EPOP ratio over 2 consecutive months. Once the program is
triggered off, there are a number of ways in which the decrease in
FMAP could be introduced to ease states' transition back to the
regular FMAP.[Footnote 28]
Under our prototype formula, states would have a more gradual
transition back to their regular FMAP once temporary assistance ended
than under the Recovery Act or the Reconciliation Act. First, our
prototype formula does not include an across-the-board or hold-
harmless provision, as provided by the Recovery Act and the
Reconciliation Act. Therefore, states would not be faced with an
abrupt loss of a large amount of assistance under our prototype
formula. Second, because of the way that our formula generates the
unemployment-based and wage-based increases, the increased FMAP
generally declines toward the end of the assistance period.[Footnote
29] As a result, for most states, the drop in FMAP once temporary
assistance ended would be modest compared to the Recovery Act. For
example, under our prototype, if the first quarter of 2011 would have
been the last quarter of assistance during the most recent economic
downturn, the average drop in FMAP would have been 0.54 percentage
points, ranging from 0.00 in seven states to 4.16 in Nevada.[Footnote
30] Only seven states would have faced a drop in FMAP of greater than
1 percentage point. In contrast, under the Recovery Act and extension,
the average drop in FMAP after the end of assistance in the second
quarter of 2011 was 6.2 percentage points, ranging from 10.8 in Hawaii
to 4.4 in Kentucky; thus, all states experienced a drop in FMAP of
over 4 percentage points.
Conclusions:
Since its inception, efforts to finance the Medicaid program have been
at odds with the cyclical nature of its design and operation,
particularly during economic downturns. At such times, states
typically experience increased Medicaid enrollment while at the same
time their own revenues are declining. During the two most recent
recessions, Congress acted to provide states with a temporary increase
in federal funds through an increased FMAP. However, these efforts to
provide states with increased FMAP assistance during national
recessions were not as responsive to state Medicaid needs as they
could have been. Legislative action at the time of a recession has not
been as timely as an automatic response to changing economic
conditions. Such a mechanism would reduce the time between the start
of the economic downturn and the beginning of assistance by, in part,
eliminating the lag between recognition of the economic downturn and
congressional action to authorize assistance. By providing this
predictability to states, an automatic trigger would facilitate budget
planning and provide states with greater fiscal stability. Similarly,
targeting assistance based on each state's level of need ensures that
federal assistance is aligned with the magnitude of the economic
downturn's effects on individual states.
The prototype formula we present offers an option for providing
automatic, timely, and targeted assistance to states during a national
economic downturn. As called for in the mandate, our prototype formula
improves the starting and ending of assistance, accounts for
variations in state economic conditions, and responds to state
Medicaid needs by providing a baseline for full funding of state
Medicaid needs during a downturn. However, the level of funding and
other design elements--such as the choice of thresholds for starting,
ending, and targeting assistance--are variables that policymakers
could adjust depending on circumstances such as competing budget
demands, macroeconomic conditions, and other state fiscal needs beyond
Medicaid.
Matter for Congressional Consideration:
To ensure that federal funding efficiently and effectively responds to
the countercyclical nature of the Medicaid program, Congress could
consider enacting an FMAP formula that is targeted for variable state
Medicaid needs and provides automatic, timely, and temporary increased
FMAP assistance in response to national economic downturns.
Agency Comments and Our Evaluation:
We provided a draft of this report for review to the Department of
Health and Human Services (HHS). HHS on behalf of the Centers for
Medicare & Medicaid Services (CMS) and the Office of the Assistant
Secretary for Planning and Evaluation (ASPE) provided written comments
on the draft, which are reprinted in appendix V.
CMS officials stated that they agreed with the analysis and goals of
the report, and they emphasized the importance of aligning changes to
the FMAP formula as closely as possible to individual state
circumstances in order to avoid unintended consequences for
beneficiaries and to provide budget planning stability for states.
However, they stated that the complexity of the prototype formula we
present may be difficult for states and the federal government to
implement, and the quarter-to-quarter variability of the increased
FMAP could present challenges for state and federal budget planning.
We note that the level of complexity and variability in our prototype
is comparable to the increased FMAP provided under the Recovery Act.
While there are inherent trade-offs between precision and complexity
in any model, a certain level of complexity is necessary to achieve
the goal of better targeting assistance in order to align the level of
funding with individual state circumstances.
CMS officials also stated that they do not recommend using the formula
to provide general fund relief to states through the Medicaid program.
Our prototype formula is designed for state Medicaid needs only.
However, since Congress has used the increased FMAP for general fund
relief in the past, most recently under the Recovery Act, we present
several modifications that would permit increased funding to states
for general fund relief.
In their comments, ASPE officials noted that the prototype formula is
designed for a national recession that impacts many states, but it
does not deal with more regional economic declines or slower
recoveries that are geographically concentrated. We agree that our
prototype formula was not designed for economic downturns limited to
an individual state or group of states, and we note this limitation in
the report. As the mandate specifically called for recommendations to
address the needs of states during periods of national economic
downturn, such an analysis is beyond the scope of this report.
ASPE officials also commented that having an automatic trigger for the
temporary increased FMAP was a good idea. Further, ASPE agreed that
our use of the employment-to-population ratio (EPOP) is a better
measure for beginning assistance than the unemployment rate because
the EPOP ratio reflects both unemployed and discouraged workers. ASPE
officials also suggested that the EPOP ratio may be a better measure
than unemployment for assessing state need and targeting assistance.
We relied in part on unemployment for targeting, however, because
there is an established relationship between changes in the
unemployment rate and Medicaid enrollment.
ASPE officials also noted that the relationship between unemployment
and Medicaid enrollment may change in the future following full
implementation of the Patient Protection and Affordable Care Act of
2010 (PPACA). We agree that the implementation of this act will have
implications for the relationship between unemployment and Medicaid
enrollment, particularly since an estimated 18 million additional
individuals could qualify for Medicaid under PPACA. Such an analysis,
however, was beyond the scope of our report, but formula elements
could be adjusted to take these changes and effects into account.
In their comments, ASPE officials also offered several considerations
to guide policy choices regarding appropriate thresholds for timing
and targeting of funds. We would note that in the development of our
prototype formula and our illustrative simulations, we made a number
of choices about specific elements of the formula design, including
thresholds for timing and targeting. Alternatives to those design
choices--such as those we present in appendix II of our report--
involve balancing the advantages of one choice against another.
We are sending copies of this report to the Secretary of HHS, the
Administrator of the Centers for Medicare & Medicaid Services, and
other interested parties. In addition, the report will be available at
no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have questions about this report, please contact
Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov or Thomas J.
McCool at (202) 512-2642 or mccoolt@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Major contributors to this report are
listed in appendix VI.
Signed by:
Carolyn L. Yocom:
Director, Health Care:
Signed by:
Thomas J. McCool:
Director, Center for Economics:
List of Committees:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable Max Baucus:
Chairman:
The Honorable Orrin G. Hatch:
Ranking Member:
Committee on Finance:
United States Senate:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Committee on Appropriations:
House of Representatives:
The Honorable Fred Upton:
Chairman:
The Honorable Henry A. Waxman:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Darrell Issa:
Chairman:
The Honorable Elijah E. Cummings:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To evaluate the performance of the prototype formula, we examined the
timing and targeting of the formula, and we simulated its application
over the period of the most recent national economic downturn. We also
considered the effects of using alternative design choices, and these
are discussed in appendix II.
Our prototype formula relies on changes in the employment-to-
population (EPOP) ratio to identify the start of a national economic
downturn, and to provide a trigger for a targeted temporary increase
in states' Federal Medical Assistance Percentage (FMAP). We define the
EPOP ratio as the ratio of the number of jobs to the working-age
population aged 16 and older. Employment data are represented by the
number of jobs by state, and come from the Bureau of Labor Statistics'
Current Employment Statistics.[Footnote 31]
To simulate the use of the EPOP ratio to identify the start of a
national economic downturn and trigger temporary FMAP assistance, we
calculated a 3-month moving average of the EPOP ratio starting in
March 1977 through May 2011 for each state and the District of
Columbia.[Footnote 32] This time period covered the last five national
recessions as defined by the National Bureau of Economic Research
(NBER). To calculate the decline in EPOP, we subtracted the EPOP 3-
month moving average for a given month from the average for the same
month in the preceding year. For example, for each state, the EPOP
ratio's 3-month moving average for May 2011 was subtracted from the
average for May 2010. We identified a threshold number of states with
declining EPOP ratios that was consistent with the start of each of
the last five NBER recessions. Our prototype formula is designed to
provide assistance during periods of national economic downturn; it is
not designed for economic downturns limited to an individual state or
region.
To simulate the targeting of temporary increased FMAP assistance to
states, we calculated increased FMAPs under our prototype formula
during the most recent national economic downturn. (The period of
targeted increases in FMAPs is defined by the EPOP "trigger.") As
outlined in our March 2011 report, we used increases in states'
unemployment rates and declines in states' wages and salaries as
indicators of states' increased funding needs for Medicaid. The
increased needs result from (1) increased Medicaid enrollments as
people are affected by the economic downturn and become eligible for
Medicaid; and (2) states' revenue losses, which affect their ability
to fund their share of Medicaid. To avoid taking into account states'
choices regarding Medicaid policies and procedures, we used increases
in state unemployment rates as a proxy to indicate Medicaid enrollment
growth attributable to the economic downturn--our unemployment
component. Similarly, to avoid taking into account state policy
choices (e.g., statutory tax rates), we used decreases in wages and
salaries as a proxy to indicate revenue losses attributable to effects
of the economic downturn--our wage and salary component.
Our calculation of targeted assistance to every state is done on a
quarterly basis, and the total increase in FMAP is the sum of amounts
calculated separately under the unemployment component, and the wage
and salary component. The overall method involves first selecting for
each state a "base quarter" from which increases in unemployment and
decreases in wages and salaries are calculated. While individual
states may experience many factors or trends that contribute to
increases or decreases in their unemployment rate or wages and
salaries, such as changes over time in the mix of industries in a
state, we determined that accounting for such factors for each state
would make the prototype formula too complex. Thus, the formula is
based on the assumption that all increases in unemployment or
decreases in wages during the period of assistance are attributed to
the effects of the economic downturn.
For the unemployment component, when the program is triggered on, a
base quarter is identified for each state by looking back over 8
quarters from the current quarter and selecting the quarter with the
lowest unemployment rate.[Footnote 33] For the first 8 quarters of the
program, the amount of assistance for each quarter is calculated based
on the difference between the unemployment rate in this low base
quarter and the rate in the current quarter. After the first 8
quarters of assistance, the state's increase in unemployment is
calculated using the unemployment rate in the current quarter minus
the lowest unemployment rate in the previous 8 quarters. As shown in
figure 8, the start of the look-back period remains fixed for the
first 8 quarters of assistance; thereafter, the look-back period is
limited to the prior 8 quarters. For example, in the fourth quarter of
2009, the look-back period extends for 15 quarters; however, beginning
in the first quarter of 2010, the look-back period is limited to the
prior 8 quarters.
Figure 8: Look-back period for Calculation of Unemployment-based and
Wage-based Federal Medical Assistance Percentage Increases:
[Refer to PDF for image: illustration]
The illustration depicts "Look-back quarters and Current quarters for
the time period of 2006 through 2011, third quarter.
2007 through 2011, third quarter is designated as an Assistance period.
Source: GAO.
[End of figure]
Under the unemployment component of the prototype, the increase in
unemployment provides states with a reduction in their financial
contribution for Medicaid that is proportional to their increase in
unemployment over the base quarter. A 1.0 percentage point increase in
a state's unemployment rate corresponds to an increase in Medicaid
enrollment, which produces a 1 percent increase in state Medicaid
spending.[Footnote 34] As shown in the formula below, the unemployment-
based FMAP increase (FMAP increaseU) for a given quarter is the
product of the state share of Medicaid (100-FMAP) and the change in
the unemployment rate (UR).
FMAP increaseU = (100-FMAP) * UR.
For example, under our prototype formula, a 10 percentage point
increase in the unemployment rate would result in a 10 percent
decrease in the state share of Medicaid. If a state had a 60 percent
FMAP, and a 40 percent state share, the state share would fall by 4
percentage points (40 percent multiplied by 10 percent) to 36 percent,
and commensurately its FMAP would rise to 64 percent.
For the prototype formula's wages and salaries component, the base
quarter is again found for each state by looking back over eight
quarters when the temporary assistance begins. The base quarter
selected is the quarter with the peak value in wages and salaries. For
the first eight quarters of the program, the amount of assistance for
each quarter is calculated based on the difference between the total
state wages and salaries in the peak quarter and the total state wages
and salaries in the current quarter. After the first eight quarters of
assistance, the state's decrease in wages and salaries is calculated
using the peak total wages and salaries in the previous eight quarters
minus the wages and salaries in the current quarter. As with the
unemployment component, the start of the look-back period remains
fixed for the first eight quarters of assistance; thereafter, the look-
back period is limited to the prior eight quarters.
Our prototype formula provides states with a separate reduction in
their financial contribution for Medicaid that is proportional to
their decrease in wages and salaries during the economic downturn.
This component is based on evidence showing a 1 percent decrease in
total state wages and salaries corresponds to a 1 percent decrease in
state tax revenues.[Footnote 35] For the purposes of our formula we
assume a reduction in state tax revenues corresponds to an equal
percent reduction in the funds available for funding the state share
of Medicaid. The total state wage and salary amount used to calculate
assistance for a given quarter is the total wage and salary amount for
that quarter compared to the highest wage and salary level in the
prior eight quarters, expressed as a percent change.[Footnote 36] As
shown in the formula below, the wage-based FMAP increase (FMAP
increaseW) for a given quarter is the product of the state share of
Medicaid (100-FMAP) and the percent change in total state wages and
salaries (%W).
FMAP increaseW = (100-FMAP) * %W.
For example, under our formula, a 20 percent decline in state wages
and salaries would result in a 20 percent decrease in the state share
of Medicaid. If a state had a 60 percent FMAP, and therefore a 40
percent state share, the state share would fall by 8 percentage points
(40 percent multiplied by 20 percent) to 32 percent, and its FMAP
would rise to 68 percent.
To simulate the use of the prototype formula to end temporary FMAP
assistance, we examined the EPOP ratio to determine when program
assistance would stop. If the number of states having declining ratios
falls below a threshold level (26) for 2 consecutive months, the FMAP
assistance would end in the following quarter. While the EPOP test
employed to initiate temporary FMAP assistance is also used to end it,
the ending of assistance is not comparable to the NBER dates of the
end of a recession. In the five past national recessions we examined,
the EPOP test would end assistance after the NBER-designated economic
recovery began. This is appropriate because, as indicated in our March
2011 report, state Medicaid needs persist into the early stages of
recovery.
In the case of the automatic trigger to start and stop the temporary
assistance to states, increased FMAP payments to states would begin in
the first calendar quarter following the quarter in which the EPOP
measure indicated the start of a economic downturn, and the last
quarter of payment would be the first calendar quarter following the
quarter in which the EPOP threshold was no longer met. In the case of
the targeted assistance to states, for the purposes of our simulation
we did not build in any delay between the availability of data and the
calculation of increased FMAPs. For example, although unemployment and
wage and salary data both become available with a delay of up to
several months, we used state unemployment and wage data for the first
quarter of 2008 to calculate the increased FMAP for the same quarter
in our simulation. Given the lag time associated with the availability
of unemployment and wage data, it may be advisable to calculate
preliminary FMAPs based on the most recent quarterly data available,
and then to calculate final FMAPs for that quarter when final data for
the quarter are published.
[End of section]
Appendix II: Some Design Elements in the Prototype Formula and
Alternatives:
In the development of our prototype formula for increased Federal
Medical Assistance Percentages (FMAP) during national economic
downturns, we made a number of choices about specific elements of the
formula design. Alternatives to those design choices involve balancing
the advantages of one choice against those of another. For example, a
design alternative that would lessen the quarter-to-quarter variation
in FMAPs would also lessen the formula's responsiveness to quarterly
changes in economic conditions. Thus, there is a trade-off between
establishing an increased FMAP that has relatively greater stability
and predictability and FMAPs that are reflective of states' current
economic conditions.
Table 2 presents a selection of formula design features contained in
our prototype formula and presents some alternatives. With each
alternative, there is a discussion of key considerations involved in
making that choice.
Table 2: Choices of Formula Design Elements Contained in GAO Prototype
Formula and Alternatives:
Formula design element: Choice of thresholds for starting assistance;
Choice contained in prototype formula: Under our prototype formula,
the assistance period begins when 26 states have declining employment-
to-population ratios (EPOPs) over 2 consecutive months;
Alternative choices and some considerations involved in the choice: To
provide greater assurance that a national recession has begun, the
threshold number of states could be set higher than 26 states (e.g.,
40 states), or the number of consecutive months with a declining EPOP
could be increased (e.g., to 4 months). However, the higher threshold
could delay the triggering of assistance. Retroactive assistance for a
quarter or two could make up for the amount of funding that was
delayed due to the higher threshold, but could not make up for the
delay in receiving the assistance.
Formula design element: Choice of thresholds for targeting;
Choice contained in prototype formula: When the assistance period
begins, our prototype formula relies on an eight-quarter look back to
identify a state's minimum unemployment rate, and maximum wage and
salary quarter;
Alternative choices and some considerations involved in the choice:
The look-back period for calculating changes in unemployment and
changes in wages and salaries could be shortened. A shorter look-back
period (e.g., four quarters) would miss the low point of unemployment
of states that enter an economic downturn relatively early, and thus
would provide them with less assistance and reduce the overall cost of
the program. The reverse is true of a longer look-back period;
it provides more aid to states entering an economic downturn early,
and it would increase the overall cost of the program.
Formula design element: Method of calculating quarterly increased FMAP;
Choice contained in prototype formula: Unemployment-based and wage-
based FMAP increases are recalculated and adjusted quarterly during
the assistance period;
Alternative choices and some considerations involved in the choice:
Quarterly wage and unemployment data can be somewhat volatile for some
states. Our simulation results showed some instances of states having
quarter-to-quarter changes in their FMAPs of more than 1.0 percentage
point. While quarterly data provide a more timely response to changing
economic conditions, they are also more prone to fluctuations. If
fluctuations in quarterly FMAPs are seen as undesirable for purposes
of state program planning and administration, a rule could be used to
moderate those changes. For example, the formula could have a rule
constraining the size of quarterly changes in FMAPs to not more than a
1 percentage point increase or decrease. Alternatively, the
fluctuations could be reduced by basing the calculations on smoothed
data. For example, the quarterly unemployment rates used could be 6-or
12-month rolling averages of those data. Such a rolling average
provides quarterly data that are the average of the 6 or 12 most recent
months, and are much more stable than data that are a 3-month average.
Formula design element: Level of state need;
Choice contained in prototype formula: For targeting, our prototype
formula provides full funding for state Medicaid needs (due to
increased enrollment and decreased revenues);
Alternative choices and some considerations involved in the choice:
Rather than base funding on estimates of Medicaid expenditure needs
alone, the formulas could be scaled up or down. Congress could scale
up assistance to help address broader state budgetary needs due to
declining revenues and to forestall state retrenchment during a period
of downturn. Alternatively, Congress could reduce the cost of the
program by scaling down assistance by providing only a percentage of
funding for state Medicaid needs. Proportional scaling of the
assistance would still maintain targeting that is proportional to
states' needs for Medicaid funding.
Formula design element: Choice of thresholds for ending assistance;
Choice contained in prototype formula: Under our prototype formula,
the temporary assistance ends when fewer than 26 states show declining
EPOPs over 2 consecutive months;
Alternative choices and some considerations involved in the choice: A
threshold of more than 26 states with a declining EPOP could be used
to end assistance earlier. There are fewer quarters during a downturn
when a very high number of states show declining EPOPs. Thus, raising
the threshold number of states would mean that there are fewer
quarters of the program of additional FMAP to states. Conversely, a
lower threshold number of states would have the program run for more
quarters. Also, a program that is longer in duration would provide
somewhat more assistance to states that enter an economic downturn
later than most other states. Further, by changing the duration of the
temporary assistance, the overall budgetary cost of the program would
be changed, along with changing when states would need to rely on
their own resources. A second parameter that could be adjusted is the
rule of 2 consecutive months. Increasing the number of consecutive
months would provide somewhat greater assurance that state economies
were consistently improving month by month. Because economic recovery
may not show consistent improvement in every month, a premature
shutdown of the program is a risk. Congress could make the decision to
override the automatic shutdown on the basis of considerations not
factored into the EPOP trigger, such as the depth and duration of
economic downturn, the pace of recovery, federal and state government
budgetary situations, and other considerations.
Formula design element: Method of ending temporary assistance;
Choice contained in prototype formula: For ending assistance with a
phased reduction of increases, our prototype calculates the targeted
assistance using a floating look-back period. After the first eight
quarters of assistance, the look-back period is constrained to not
exceed eight quarters;
Alternative choices and some considerations involved in the choice:
While the eight-quarter floating look-back period provides some
lessening of assistance in the later quarters, some states are still
likely to face sizeable drops ("cliffs") in their FMAP when the
program ends. To ensure that no state experiences a sharp decline in
their temporary increased FMAP at the end of the assistance period, a
phase-out rule could constrain the quarterly drop in FMAP. For
example, a rule could provide that a state's quarter-to-quarter
decrease in FMAP would be capped at 0.5 percentage points. Such a rule
would provide a stepped phase out of assistance for all states and a
longer phase out for those states facing a larger drop in their FMAP
when the program ends.
Source: GAO.
[End of table]
Table 3 describes two additional adjustments that were not included in
our prototype formula, but could be applied.
Table 3: Choices of Formula Design Elements Not Contained in GAO
Prototype Formula that could be Applied:
Additional adjustment: Method of financing;
Description: The general characteristics of the assistance program
could also be adjusted to approximate budget neutrality. While our
current prototype formula automatically triggers on and off based on
economic downturns, it does not make adjustments for stronger economic
times. However, just as states experience increased enrollment and
decreased revenues during a downturn, they can experience the opposite
effect during stronger economic times--decreased Medicaid enrollment
and increased revenues. Thus, the FMAP could be adjusted for targeted
increases during economic downturns, and targeted decreases during a
stronger economy.
Additional adjustment: Enhanced targeting;
Description: The amount of increased assistance based on increased
Medicaid enrollment could be adjusted to take into account the
unemployment rate instead of being based solely on the change in the
unemployment rate. Currently, our prototype formula increases states'
FMAPs based on the change in their unemployment rate. Under this
enhanced targeting option, states with higher unemployment rates would
receive more assistance than states with lower unemployment rates even
if the change in the unemployment rate were the same. For example, a
state with a 2 percent unemployment rate that increased to 4 percent
would receive less assistance than a state whose unemployment
increased from 6 to 8 percent. Another alternative would be to
establish an unemployment rate floor for assistance. The unemployment
rate would have to be above a specified level for the state to receive
any additional assistance. This approach reflects a different policy
goal than that provided under our prototype formula in that it
provides assistance to states that may have consistently high
unemployment.
Source: GAO.
[End of table]
[End of section]
Appendix III: The Recovery Act's Across-the-board and Hold-harmless
Provisions Were Not Targeted for States' Medicaid Needs:
The across-the-board and hold-harmless provisions of the American
Recovery and Reinvestment Act of 2009 (Recovery Act) did not provide a
needs-based method for targeting Medicaid assistance to states during
an economic downturn. Because these provisions did not distinguish
among states that experienced varying degrees of increased
unemployment or decreased wages and salaries during an economic
downturn, they are not included in our prototype formula.
The Recovery Act's Across-the-board Provision Did Not Reflect the
Variation among States in the Effect of the Economic Downturn:
The largest share of total assistance to states under the Recovery Act
was the 6.2 percentage point across-the-board FMAP increase that each
state received. However, because states are not equally affected by
national economic downturns an equal FMAP increase does not address
variable state Medicaid funding needs. Furthermore, as we discussed in
our March report, equal percentage point changes in FMAPs do not
result in equal percent reductions in state contributions for
Medicaid. States with higher regular FMAPs received a
disproportionately large reduction in their state contribution for
Medicaid under the across-the-board provision. For example, during the
fourth quarter of assistance under the Recovery Act, Nevada--a low
FMAP state--had a 7.1 percentage point increase in unemployment and a
27.9 percent decline in the state share of Medicaid, while Arkansas--a
high FMAP state--experienced a 2.1 percentage point increase in
unemployment, but a similar 28.1 percent decline in state share.
[Footnote 37]
The Recovery Act's Hold-harmless Provision Was Not Targeted for
Variable State Needs:
Under the hold-harmless provision of the Recovery Act, each state's
regular FMAP rate was held to the state's highest rate since fiscal
year 2008, regardless of changes in the state's per capita income
(PCI).[Footnote 38] As a result, the largest FMAP increases due to the
hold-harmless provision went to the states with the greatest
improvements in their underlying economic condition, as measured by
PCI, relative to the national average. Furthermore, states with both
higher unemployment and rising unemployment tended to receive the
least benefit from the hold-harmless provision. As shown in table 4,
many states that benefited from the Recovery Act hold-harmless
provision often had relative increases in their PCI compared to the
national average, while some states that had little or no increase in
PCI received little, if any, benefit from the hold-harmless provision.
Table 4: Hold-harmless FMAP Increases and Economic Variables, by State
in Descending Order of FMAP Increase:
State: Median of all states;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.12;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.0%;
Unemployment rate (3-month average ending Sept. 2010): 8.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.5.
State: Louisiana;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 8.86;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 7.7%;
Unemployment rate (3-month average ending Sept. 2010): 7.5;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.8.
State: Hawaii;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 4.71;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 4.0%;
Unemployment rate (3-month average ending Sept. 2010): 6.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.1.
State: North Dakota;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 3.40;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 3.2%;
Unemployment rate (3-month average ending Sept. 2010): 3.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 0.8.
State: Alaska;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 2.48;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 2.1%;
Unemployment rate (3-month average ending Sept. 2010): 7.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 1.8.
State: Oklahoma;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 2.16;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 4.0%;
Unemployment rate (3-month average ending Sept. 2010): 6.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.7.
State: Nebraska;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 2.12;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.1%;
Unemployment rate (3-month average ending Sept. 2010): 4.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 1.9.
State: Montana;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.72;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.8%;
Unemployment rate (3-month average ending Sept. 2010): 7.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.2.
State: New Mexico;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.57;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.6%;
Unemployment rate (3-month average ending Sept. 2010): 8.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.8.
State: Arkansas;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.57;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.9%;
Unemployment rate (3-month average ending Sept. 2010): 7.5;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 2.7.
State: Mississippi;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.56;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.2%;
Unemployment rate (3-month average ending Sept. 2010): 10.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.1.
State: Washington;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.52;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.1%;
Unemployment rate (3-month average ending Sept. 2010): 9.0;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.6.
State: South Dakota;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.47;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -1.5%;
Unemployment rate (3-month average ending Sept. 2010): 4.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 1.7.
State: Florida;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.38;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.3%;
Unemployment rate (3-month average ending Sept. 2010): 11.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 8.4.
State: Kansas;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.33;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.1%;
Unemployment rate (3-month average ending Sept. 2010): 6.5;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 2.6.
State: Missouri;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.22;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.3%;
Unemployment rate (3-month average ending Sept. 2010): 9.3;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.6.
State: Maine;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.19;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.4%;
Unemployment rate (3-month average ending Sept. 2010): 7.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.4.
State: Nevada;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.03;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.9%;
Unemployment rate (3-month average ending Sept. 2010): 14.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 10.2.
State: Idaho;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.02;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.0%;
Unemployment rate (3-month average ending Sept. 2010): 8.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 6.2.
State: West Virginia;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 1.01;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.3%;
Unemployment rate (3-month average ending Sept. 2010): 8.8;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.9.
State: Iowa;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.88;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.9%;
Unemployment rate (3-month average ending Sept. 2010): 6.8;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.2.
State: Vermont;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.74;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.2%;
Unemployment rate (3-month average ending Sept. 2010): 5.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 2.3.
State: Utah;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.55;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.2%;
Unemployment rate (3-month average ending Sept. 2010): 7.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.9.
State: North Carolina;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.42;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -1.8%;
Unemployment rate (3-month average ending Sept. 2010): 9.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.2.
State: Arizona;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.35;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.5%;
Unemployment rate (3-month average ending Sept. 2010): 9.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 6.0.
State: South Carolina;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.28;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -1.2%;
Unemployment rate (3-month average ending Sept. 2010): 10.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.4.
State: Illinois;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.12;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.7%;
Unemployment rate (3-month average ending Sept. 2010): 10.1;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.7.
State: Wisconsin;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.05;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.5%;
Unemployment rate (3-month average ending Sept. 2010): 7.8;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.5.
State: Texas;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.4%;
Unemployment rate (3-month average ending Sept. 2010): 8.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.9.
State: Pennsylvania;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.4%;
Unemployment rate (3-month average ending Sept. 2010): 9.1;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.9.
State: Alabama;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.1%;
Unemployment rate (3-month average ending Sept. 2010): 9.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.9.
State: Rhode Island;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.9%;
Unemployment rate (3-month average ending Sept. 2010): 11.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 6.8.
State: Kentucky;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -1.9%;
Unemployment rate (3-month average ending Sept. 2010): 10.0;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.5.
State: Oregon;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.4%;
Unemployment rate (3-month average ending Sept. 2010): 10.6;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.6.
State: Tennessee;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.4%;
Unemployment rate (3-month average ending Sept. 2010): 9.6;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.0.
State: Delaware;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.8%;
Unemployment rate (3-month average ending Sept. 2010): 8.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.0.
State: Georgia;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -3.6%;
Unemployment rate (3-month average ending Sept. 2010): 9.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.5.
State: Ohio;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -3.7%;
Unemployment rate (3-month average ending Sept. 2010): 10.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.9.
State: Indiana;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -4.2%;
Unemployment rate (3-month average ending Sept. 2010): 10.2;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.7.
State: Michigan;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -6.8%;
Unemployment rate (3-month average ending Sept. 2010): 13.1;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 6.4.
States excluded from the hold-harmless because of unchanged FMAPS[A]:
State: Wyoming;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 10.6%;
Unemployment rate (3-month average ending Sept. 2010): 6.8;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.1.
State: District of Columbia;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 6.7%;
Unemployment rate (3-month average ending Sept. 2010): 9.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.5.
State: New York;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 5.5%;
Unemployment rate (3-month average ending Sept. 2010): 8.3;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.0.
State: Connecticut;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 2.8%;
Unemployment rate (3-month average ending Sept. 2010): 9.1;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.8.
State: New Jersey;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.9%;
Unemployment rate (3-month average ending Sept. 2010): 9.6;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 5.5.
State: Massachusetts;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 1.9%;
Unemployment rate (3-month average ending Sept. 2010): 8.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.3.
State: Virginia;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.6%;
Unemployment rate (3-month average ending Sept. 2010): 6.9;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.1.
State: California;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.6%;
Unemployment rate (3-month average ending Sept. 2010): 12.4;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 7.6.
State: Maryland;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: 0.2%;
Unemployment rate (3-month average ending Sept. 2010): 7.3;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.8.
State: Colorado;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -0.9%;
Unemployment rate (3-month average ending Sept. 2010): 8.1;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 4.5.
State: New Hampshire;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -1.2%;
Unemployment rate (3-month average ending Sept. 2010): 5.7;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 2.3.
State: Minnesota;
FMAP increase due to hold-harmless provision (2011, Qtr 1): 0.00;
Percentage change in 3-year average per capita income (PCI) from 2003-
05 to 2006-08, relative to U.S. average: -2.1%;
Unemployment rate (3-month average ending Sept. 2010): 7.0;
Increase in unemployment rate (3-month average ending Sept. 2010
compared to lowest 3-month average since Jan. 2006): 3.1.
Source: Department of Health and Human Services, Bureau of Economic
Analysis, and Bureau of Labor Statistics.
[A] Eleven states and the District of Columbia did not qualify for the
hold-harmless provision. These are states whose Federal Medical
Assistance Percentage (FMAP) is at the 50 percent floor each year for
fiscal year 2008 through fiscal year 2011, and the District of
Columbia whose FMAP is fixed at 70 percent. By statute, the minimum
regular FMAP for a state is 50 percent. (The District of Columbia is
not subject to this formula and instead by law has its FMAP set at 70
percent.)
[End of table]
During the first quarter of 2011, 9 of the 10 states that received the
largest FMAP increases due to the hold-harmless provision had rising
PCIs relative to the national average. For example, Hawaii, which had
a 4.0 percent increase in its PCI, received a FMAP increase of 4.71
percentage points. Conversely, 11 of the 12 states that received no
benefit from the hold-harmless provision in the first quarter of 2011
had declining per capita incomes relative to the national average. In
addition, states with the greatest recession-related needs, such as
high and rising unemployment rates tended to receive the least benefit
from the hold-harmless provision. For example, Michigan received no
benefit from the hold-harmless provision despite a much worse economic
condition relative to other states: a 13.1 percent unemployment rate
and a 6.4 percent increase in its unemployment.
[End of section]
Appendix IV: Temporary Increased FMAP Data by State, GAO Prototype
Formula:
Table 5: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Component and State, GAO Prototype Formula, 2009, Fourth
Quarter:
States: Alabama;
Change in unemployment (2009, Qtr 4): 7.1;
Percent Change in wages (2009, Qtr 4): -6.0;
FY 2010 FMAP: 68.01;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.27;
Wages: 1.90;
Total change: 4.18.
States: Alaska;
Change in unemployment (2009, Qtr 4): 2.2;
Percent Change in wages (2009, Qtr 4): 0.0;
FY 2010 FMAP: 51.43;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.07;
Wages: 0.00;
Total change: 1.07.
States: Arizona;
Change in unemployment (2009, Qtr 4): 6.8;
Percent Change in wages (2009, Qtr 4): -10.1;
FY 2010 FMAP: 65.75;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.33;
Wages: 3.47;
Total change: 5.80.
States: Arkansas;
Change in unemployment (2009, Qtr 4): 2.9;
Percent Change in wages (2009, Qtr 4): -6.4;
FY 2010 FMAP: 72.78;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 0.79;
Wages: 1.76;
Total change: 2.54.
States: California;
Change in unemployment (2009, Qtr 4): 7.4;
Percent Change in wages (2009, Qtr 4): -8.4;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 3.70;
Wages: 4.21;
Total change: 7.91.
States: Colorado;
Change in unemployment (2009, Qtr 4): 5.1;
Percent Change in wages (2009, Qtr 4): -6.0;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.55;
Wages: 2.98;
Total change: 5.53.
States: Connecticut;
Change in unemployment (2009, Qtr 4): 4.5;
Percent Change in wages (2009, Qtr 4): -7.3;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.25;
Wages: 3.65;
Total change: 5.90.
States: Delaware;
Change in unemployment (2009, Qtr 4): 5.2;
Percent Change in wages (2009, Qtr 4): -8.5;
FY 2010 FMAP: 50.21;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.59;
Wages: 4.22;
Total change: 6.81.
States: District of Columbia;
Change in unemployment (2009, Qtr 4): 4.9;
Percent Change in wages (2009, Qtr 4): 0.0;
FY 2010 FMAP: 70.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.47;
Wages: 0.00;
Total change: 1.47.
States: Florida;
Change in unemployment (2009, Qtr 4): 7.8;
Percent Change in wages (2009, Qtr 4): -9.6;
FY 2010 FMAP: 54.98;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 3.51;
Wages: 4.32;
Total change: 7.83.
States: Georgia;
Change in unemployment (2009, Qtr 4): 6.0;
Percent Change in wages (2009, Qtr 4): -8.2;
FY 2010 FMAP: 65.10;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.09;
Wages: 2.86;
Total change: 4.95.
States: Hawaii;
Change in unemployment (2009, Qtr 4): 4.7;
Percent Change in wages (2009, Qtr 4): -5.3;
FY 2010 FMAP: 54.24;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.15;
Wages: 2.43;
Total change: 4.58.
States: Idaho;
Change in unemployment (2009, Qtr 4): 6.0;
Percent Change in wages (2009, Qtr 4): -8.9;
FY 2010 FMAP: 69.40;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.84;
Wages: 2.73;
Total change: 4.56.
States: Illinois;
Change in unemployment (2009, Qtr 4): 6.6;
Percent Change in wages (2009, Qtr 4): -8.3;
FY 2010 FMAP: 50.17;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 3.29;
Wages: 4.13;
Total change: 7.42.
States: Indiana;
Change in unemployment (2009, Qtr 4): 6.1;
Percent Change in wages (2009, Qtr 4): -7.7;
FY 2010 FMAP: 65.93;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.08;
Wages: 2.61;
Total change: 4.69.
States: Iowa;
Change in unemployment (2009, Qtr 4): 2.4;
Percent Change in wages (2009, Qtr 4): -4.1;
FY 2010 FMAP: 63.51;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 0.88;
Wages: 1.49;
Total change: 2.37.
States: Kansas;
Change in unemployment (2009, Qtr 4): 3.3;
Percent Change in wages (2009, Qtr 4): -4.8;
FY 2010 FMAP: 60.38;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.31;
Wages: 1.91;
Total change: 3.22.
States: Kentucky;
Change in unemployment (2009, Qtr 4): 5.4;
Percent Change in wages (2009, Qtr 4): -4.0;
FY 2010 FMAP: 70.96;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.57;
Wages: 1.15;
Total change: 2.72.
States: Louisiana;
Change in unemployment (2009, Qtr 4): 3.4;
Percent Change in wages (2009, Qtr 4): -4.0;
FY 2010 FMAP: 67.61;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.10;
Wages: 1.30;
Total change: 2.40.
States: Maine;
Change in unemployment (2009, Qtr 4): 3.8;
Percent Change in wages (2009, Qtr 4): -4.4;
FY 2010 FMAP: 64.99;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.33;
Wages: 1.55;
Total change: 2.88.
States: Maryland;
Change in unemployment (2009, Qtr 4): 4.1;
Percent Change in wages (2009, Qtr 4): -2.5;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.05;
Wages: 1.24;
Total change: 3.29.
States: Massachusetts;
Change in unemployment (2009, Qtr 4): 4.4;
Percent Change in wages (2009, Qtr 4): -6.4;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.20;
Wages: 3.22;
Total change: 5.42.
States: Michigan;
Change in unemployment (2009, Qtr 4): 7.2;
Percent Change in wages (2009, Qtr 4): -13.0;
FY 2010 FMAP: 63.19;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.65;
Wages: 4.78;
Total change: 7.43.
States: Minnesota;
Change in unemployment (2009, Qtr 4): 4.0;
Percent Change in wages (2009, Qtr 4): -7.6;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.00;
Wages: 3.78;
Total change: 5.78.
States: Mississippi;
Change in unemployment (2009, Qtr 4): 4.7;
Percent Change in wages (2009, Qtr 4): -5.6;
FY 2010 FMAP: 75.67;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.14;
Wages: 1.37;
Total change: 2.52.
States: Missouri;
Change in unemployment (2009, Qtr 4): 5.0;
Percent Change in wages (2009, Qtr 4): -8.2;
FY 2010 FMAP: 64.51;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.77;
Wages: 2.91;
Total change: 4.69.
States: Montana;
Change in unemployment (2009, Qtr 4): 3.8;
Percent Change in wages (2009, Qtr 4): -4.0;
FY 2010 FMAP: 67.42;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.24;
Wages: 1.31;
Total change: 2.55.
States: Nebraska;
Change in unemployment (2009, Qtr 4): 2.2;
Percent Change in wages (2009, Qtr 4): -2.9;
FY 2010 FMAP: 60.56;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 0.87;
Wages: 1.15;
Total change: 2.02.
States: Nevada;
Change in unemployment (2009, Qtr 4): 10.1;
Percent Change in wages (2009, Qtr 4): -17.3;
FY 2010 FMAP: 50.16;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 5.03;
Wages: 8.64;
Total change: 13.68.
States: New Hampshire;
Change in unemployment (2009, Qtr 4): 3.3;
Percent Change in wages (2009, Qtr 4): -7.2;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.65;
Wages: 3.62;
Total change: 5.27.
States: New Jersey;
Change in unemployment (2009, Qtr 4): 5.5;
Percent Change in wages (2009, Qtr 4): -7.2;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.75;
Wages: 3.60;
Total change: 6.35.
States: New Mexico;
Change in unemployment (2009, Qtr 4): 4.5;
Percent Change in wages (2009, Qtr 4): -3.6;
FY 2010 FMAP: 71.35;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.29;
Wages: 1.04;
Total change: 2.33.
States: New York;
Change in unemployment (2009, Qtr 4): 4.6;
Percent Change in wages (2009, Qtr 4): -9.0;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.30;
Wages: 4.50;
Total change: 6.80.
States: North Carolina;
Change in unemployment (2009, Qtr 4): 6.6;
Percent Change in wages (2009, Qtr 4): -6.6;
FY 2010 FMAP: 65.13;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.30;
Wages: 2.30;
Total change: 4.60.
States: North Dakota;
Change in unemployment (2009, Qtr 4): 1.4;
Percent Change in wages (2009, Qtr 4): 0.0;
FY 2010 FMAP: 63.01;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 0.52;
Wages: 0.00;
Total change: 0.52.
States: Ohio;
Change in unemployment (2009, Qtr 4): 5.2;
Percent Change in wages (2009, Qtr 4): -8.5;
FY 2010 FMAP: 63.42;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.90;
Wages: 3.12;
Total change: 5.02.
States: Oklahoma;
Change in unemployment (2009, Qtr 4): 4.0;
Percent Change in wages (2009, Qtr 4): -5.4;
FY 2010 FMAP: 64.43;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.42;
Wages: 1.91;
Total change: 3.34.
States: Oregon;
Change in unemployment (2009, Qtr 4): 6.0;
Percent Change in wages (2009, Qtr 4): -8.6;
FY 2010 FMAP: 62.74;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.24;
Wages: 3.19;
Total change: 5.43.
States: Pennsylvania;
Change in unemployment (2009, Qtr 4): 4.4;
Percent Change in wages (2009, Qtr 4): -3.2;
FY 2010 FMAP: 54.81;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.99;
Wages: 1.43;
Total change: 3.42.
States: Rhode Island;
Change in unemployment (2009, Qtr 4): 6.8;
Percent Change in wages (2009, Qtr 4): -6.4;
FY 2010 FMAP: 52.63;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 3.22;
Wages: 3.02;
Total change: 6.24.
States: South Carolina;
Change in unemployment (2009, Qtr 4): 6.3;
Percent Change in wages (2009, Qtr 4): -6.1;
FY 2010 FMAP: 70.32;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.87;
Wages: 1.81;
Total change: 3.68.
States: South Dakota;
Change in unemployment (2009, Qtr 4): 2.4;
Percent Change in wages (2009, Qtr 4): -2.5;
FY 2010 FMAP: 62.72;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 0.89;
Wages: 0.91;
Total change: 1.81.
States: Tennessee;
Change in unemployment (2009, Qtr 4): 5.9;
Percent Change in wages (2009, Qtr 4): -7.8;
FY 2010 FMAP: 65.57;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.03;
Wages: 2.67;
Total change: 4.70.
States: Texas;
Change in unemployment (2009, Qtr 4): 3.8;
Percent Change in wages (2009, Qtr 4): -4.8;
FY 2010 FMAP: 58.73;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.57;
Wages: 1.99;
Total change: 3.55.
States: Utah;
Change in unemployment (2009, Qtr 4): 5.3;
Percent Change in wages (2009, Qtr 4): -5.9;
FY 2010 FMAP: 71.68;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.50;
Wages: 1.67;
Total change: 3.18.
States: Vermont;
Change in unemployment (2009, Qtr 4): 3.1;
Percent Change in wages (2009, Qtr 4): -2.9;
FY 2010 FMAP: 58.73;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.28;
Wages: 1.18;
Total change: 2.46.
States: Virginia;
Change in unemployment (2009, Qtr 4): 4.2;
Percent Change in wages (2009, Qtr 4): -2.5;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.10;
Wages: 1.23;
Total change: 3.33.
States: Washington;
Change in unemployment (2009, Qtr 4): 5.4;
Percent Change in wages (2009, Qtr 4): -4.8;
FY 2010 FMAP: 50.12;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.69;
Wages: 2.38;
Total change: 5.07.
States: West Virginia;
Change in unemployment (2009, Qtr 4): 4.7;
Percent Change in wages (2009, Qtr 4): -2.8;
FY 2010 FMAP: 74.04;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.22;
Wages: 0.73;
Total change: 1.95.
States: Wisconsin;
Change in unemployment (2009, Qtr 4): 4.7;
Percent Change in wages (2009, Qtr 4): -6.5;
FY 2010 FMAP: 60.21;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 1.87;
Wages: 2.58;
Total change: 4.45.
States: Wyoming;
Change in unemployment (2009, Qtr 4): 5.1;
Percent Change in wages (2009, Qtr 4): -8.5;
FY 2010 FMAP: 50.00;
Simulated increases in FMAP, based on changes in:
Unemployment rate: 2.55;
Wages: 4.25;
Total change: 6.80.
Source: GAO.
[End of table]
Table 6: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Quarter and State, GAO Prototype Formula, 2008 to 2009:
State Postal code: AL;
FMAP: FY 2008: 67.62;
Simulated increases in FMAPs:
2008 Qtr 1: 0.23;
2008 Qtr 2: 0.66;
2008 Qtr 3: 1.22;
FMAP FY 2009: 67.98;
Simulated increases in FMAPs:
2008 Qtr 4: 1.94;
2009 Qtr 1: 3.57;
2009 Qtr 2: 3.74;
2009 Qtr 3: 4.07.
State Postal code: AK;
FMAP: FY 2008: 52.48;
Simulated increases in FMAPs:
2008 Qtr 1: 0.10;
2008 Qtr 2: 0.14;
2008 Qtr 3: 0.24;
FMAP FY 2009: 50.53;
Simulated increases in FMAPs:
2008 Qtr 4: 0.35;
2009 Qtr 1: 0.77;
2009 Qtr 2: 0.84;
2009 Qtr 3: 1.04.
State Postal code: AZ;
FMAP: FY 2008: 66.20;
Simulated increases in FMAPs:
2008 Qtr 1: 0.27;
2008 Qtr 2: 1.23;
2008 Qtr 3: 2.26;
FMAP FY 2009: 65.77;
Simulated increases in FMAPs:
2008 Qtr 4: 3.10;
2009 Qtr 1: 4.73;
2009 Qtr 2: 5.20;
2009 Qtr 3: 5.81.
State Postal code: AR;
FMAP: FY 2008: 72.94;
Simulated increases in FMAPs:
2008 Qtr 1: 1.10;
2008 Qtr 2: 1.05;
2008 Qtr 3: 1.43;
FMAP FY 2009: 72.81;
Simulated increases in FMAPs:
2008 Qtr 4: 1.66;
2009 Qtr 1: 1.85;
2009 Qtr 2: 2.50;
2009 Qtr 3: 2.54.
State Postal code: CA;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.90;
2008 Qtr 2: 1.52;
2008 Qtr 3: 2.65;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 4.20;
2009 Qtr 1: 6.31;
2009 Qtr 2: 7.11;
2009 Qtr 3: 7.96.
State Postal code: CO;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.35;
2008 Qtr 2: 0.78;
2008 Qtr 3: 1.40;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 2.65;
2009 Qtr 1: 4.42;
2009 Qtr 2: 5.53;
2009 Qtr 3: 5.62.
State Postal code: CT;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.30;
2008 Qtr 2: 1.19;
2008 Qtr 3: 1.95;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 2.89;
2009 Qtr 1: 5.97;
2009 Qtr 2: 5.45;
2009 Qtr 3: 6.03.
State Postal code: DE;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.81;
2008 Qtr 2: 1.82;
2008 Qtr 3: 2.88;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 3.53;
2009 Qtr 1: 5.64;
2009 Qtr 2: 6.31;
2009 Qtr 3: 6.39.
State Postal code: DC;
FMAP: FY 2008: 70.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.09;
2008 Qtr 2: 0.76;
2008 Qtr 3: 1.17;
FMAP FY 2009: 70.00;
Simulated increases in FMAPs:
2008 Qtr 4: 0.90;
2009 Qtr 1: 1.71;
2009 Qtr 2: 1.27;
2009 Qtr 3: 1.56.
State Postal code: FL;
FMAP: FY 2008: 56.83;
Simulated increases in FMAPs:
2008 Qtr 1: 1.22;
2008 Qtr 2: 2.26;
2008 Qtr 3: 3.51;
FMAP FY 2009: 55.40;
Simulated increases in FMAPs:
2008 Qtr 4: 4.72;
2009 Qtr 1: 6.69;
2009 Qtr 2: 6.99;
2009 Qtr 3: 7.71.
State Postal code: GA;
FMAP: FY 2008: 63.10;
Simulated increases in FMAPs:
2008 Qtr 1: 0.33;
2008 Qtr 2: 1.13;
2008 Qtr 3: 1.93;
FMAP FY 2009: 64.49;
Simulated increases in FMAPs:
2008 Qtr 4: 2.56;
2009 Qtr 1: 4.15;
2009 Qtr 2: 4.37;
2009 Qtr 3: 4.95.
State Postal code: HI;
FMAP: FY 2008: 56.50;
Simulated increases in FMAPs:
2008 Qtr 1: 0.35;
2008 Qtr 2: 1.09;
2008 Qtr 3: 2.20;
FMAP FY 2009: 55.11;
Simulated increases in FMAPs:
2008 Qtr 4: 2.73;
2009 Qtr 1: 4.03;
2009 Qtr 2: 3.95;
2009 Qtr 3: 4.55.
State Postal code: ID;
FMAP: FY 2008: 69.87;
Simulated increases in FMAPs:
2008 Qtr 1: 0.64;
2008 Qtr 2: 1.13;
2008 Qtr 3: 1.99;
FMAP FY 2009: 69.77;
Simulated increases in FMAPs:
2008 Qtr 4: 2.60;
2009 Qtr 1: 3.56;
2009 Qtr 2: 4.12;
2009 Qtr 3: 4.33.
State Postal code: IL;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.60;
2008 Qtr 2: 1.65;
2008 Qtr 3: 2.49;
FMAP FY 2009: 50.32;
Simulated increases in FMAPs:
2008 Qtr 4: 3.40;
2009 Qtr 1: 5.78;
2009 Qtr 2: 6.80;
2009 Qtr 3: 7.38.
State Postal code: IN;
FMAP: FY 2008: 62.69;
Simulated increases in FMAPs:
2008 Qtr 1: 0.11;
2008 Qtr 2: 0.88;
2008 Qtr 3: 1.73;
FMAP FY 2009: 64.26;
Simulated increases in FMAPs:
2008 Qtr 4: 2.33;
2009 Qtr 1: 4.85;
2009 Qtr 2: 5.36;
2009 Qtr 3: 5.47.
State Postal code: IA;
FMAP: FY 2008: 61.73;
Simulated increases in FMAPs:
2008 Qtr 1: 0.11;
2008 Qtr 2: 0.48;
2008 Qtr 3: 0.75;
FMAP FY 2009: 62.62;
Simulated increases in FMAPs:
2008 Qtr 4: 0.90;
2009 Qtr 1: 1.92;
2009 Qtr 2: 2.16;
2009 Qtr 3: 2.43.
State Postal code: KS;
FMAP: FY 2008: 59.43;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.13;
2008 Qtr 3: 0.70;
FMAP FY 2009: 60.08;
Simulated increases in FMAPs:
2008 Qtr 4: 1.07;
2009 Qtr 1: 2.93;
2009 Qtr 2: 3.14;
2009 Qtr 3: 3.47.
State Postal code: KY;
FMAP: FY 2008: 69.78;
Simulated increases in FMAPs:
2008 Qtr 1: 0.03;
2008 Qtr 2: 0.27;
2008 Qtr 3: 0.98;
FMAP FY 2009: 70.13;
Simulated increases in FMAPs:
2008 Qtr 4: 1.35;
2009 Qtr 1: 2.83;
2009 Qtr 2: 3.02;
2009 Qtr 3: 2.98.
State Postal code: LA;
FMAP: FY 2008: 72.47;
Simulated increases in FMAPs:
2008 Qtr 1: 0.03;
2008 Qtr 2: 0.06;
2008 Qtr 3: 0.30;
FMAP FY 2009: 71.31;
Simulated increases in FMAPs:
2008 Qtr 4: 0.46;
2009 Qtr 1: 1.36;
2009 Qtr 2: 1.78;
2009 Qtr 3: 1.93.
State Postal code: ME;
FMAP: FY 2008: 63.31;
Simulated increases in FMAPs:
2008 Qtr 1: 0.07;
2008 Qtr 2: 0.76;
2008 Qtr 3: 1.29;
FMAP FY 2009: 64.41;
Simulated increases in FMAPs:
2008 Qtr 4: 1.78;
2009 Qtr 1: 3.39;
2009 Qtr 2: 3.14;
2009 Qtr 3: 3.02.
State Postal code: MD;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.05;
2008 Qtr 2: 0.60;
2008 Qtr 3: 1.58;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 2.02;
2009 Qtr 1: 3.42;
2009 Qtr 2: 3.11;
2009 Qtr 3: 3.23.
State Postal code: MA;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.05;
2008 Qtr 2: 0.81;
2008 Qtr 3: 2.16;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 2.62;
2009 Qtr 1: 5.17;
2009 Qtr 2: 5.31;
2009 Qtr 3: 5.46.
State Postal code: MI;
FMAP: FY 2008: 58.10;
Simulated increases in FMAPs:
2008 Qtr 1: 1.05;
2008 Qtr 2: 1.96;
2008 Qtr 3: 3.35;
FMAP FY 2009: 60.27;
Simulated increases in FMAPs:
2008 Qtr 4: 3.95;
2009 Qtr 1: 7.37;
2009 Qtr 2: 7.86;
2009 Qtr 3: 8.41.
State Postal code: MN;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.45;
2008 Qtr 2: 1.94;
2008 Qtr 3: 1.93;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 3.04;
2009 Qtr 1: 5.55;
2009 Qtr 2: 6.07;
2009 Qtr 3: 6.42.
State Postal code: MS;
FMAP: FY 2008: 76.29;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.24;
2008 Qtr 3: 0.82;
FMAP FY 2009: 75.84;
Simulated increases in FMAPs:
2008 Qtr 4: 1.05;
2009 Qtr 1: 1.86;
2009 Qtr 2: 2.01;
2009 Qtr 3: 2.33.
State Postal code: MO;
FMAP: FY 2008: 62.42;
Simulated increases in FMAPs:
2008 Qtr 1: 0.23;
2008 Qtr 2: 0.34;
2008 Qtr 3: 1.39;
FMAP FY 2009: 63.19;
Simulated increases in FMAPs:
2008 Qtr 4: 0.92;
2009 Qtr 1: 3.88;
2009 Qtr 2: 4.41;
2009 Qtr 3: 4.73.
State Postal code: MT;
FMAP: FY 2008: 68.53;
Simulated increases in FMAPs:
2008 Qtr 1: 0.22;
2008 Qtr 2: 0.69;
2008 Qtr 3: 1.13;
FMAP FY 2009: 68.04;
Simulated increases in FMAPs:
2008 Qtr 4: 1.28;
2009 Qtr 1: 2.35;
2009 Qtr 2: 2.30;
2009 Qtr 3: 2.27.
State Postal code: NE;
FMAP: FY 2008: 58.02;
Simulated increases in FMAPs:
2008 Qtr 1: 0.32;
2008 Qtr 2: 0.08;
2008 Qtr 3: 0.41;
FMAP FY 2009: 59.54;
Simulated increases in FMAPs:
2008 Qtr 4: 1.13;
2009 Qtr 1: 1.57;
2009 Qtr 2: 2.12;
2009 Qtr 3: 2.34.
State Postal code: NV;
FMAP: FY 2008: 52.64;
Simulated increases in FMAPs:
2008 Qtr 1: 1.27;
2008 Qtr 2: 3.31;
2008 Qtr 3: 4.85;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 7.33;
2009 Qtr 1: 10.23;
2009 Qtr 2: 11.36;
2009 Qtr 3: 12.90.
State Postal code: NH;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.38;
2008 Qtr 2: 1.32;
2008 Qtr 3: 2.40;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 2.84;
2009 Qtr 1: 4.91;
2009 Qtr 2: 5.18;
2009 Qtr 3: 5.04.
State Postal code: NJ;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.25;
2008 Qtr 2: 1.49;
2008 Qtr 3: 2.55;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 3.06;
2009 Qtr 1: 5.80;
2009 Qtr 2: 6.02;
2009 Qtr 3: 6.17.
State Postal code: NM;
FMAP: FY 2008: 71.04;
Simulated increases in FMAPs:
2008 Qtr 1: 0.06;
2008 Qtr 2: 0.32;
2008 Qtr 3: 0.77;
FMAP FY 2009: 70.88;
Simulated increases in FMAPs:
2008 Qtr 4: 0.93;
2009 Qtr 1: 1.82;
2009 Qtr 2: 2.07;
2009 Qtr 3: 2.26.
State Postal code: NY;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.20;
2008 Qtr 2: 1.84;
2008 Qtr 3: 2.38;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 3.54;
2009 Qtr 1: 8.54;
2009 Qtr 2: 6.73;
2009 Qtr 3: 7.17.
State Postal code: NC;
FMAP: FY 2008: 64.05;
Simulated increases in FMAPs:
2008 Qtr 1: 0.14;
2008 Qtr 2: 0.67;
2008 Qtr 3: 1.50;
FMAP FY 2009: 64.60;
Simulated increases in FMAPs:
2008 Qtr 4: 2.33;
2009 Qtr 1: 4.50;
2009 Qtr 2: 4.57;
2009 Qtr 3: 4.66.
State Postal code: ND;
FMAP: FY 2008: 63.75;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.07;
2008 Qtr 3: 0.18;
FMAP FY 2009: 63.15;
Simulated increases in FMAPs:
2008 Qtr 4: 0.26;
2009 Qtr 1: 1.21;
2009 Qtr 2: 1.05;
2009 Qtr 3: 0.55.
State Postal code: OH;
FMAP: FY 2008: 60.79;
Simulated increases in FMAPs:
2008 Qtr 1: 0.44;
2008 Qtr 2: 1.08;
2008 Qtr 3: 1.87;
FMAP FY 2009: 62.14;
Simulated increases in FMAPs:
2008 Qtr 4: 2.49;
2009 Qtr 1: 4.29;
2009 Qtr 2: 4.97;
2009 Qtr 3: 5.25.
State Postal code: OK;
FMAP: FY 2008: 67.10;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.03;
2008 Qtr 3: 0.41;
FMAP FY 2009: 65.90;
Simulated increases in FMAPs:
2008 Qtr 4: 0.52;
2009 Qtr 1: 1.99;
2009 Qtr 2: 2.78;
2009 Qtr 3: 2.87.
State Postal code: OR;
FMAP: FY 2008: 60.86;
Simulated increases in FMAPs:
2008 Qtr 1: 0.17;
2008 Qtr 2: 0.78;
2008 Qtr 3: 1.87;
FMAP FY 2009: 62.45;
Simulated increases in FMAPs:
2008 Qtr 4: 2.95;
2009 Qtr 1: 4.97;
2009 Qtr 2: 5.45;
2009 Qtr 3: 5.69.
State Postal code: PA;
FMAP: FY 2008: 54.08;
Simulated increases in FMAPs:
2008 Qtr 1: 0.23;
2008 Qtr 2: 0.48;
2008 Qtr 3: 1.33;
FMAP FY 2009: 54.52;
Simulated increases in FMAPs:
2008 Qtr 4: 1.67;
2009 Qtr 1: 3.42;
2009 Qtr 2: 3.58;
2009 Qtr 3: 3.95.
State Postal code: RI;
FMAP: FY 2008: 52.51;
Simulated increases in FMAPs:
2008 Qtr 1: 1.03;
2008 Qtr 2: 2.63;
2008 Qtr 3: 4.16;
FMAP FY 2009: 52.59;
Simulated increases in FMAPs:
2008 Qtr 4: 3.80;
2009 Qtr 1: 6.30;
2009 Qtr 2: 6.23;
2009 Qtr 3: 6.54.
State Postal code: SC;
FMAP: FY 2008: 69.79;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.48;
2008 Qtr 3: 1.21;
FMAP FY 2009: 70.07;
Simulated increases in FMAPs:
2008 Qtr 4: 1.98;
2009 Qtr 1: 3.39;
2009 Qtr 2: 3.80;
2009 Qtr 3: 3.95.
State Postal code: SD;
FMAP: FY 2008: 60.03;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.73;
2008 Qtr 3: 0.94;
FMAP FY 2009: 62.55;
Simulated increases in FMAPs:
2008 Qtr 4: 0.99;
2009 Qtr 1: 1.99;
2009 Qtr 2: 2.03;
2009 Qtr 3: 1.79.
State Postal code: TN;
FMAP: FY 2008: 63.71;
Simulated increases in FMAPs:
2008 Qtr 1: 0.36;
2008 Qtr 2: 1.24;
2008 Qtr 3: 1.87;
FMAP FY 2009: 64.28;
Simulated increases in FMAPs:
2008 Qtr 4: 2.71;
2009 Qtr 1: 4.53;
2009 Qtr 2: 4.99;
2009 Qtr 3: 5.33.
State Postal code: TX;
FMAP: FY 2008: 60.53;
Simulated increases in FMAPs:
2008 Qtr 1: 0.04;
2008 Qtr 2: 0.24;
2008 Qtr 3: 0.79;
FMAP FY 2009: 59.44;
Simulated increases in FMAPs:
2008 Qtr 4: 0.96;
2009 Qtr 1: 2.73;
2009 Qtr 2: 3.20;
2009 Qtr 3: 3.49.
State Postal code: UT;
FMAP: FY 2008: 71.63;
Simulated increases in FMAPs:
2008 Qtr 1: 0.23;
2008 Qtr 2: 0.43;
2008 Qtr 3: 0.86;
FMAP FY 2009: 70.71;
Simulated increases in FMAPs:
2008 Qtr 4: 1.54;
2009 Qtr 1: 2.51;
2009 Qtr 2: 2.87;
2009 Qtr 3: 3.23.
State Postal code: VT;
FMAP: FY 2008: 59.03;
Simulated increases in FMAPs:
2008 Qtr 1: 0.20;
2008 Qtr 2: 0.87;
2008 Qtr 3: 1.24;
FMAP FY 2009: 59.45;
Simulated increases in FMAPs:
2008 Qtr 4: 1.21;
2009 Qtr 1: 3.56;
2009 Qtr 2: 3.21;
2009 Qtr 3: 2.91.
State Postal code: VA;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.20;
2008 Qtr 2: 0.74;
2008 Qtr 3: 1.30;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 1.80;
2009 Qtr 1: 3.38;
2009 Qtr 2: 3.36;
2009 Qtr 3: 3.54.
State Postal code: WA;
FMAP: FY 2008: 51.52;
Simulated increases in FMAPs:
2008 Qtr 1: 0.20;
2008 Qtr 2: 0.88;
2008 Qtr 3: 1.17;
FMAP FY 2009: 50.94;
Simulated increases in FMAPs:
2008 Qtr 4: 2.23;
2009 Qtr 1: 4.21;
2009 Qtr 2: 4.56;
2009 Qtr 3: 4.97.
State Postal code: WV;
FMAP: FY 2008: 74.25;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.03;
2008 Qtr 3: 0.08;
FMAP FY 2009: 73.73;
Simulated increases in FMAPs:
2008 Qtr 4: 0.26;
2009 Qtr 1: 1.09;
2009 Qtr 2: 1.61;
2009 Qtr 3: 1.98.
State Postal code: WI;
FMAP: FY 2008: 57.62;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.34;
2008 Qtr 3: 0.97;
FMAP FY 2009: 59.38;
Simulated increases in FMAPs:
2008 Qtr 4: 1.50;
2009 Qtr 1: 3.90;
2009 Qtr 2: 4.32;
2009 Qtr 3: 4.59.
State Postal code: WY;
FMAP: FY 2008: 50.00;
Simulated increases in FMAPs:
2008 Qtr 1: 0.00;
2008 Qtr 2: 0.48;
2008 Qtr 3: 0.49;
FMAP FY 2009: 50.00;
Simulated increases in FMAPs:
2008 Qtr 4: 0.60;
2009 Qtr 1: 2.80;
2009 Qtr 2: 5.01;
2009 Qtr 3: 6.06.
Source: GAO.
[End of table]
Table 7: Temporary Increased Federal Medical Assistance Percentage
(FMAP) by Quarter and State, GAO Prototype Formula, 2009 to 2011:
State Postal code: AL;
FMAP FY 2010: 68.01;
Simulated increases in FMAPs:
2009 Qtr 4: 4.18;
2010 Qtr 1: 3.96;
2010 Qtr 2: 3.01;
2010 Qtr 3: 2.09;
FMAP FY 2011: 68.54;
Simulated increases in FMAPs:
2010 Qtr 4: 1.61;
2011 Qtr 1: 0.45;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: AK;
FMAP FY 2010: 51.43;
Simulated increases in FMAPs:
2009 Qtr 4: 1.07;
2010 Qtr 1: 1.18;
2010 Qtr 2: 0.83;
2010 Qtr 3: 0.68;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 0.60;
2011 Qtr 1: 0.20;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: AZ;
FMAP FY 2010: 65.75;
Simulated increases in FMAPs:
2009 Qtr 4: 5.80;
2010 Qtr 1: 5.81;
2010 Qtr 2: 4.66;
2010 Qtr 3: 3.67;
FMAP FY 2011: 65.85;
Simulated increases in FMAPs:
2010 Qtr 4: 2.73;
2011 Qtr 1: 0.91;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: AR;
FMAP FY 2010: 72.78;
Simulated increases in FMAPs:
2009 Qtr 4: 2.54;
2010 Qtr 1: 1.75;
2010 Qtr 2: 1.21;
2010 Qtr 3: 0.67;
FMAP FY 2011: 71.37;
Simulated increases in FMAPs:
2010 Qtr 4: 0.93;
2011 Qtr 1: 0.59;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: CA;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 7.91;
2010 Qtr 1: 6.76;
2010 Qtr 2: 5.99;
2010 Qtr 3: 4.85;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 2.33;
2011 Qtr 1: 1.14;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: CO;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 5.53;
2010 Qtr 1: 5.43;
2010 Qtr 2: 4.98;
2010 Qtr 3: 3.94;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 2.04;
2011 Qtr 1: 0.90;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: CT;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 5.90;
2010 Qtr 1: 6.38;
2010 Qtr 2: 4.48;
2010 Qtr 3: 3.60;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 2.76;
2011 Qtr 1: 0.80;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: DE;
FMAP FY 2010: 50.21;
Simulated increases in FMAPs:
2009 Qtr 4: 6.81;
2010 Qtr 1: 6.50;
2010 Qtr 2: 4.94;
2010 Qtr 3: 3.08;
FMAP FY 2011: 53.15;
Simulated increases in FMAPs:
2010 Qtr 4: 1.77;
2011 Qtr 1: 0.56;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: DC;
FMAP FY 2010: 70.00;
Simulated increases in FMAPs:
2009 Qtr 4: 1.47;
2010 Qtr 1: 1.35;
2010 Qtr 2: 1.14;
2010 Qtr 3: 0.98;
FMAP FY 2011: 70.00;
Simulated increases in FMAPs:
2010 Qtr 4: 0.60;
2011 Qtr 1: 0.27;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: FL;
FMAP FY 2010: 54.98;
Simulated increases in FMAPs:
2009 Qtr 4: 7.83;
2010 Qtr 1: 7.09;
2010 Qtr 2: 5.65;
2010 Qtr 3: 4.42;
FMAP FY 2011: 55.45;
Simulated increases in FMAPs:
2010 Qtr 4: 3.43;
2011 Qtr 1: 1.27;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: GA;
FMAP FY 2010: 65.10;
Simulated increases in FMAPs:
2009 Qtr 4: 4.95;
2010 Qtr 1: 4.49;
2010 Qtr 2: 3.53;
2010 Qtr 3: 2.81;
FMAP FY 2011: 65.33;
Simulated increases in FMAPs:
2010 Qtr 4: 1.92;
2011 Qtr 1: 0.49;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: HI;
FMAP FY 2010: 54.24;
Simulated increases in FMAPs:
2009 Qtr 4: 4.58;
2010 Qtr 1: 4.46;
2010 Qtr 2: 3.52;
2010 Qtr 3: 2.03;
FMAP FY 2011: 51.79;
Simulated increases in FMAPs:
2010 Qtr 4: 1.36;
2011 Qtr 1: 0.21;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: ID;
FMAP FY 2010: 69.40;
Simulated increases in FMAPs:
2009 Qtr 4: 4.56;
2010 Qtr 1: 4.15;
2010 Qtr 2: 3.65;
2010 Qtr 3: 2.75;
FMAP FY 2011: 68.85;
Simulated increases in FMAPs:
2010 Qtr 4: 2.09;
2011 Qtr 1: 1.29;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: IL;
FMAP FY 2010: 50.17;
Simulated increases in FMAPs:
2009 Qtr 4: 7.42;
2010 Qtr 1: 7.40;
2010 Qtr 2: 5.32;
2010 Qtr 3: 3.88;
FMAP FY 2011: 50.20;
Simulated increases in FMAPs:
2010 Qtr 4: 2.67;
2011 Qtr 1: 0.15;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: IN;
FMAP FY 2010: 65.93;
Simulated increases in FMAPs:
2009 Qtr 4: 4.69;
2010 Qtr 1: 4.59;
2010 Qtr 2: 3.37;
2010 Qtr 3: 2.39;
FMAP FY 2011: 66.52;
Simulated increases in FMAPs:
2010 Qtr 4: 1.58;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: IA;
FMAP FY 2010: 63.51;
Simulated increases in FMAPs:
2009 Qtr 4: 2.37;
2010 Qtr 1: 2.29;
2010 Qtr 2: 1.58;
2010 Qtr 3: 1.30;
FMAP FY 2011: 62.63;
Simulated increases in FMAPs:
2010 Qtr 4: 1.07;
2011 Qtr 1: 0.34;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: KS;
FMAP FY 2010: 60.38;
Simulated increases in FMAPs:
2009 Qtr 4: 3.22;
2010 Qtr 1: 3.50;
2010 Qtr 2: 3.09;
2010 Qtr 3: 2.20;
FMAP FY 2011: 59.05;
Simulated increases in FMAPs:
2010 Qtr 4: 1.88;
2011 Qtr 1: 0.25;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: KY;
FMAP FY 2010: 70.96;
Simulated increases in FMAPs:
2009 Qtr 4: 2.72;
2010 Qtr 1: 2.76;
2010 Qtr 2: 2.06;
2010 Qtr 3: 1.16;
FMAP FY 2011: 71.49;
Simulated increases in FMAPs:
2010 Qtr 4: 0.93;
2011 Qtr 1: 0.14;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: LA;
FMAP FY 2010: 67.61;
Simulated increases in FMAPs:
2009 Qtr 4: 2.40;
2010 Qtr 1: 2.52;
2010 Qtr 2: 2.16;
2010 Qtr 3: 1.63;
FMAP FY 2011: 63.61;
Simulated increases in FMAPs:
2010 Qtr 4: 1.82;
2011 Qtr 1: 0.96;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: ME;
FMAP FY 2010: 64.99;
Simulated increases in FMAPs:
2009 Qtr 4: 2.88;
2010 Qtr 1: 3.07;
2010 Qtr 2: 2.13;
2010 Qtr 3: 1.34;
FMAP FY 2011: 63.80;
Simulated increases in FMAPs:
2010 Qtr 4: 1.26;
2011 Qtr 1: 0.36;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MD;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 3.29;
2010 Qtr 1: 3.45;
2010 Qtr 2: 2.44;
2010 Qtr 3: 1.35;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 0.95;
2011 Qtr 1: 0.30;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MA;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 5.42;
2010 Qtr 1: 5.61;
2010 Qtr 2: 3.89;
2010 Qtr 3: 1.83;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 1.38;
2011 Qtr 1: 0.52;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MI;
FMAP FY 2010: 63.19;
Simulated increases in FMAPs:
2009 Qtr 4: 7.43;
2010 Qtr 1: 6.90;
2010 Qtr 2: 5.33;
2010 Qtr 3: 3.47;
FMAP FY 2011: 65.79;
Simulated increases in FMAPs:
2010 Qtr 4: 2.30;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MN;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 5.78;
2010 Qtr 1: 4.91;
2010 Qtr 2: 3.30;
2010 Qtr 3: 2.51;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 0.83;
2011 Qtr 1: 0.30;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MS;
FMAP FY 2010: 75.67;
Simulated increases in FMAPs:
2009 Qtr 4: 2.52;
2010 Qtr 1: 2.71;
2010 Qtr 2: 2.02;
2010 Qtr 3: 1.42;
FMAP FY 2011: 74.73;
Simulated increases in FMAPs:
2010 Qtr 4: 1.42;
2011 Qtr 1: 0.55;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MO;
FMAP FY 2010: 64.51;
Simulated increases in FMAPs:
2009 Qtr 4: 4.69;
2010 Qtr 1: 4.58;
2010 Qtr 2: 4.28;
2010 Qtr 3: 3.94;
FMAP FY 2011: 63.29;
Simulated increases in FMAPs:
2010 Qtr 4: 3.73;
2011 Qtr 1: 0.70;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: MT;
FMAP FY 2010: 67.42;
Simulated increases in FMAPs:
2009 Qtr 4: 2.55;
2010 Qtr 1: 2.23;
2010 Qtr 2: 1.56;
2010 Qtr 3: 1.41;
FMAP FY 2011: 66.81;
Simulated increases in FMAPs:
2010 Qtr 4: 1.06;
2011 Qtr 1: 0.56;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NE;
FMAP FY 2010: 60.56;
Simulated increases in FMAPs:
2009 Qtr 4: 2.02;
2010 Qtr 1: 2.26;
2010 Qtr 2: 1.61;
2010 Qtr 3: 1.34;
FMAP FY 2011: 58.44;
Simulated increases in FMAPs:
2010 Qtr 4: 0.63;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NV;
FMAP FY 2010: 50.16;
Simulated increases in FMAPs:
2009 Qtr 4: 13.68;
2010 Qtr 1: 13.73;
2010 Qtr 2: 11.37;
2010 Qtr 3: 9.84;
FMAP FY 2011: 51.61;
Simulated increases in FMAPs:
2010 Qtr 4: 7.81;
2011 Qtr 1: 4.16;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NH;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 5.27;
2010 Qtr 1: 5.31;
2010 Qtr 2: 3.02;
2010 Qtr 3: 2.16;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 1.82;
2011 Qtr 1: 0.29;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NJ;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 6.35;
2010 Qtr 1: 6.17;
2010 Qtr 2: 4.84;
2010 Qtr 3: 3.72;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 3.53;
2011 Qtr 1: 1.04;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NM;
FMAP FY 2010: 71.35;
Simulated increases in FMAPs:
2009 Qtr 4: 2.33;
2010 Qtr 1: 2.57;
2010 Qtr 2: 2.14;
2010 Qtr 3: 1.76;
FMAP FY 2011: 69.78;
Simulated increases in FMAPs:
2010 Qtr 4: 1.53;
2011 Qtr 1: 0.95;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NY;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 6.80;
2010 Qtr 1: 6.68;
2010 Qtr 2: 3.67;
2010 Qtr 3: 3.77;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 2.80;
2011 Qtr 1: 1.12;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: NC;
FMAP FY 2010: 65.13;
Simulated increases in FMAPs:
2009 Qtr 4: 4.60;
2010 Qtr 1: 4.36;
2010 Qtr 2: 3.37;
2010 Qtr 3: 2.40;
FMAP FY 2011: 64.71;
Simulated increases in FMAPs:
2010 Qtr 4: 1.36;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: ND;
FMAP FY 2010: 63.01;
Simulated increases in FMAPs:
2009 Qtr 4: 0.52;
2010 Qtr 1: 0.48;
2010 Qtr 2: 0.33;
2010 Qtr 3: 0.22;
FMAP FY 2011: 60.35;
Simulated increases in FMAPs:
2010 Qtr 4: 0.16;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: OH;
FMAP FY 2010: 63.42;
Simulated increases in FMAPs:
2009 Qtr 4: 5.02;
2010 Qtr 1: 4.66;
2010 Qtr 2: 3.68;
2010 Qtr 3: 2.59;
FMAP FY 2011: 63.69;
Simulated increases in FMAPs:
2010 Qtr 4: 1.66;
2011 Qtr 1: 0.04;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: OK;
FMAP FY 2010: 64.43;
Simulated increases in FMAPs:
2009 Qtr 4: 3.34;
2010 Qtr 1: 3.28;
2010 Qtr 2: 2.65;
2010 Qtr 3: 1.92;
FMAP FY 2011: 64.94;
Simulated increases in FMAPs:
2010 Qtr 4: 1.47;
2011 Qtr 1: 0.32;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: OR;
FMAP FY 2010: 62.74;
Simulated increases in FMAPs:
2009 Qtr 4: 5.43;
2010 Qtr 1: 5.28;
2010 Qtr 2: 4.37;
2010 Qtr 3: 3.18;
FMAP FY 2011: 62.85;
Simulated increases in FMAPs:
2010 Qtr 4: 1.84;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: PA;
FMAP FY 2010: 54.81;
Simulated increases in FMAPs:
2009 Qtr 4: 3.42;
2010 Qtr 1: 3.63;
2010 Qtr 2: 2.93;
2010 Qtr 3: 1.54;
FMAP FY 2011: 55.64;
Simulated increases in FMAPs:
2010 Qtr 4: 1.20;
2011 Qtr 1: 0.35;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: RI;
FMAP FY 2010: 52.63;
Simulated increases in FMAPs:
2009 Qtr 4: 6.24;
2010 Qtr 1: 5.96;
2010 Qtr 2: 3.48;
2010 Qtr 3: 2.06;
FMAP FY 2011: 52.97;
Simulated increases in FMAPs:
2010 Qtr 4: 1.71;
2011 Qtr 1: 0.81;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: SC;
FMAP FY 2010: 70.32;
Simulated increases in FMAPs:
2009 Qtr 4: 3.68;
2010 Qtr 1: 3.83;
2010 Qtr 2: 2.82;
2010 Qtr 3: 2.04;
FMAP FY 2011: 70.04;
Simulated increases in FMAPs:
2010 Qtr 4: 1.35;
2011 Qtr 1: 0.03;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: SD;
FMAP FY 2010: 62.72;
Simulated increases in FMAPs:
2009 Qtr 4: 1.81;
2010 Qtr 1: 2.12;
2010 Qtr 2: 0.84;
2010 Qtr 3: 0.52;
FMAP FY 2011: 61.25;
Simulated increases in FMAPs:
2010 Qtr 4: 0.39;
2011 Qtr 1: 0.26;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: TN;
FMAP FY 2010: 65.57;
Simulated increases in FMAPs:
2009 Qtr 4: 4.70;
2010 Qtr 1: 4.12;
2010 Qtr 2: 2.76;
2010 Qtr 3: 2.05;
FMAP FY 2011: 65.85;
Simulated increases in FMAPs:
2010 Qtr 4: 1.04;
2011 Qtr 1: 0.03;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: TX;
FMAP FY 2010: 58.73;
Simulated increases in FMAPs:
2009 Qtr 4: 3.55;
2010 Qtr 1: 3.31;
2010 Qtr 2: 2.72;
2010 Qtr 3: 1.94;
FMAP FY 2011: 60.56;
Simulated increases in FMAPs:
2010 Qtr 4: 1.40;
2011 Qtr 1: 0.59;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: UT;
FMAP FY 2010: 71.68;
Simulated increases in FMAPs:
2009 Qtr 4: 3.18;
2010 Qtr 1: 2.96;
2010 Qtr 2: 2.80;
2010 Qtr 3: 2.04;
FMAP FY 2011: 71.13;
Simulated increases in FMAPs:
2010 Qtr 4: 0.98;
2011 Qtr 1: 0.40;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: VT;
FMAP FY 2010: 58.73;
Simulated increases in FMAPs:
2009 Qtr 4: 2.46;
2010 Qtr 1: 3.35;
2010 Qtr 2: 1.30;
2010 Qtr 3: 1.12;
FMAP FY 2011: 58.71;
Simulated increases in FMAPs:
2010 Qtr 4: 0.85;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: VA;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 3.33;
2010 Qtr 1: 3.12;
2010 Qtr 2: 2.13;
2010 Qtr 3: 1.35;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 0.85;
2011 Qtr 1: 0.15;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: WA;
FMAP FY 2010: 50.12;
Simulated increases in FMAPs:
2009 Qtr 4: 5.07;
2010 Qtr 1: 5.08;
2010 Qtr 2: 4.04;
2010 Qtr 3: 3.14;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 1.83;
2011 Qtr 1: 0.45;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: WV;
FMAP FY 2010: 74.04;
Simulated increases in FMAPs:
2009 Qtr 4: 1.95;
2010 Qtr 1: 2.03;
2010 Qtr 2: 1.73;
2010 Qtr 3: 1.30;
FMAP FY 2011: 73.24;
Simulated increases in FMAPs:
2010 Qtr 4: 1.42;
2011 Qtr 1: 0.93;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: WI;
FMAP FY 2010: 60.21;
Simulated increases in FMAPs:
2009 Qtr 4: 4.45;
2010 Qtr 1: 4.70;
2010 Qtr 2: 3.62;
2010 Qtr 3: 2.57;
FMAP FY 2011: 60.16;
Simulated increases in FMAPs:
2010 Qtr 4: 1.68;
2011 Qtr 1: 0.00;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
State Postal code: WY;
FMAP FY 2010: 50.00;
Simulated increases in FMAPs:
2009 Qtr 4: 6.80;
2010 Qtr 1: 6.16;
2010 Qtr 2: 5.52;
2010 Qtr 3: 4.32;
FMAP FY 2011: 50.00;
Simulated increases in FMAPs:
2010 Qtr 4: 4.00;
2011 Qtr 1: 1.25;
2011 Qtr 2[A]: N/A;
2011 Qtr 3[A]: N/A.
Source: GAO.
[A] Data for these quarters are not yet available.
[End of table]
[End of section]
Appendix V: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
October 26, 2011:
Carolyn Yocum, Director:
Health Care:
Thomas McCool, Director:
Applied Research and Methodology:
U.S. Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Ms. Yocum and Mr. McCool:
Attached are comments on the U.S. Government Accountability Office's
(GAO) draft report entitled, "Medicaid: Prototype Formula Would
Provide Automatic, Targeted Assistance to States during Economic
Downturns" (GAO-12-38).
The Department appreciates the opportunity to review this report prior
to publication.
Sincerely,
Signed by:
Jim R. Esquea:
Assistant Secretary for Legislation:
Attachment:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office's (GAO) Draft Report Entitled,
"Medicaid: Prototype Formula Would Provide Automatic, Targeted
Assistance To States During Economic Downturns" (GAO-12-38):
The Department appreciates the opportunity to review and comment on
this draft report.
Centers for Medicare & Medicaid Services' (CMS) Comments:
We strongly agree with the report's findings that temporary increases
in FMAP established by the American Recovery and Reinvestment Act of
2009 provided critical fiscal relief to States facing economic
hardship.
While we realize that any changes to the FMAP formula must be
authorized by statute and are then further implemented by the HHS
Assistant Secretary for Planning and Evaluation (ASPE), we agree with
the analysis and goals of this report. We believe it is critical to
align changes to the FMAP formula as closely as possible to individual
State circumstances in order to avoid unintended consequences for
beneficiaries as well as to provide budget planning stability for
States.
The report proposes a prototype formula for a temporary increase to
the FMAP. We believe that, in general, an effective prototype formula
should be able to be easily administered and should produce
predictable effects upon States. Although we agree with the concept of
aligning the FMAP formula more closely with individual State
circumstances, we believe that the recommended FMAP prototype formula
would be difficult for the Federal government and States to implement.
The complexity of the prototype formula and its quarter-to-quarter,
unpredictable variability would result in very difficult budget
planning for States and the Federal government. Additionally, the
formula would impose a significant burden on States and the Federal
government when attempting to apply FMAP rates to expenditures. We
would be interested in working with GAO further on this important
matter.
Additionally, the report identifies and discusses potential
modifications to the prototype formula that would permit increased
funding to States for general fund relief. We do not recommend that
the prototype formula be used to provide general fund relief to States
through the Medicaid program. If the goal is to provide general fund
relief to States, we recommend that it be effected outside of the
Medicaid program. To ensure efficiency while implementing the
Affordable Care Act, we are interested in preserving our ability to
identify data that specifically relates to the Medicaid program. We
believe that providing general fund relief to States through the
Medicaid program would compromise this ability.
ASPE Comments:
Automatic Trigger:
Having an automatic trigger for FMAP is a good idea, but we note that,
depending on the design, it may not help states that are most in need.
The use of the employment to population ratio from BLS is a better
measure to begin assistance to states than the unemployment rate which
is often used for triggers because it reflects not only the unemployed
but also discouraged workers.
Additionally, the use of the employment to population ratio and the
changes in wages and salary are two good measures to assess state
need. The unemployment rate is less so because it ignores the growing
number of discouraged workers during an extended downturn or jobless
recovery.
The use of the employment to population ratio also protects states
during a jobless recovery such as the one following the brief 2001
recession.
Overall Comments:
The GAO prototype is focused on a national recession that impacts many
states (26 needed to trigger) but doesn't deal with more regional
economic declines or slower recoveries that may result in overall
declines in GDP growth but are geographically concentrated or because
the industries impacted may be geographically concentrated (e.g., auto
industry in Midwest vs. construction on the west coast).
The proposed FMAP increase is substantial in part based on the assumed
relationship between the change in the unemployment rate and the
change in Medicaid enrollment (work by Holahan prior to the Affordable
Care Act [ACA]). For an informed analysis, one must consider if this
relationship will change following full implementation of ACA.
As with any formula with a 'look back' provision, in this case only
one year, one needs to consider how it will work in an extended period
of decline or stability at a low level, as in a jobless recovery. For
example, there is a problem with the way the trigger condition works
in the current economic climate. During 2008 and 2009, the employment
to population ratio has bottomed at low levels and remained stuck
there for the most part. But that means states, though still in
economic difficulty, are no longer experiencing the negative changes
that count toward the trigger (the decreases have ended) and the
number of states with further decreases will drop below 26.
Under the prototype, FMAP is recalculated for each quarter. On the
downside, Medicaid enrollment declines may lag the triggers and for
states that rely on corporate and sales taxes for revenue there will
be a substantial lag. Perhaps states' assistance should be extended
beyond the next quarter to mitigate this lag.
Being based on a nationwide recession the assistance shuts off
abruptly. If the number of states falls below 26 the enhanced rates
shut down in one quarter for all states yet many states may still be
experiencing trouble due to high unemployment or flat wage and salary
statistics. A fuller discussion of this issue would be useful.
We suggest simulating these alternative scenarios against recessions
over the past two decades to better understand how they might address
the concerns we have identified.
[End of section]
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Carolyn L. Yocom, (202) 512-7114 or yocomc@gao.gov Thomas J. McCool,
(202) 512-2642 or mccoolt@gao.gov:
Staff Acknowledgments:
In addition to the contacts named above, major contributors included
Robert Copeland, Assistant Director; Eric R. Anderson; Robert
Dinkelmeyer; Greg Dybalski; Drew Long; and Max Sawicky.
[End of section]
Footnotes:
[1] For this report, we use the term recession to refer to national
recessions as defined by NBER. NBER identifies recessions on the basis
of several indicators, including employment, sales in the
manufacturing and trade sectors, and industrial production. A
recession begins just after the economy reaches a peak of activity and
ends as the economy reaches its lowest point.
[2] Pub. L. No. 111-5, Div. B. Tit. V, § 5001, 123 Stat. 115, 496
(2009). Increased FMAP funds were made available to states with the
passage of the Recovery Act in February 2009; however, states could
retroactively claim reimbursement for Medicaid expenditures that
occurred as of October 1, 2008.
[3] While the increased FMAP funds available under the Recovery Act
were for Medicaid services only, the receipt of these funds may reduce
the funds that states would otherwise have to use for their Medicaid
programs, and states have reported using these freed-up funds for a
variety of purposes including support for general state budget needs.
See GAO, Recovery Act: Increased Medicaid Funds Aided Enrollment
Growth, and Most States Reported Taking Steps to Sustain Their
Programs, [hyperlink, http://www.gao.gov/products/GAO-11-58]
(Washington, D.C.: Oct. 8, 2010).
[4] In a 2006 report, we provided options for Congress to consider
when assisting states in their efforts to meet increased Medicaid
expenditures resulting from national recessions. Among these options
was a formula for providing a temporary increased FMAP to states
during a national recession, a version of which Congress subsequently
incorporated as part of the Recovery Act. See GAO, Medicaid:
Strategies to Help States Address Increased Expenditures during
Economic Downturns, [hyperlink, http://www.gao.gov/products/GAO-07-97]
(Washington, D.C.: Oct. 18, 2006).
[5] GAO, Medicaid: Improving Responsiveness of Federal Assistance to
States during Economic Downturns, [hyperlink,
http://www.gao.gov/products/GAO-11-395] (Washington, D.C.: Mar. 31,
2011).
[6] In our March 2011 report, we reported that during and following
the most recent national economic downturn, states implemented various
Medicaid program cuts and other adjustments in order to balance their
budgets. For example, 28 states reduced or froze provider payment
rates; 22 states reported implementing or considering restrictions on
optional benefits, such as eliminating dental and vision services; 38
states implemented cost-containment initiatives in the area of
prescription drugs; and 18 states implemented utilization controls on
long-term care services. See [hyperlink,
http://www.gao.gov/products/GAO-11-395].
[7] Timing refers to whether funds were provided when states most
needed them. Targeting refers to whether the distribution of funds
reflected different state needs for funding the cost of new Medicaid
enrollees attributable to the recession and maintaining their existing
Medicaid programs as states' revenues declined.
[8] GAO, State and Local Governments: Knowledge of Past Recessions Can
Inform Future Federal Fiscal Assistance, [hyperlink,
http://www.gao.gov/products/GAO-11-401] (Washington, D.C.: Mar. 31,
2011).
[9] As we noted in our March 2011 report [hyperlink,
http://www.gao.gov/products/GAO-11-395], starting assistance closer to
the onset of an economic downturn could help states avoid program
cuts. If states can anticipate assistance, the funds do not need to be
received or "in the pipeline" in order to produce the desired effect
on state fiscal behavior.
[10] Countercyclical aid, such as the Recovery Act's increased FMAP,
is intended to assist states experiencing revenue declines and
expenditure increases that are associated with economic downturns.
[11] R. Mattoon, V. Haleco-Meyer, and T. Foster, "Improving the impact
of federal aid to the states," Economic Perspectives, vol. 34, no. 3
(2010).
[12] States have some flexibility in the design of their Medicaid
programs within broad federal parameters. For example, under federal
law, states generally must enroll certain mandatory categories of
individuals, which include pregnant women and children up to 6 years
of age with family income at or below 133 percent of the federal
poverty level (FPL), and children ages 6 to 19 with a family income at
100 percent or less of the FPL. States may choose to cover additional
categories of individuals, such as pregnant women and infants between
133 and 185 percent of the FPL.
[13] In this report, we use the term regular FMAP to refer to the base
FMAP, as defined under federal law, that is used to determine the
percentage of federal assistance for most state Medicaid expenditures.
We use the term increased FMAP to refer to temporary FMAP increases
above the regular FMAP, as authorized under federal law, that provided
states with additional Medicaid funding during national recessions.
The regular FMAP is determined annually by a statutory formula
designed to account for income variation across the states. See 42
U.S.C. § 1396d(b). For federal fiscal year 2011, the regular FMAP for
states ranged from 50.00 percent to 74.73 percent. By statute, the
minimum regular FMAP for a state is 50 percent and the maximum is 83
percent. The District of Columbia is not subject to this formula and
instead has its FMAP set at 70 percent.
[14] Pub. L. No. 111-226, Tit. II, Subtit. A, § 201, 124 Stat. 2389,
2393 (2010). In this report, we refer to this legislation as the
Education, Jobs, and Medicaid Assistance Act.
[15] Reconciliation Act assistance was provided approximately six
quarters after the recession ended and was not targeted based on state
Medicaid needs.
[16] [hyperlink, http://www.gao.gov/products/GAO-11-395].
[17] V.K. Smith et. al., "The Crunch Continues: Medicaid Spending,
Coverage and Policy in the Midst of a Recession. Results from a 50-
state Medicaid Budget Survey for State Fiscal Years 2009 and 2010,"
Kaiser Commission on Medicaid and the Uninsured, September 2009.
[18] To be eligible for the increased FMAP under the Recovery Act,
states could not restrict their Medicaid eligibility standards,
methodologies, or procedures more than those in place on July 1, 2008.
[19] The Education, Jobs, and Medicaid Assistance Act did not change
the hold-harmless and unemployment provisions, but the across-the-
board increase was reduced. Under the Recovery Act, each state's
regular FMAP was increased 6.2 percentage points. Under the Education,
Jobs, and Medicaid Assistance Act, the increase was 3.2 percentage
points for the first quarter of 2011 and 1.2 percentage points for the
second quarter of 2011.
[20] The employment-to-population ratio is the ratio of the number of
jobs in a state to the working age population aged 16 and older. Our
prototype formula identifies the start of a national recession and
triggers assistance when 26 states show a decrease in their 3-month
average EPOP ratio, compared to the same 3-Month period in the
previous year, over 2 consecutive months.
[21] Calculations are based on calendar year quarters. For example,
the first quarter of 2008 is the 3-month period from January through
March of 2008.
[22] For example, in our calculation the EPOP ratio for October 2007
is an average of 3 consecutive months, August to October, of the EPOP
ratio. This ratio is calculated for each state. The difference in the
October 2007 EPOP ratio and the corresponding ratio in the prior year,
October 2006, is calculated and the number of states showing a decline
in their EPOP ratio is counted. If the number of states having
declining EPOP ratios exceeds 25 for 2 consecutive months, then the
program would commence.
[23] This compares with the NBER's December 2008 announcement that the
recession began in December 2007. Congress subsequently passed the
Recovery Act in February 2009 and provided assistance retroactive to
October 2008. In September 2010, NBER announced the end of the
recession as of June 2009.
[24] The employed share of the population under conditions of full
employment will probably decrease as the retired share increases. This
change is expected to be slow and gradual. Even so, failure to account
for any such drift could cause the trigger to activate the program too
quickly. We think it advisable for the EPOP trigger mechanism proposed
here to be periodically adjusted to remove the impact of long-run,
national demographic trends.
[25] J. Holahan and A. Garrett, "Rising Unemployment, Medicaid and the
Uninsured," Kaiser Commission on Medicaid and the Uninsured
(Washington, D.C.: January 2009). Holahan and Garrett report that a 1
percentage point increase in the unemployment rate is associated with
about a $1.5 billion increase in the state share of Medicaid spending
which is about 1.0 percent increase in state spending on Medicaid.
[26] GAO, State and Local Governments: Knowledge of Past Recessions
Can Inform Future Federal Fiscal Assistance, [hyperlink,
http://www.gao.gov/products/GAO-11-401] (Washington, D.C.: Mar. 31,
2011), pp. 48-49.
[27] A total of 41states and the District of Columbia would have
received some assistance in the first quarter of 2008, either a wage-
based increase only (2 states), an unemployment-based increase only
(27 states and the District of Columbia), or both (12 states). Nine
states would have received no increase.
[28] For example, when the Recovery Act's increased FMAP assistance
ended, many states faced a large drop in their FMAPs when returning to
their regular FMAPs. Congress passed a two-quarter extension to the
Recovery Act, which eased states' transition back to the regular FMAP.
States continued to receive the hold-harmless component and
unemployment-based increases for two additional quarters, but the
across-the-board increase was reduced from 6.2 to 3.2 percentage
points in the first extension quarter and to 1.2 in the final quarter.
[29] For example, the "base quarter" used to calculate the increase in
unemployment would be redetermined each quarter by a retrospective
assessment of the last eight quarters. Except for some states entering
the downturn late, this redetermination might result in a newly
designated base quarter with higher unemployment that would lessen the
increase in unemployment rate used to calculate assistance in a
quarter. In contrast, the Recovery Act allowed states to use any
quarter after January 1, 2006, as the base quarter used to calculate
the increase in unemployment.
[30] Although our formula would extend assistance through the third
quarter of 2011, data were not available to calculate the actual
change in FMAP at the end of the assistance period. We relied on data
from the first quarter of 2011 for this illustration.
[31] Specifically, data on the number of jobs by state come from State
and Metro Area Employment, Hours, & Earnings from the Bureau of Labor
Statistics. Data for the working-age population by state come from the
Local Area Unemployment Statistics from the Bureau of Labor
Statistics. These data are available with a 2-month lag. For example,
state employment and population data for July are available by the end
of August.
[32] For any month, the 3-month moving average is calculated as the
average of that month and the values in the 2 preceding months. A
moving average (sometimes called a "rolling average") is a calculation
used to smooth fluctuations in data.
[33] The state unemployment rates by quarter are calculated by
dividing a 3-month average of the seasonally adjusted number of
persons unemployed by a comparable 3-month average number in the labor
force. Data are from the BLS' Local Area Unemployment Statistics.
[34] J. Holahan and A. Garrett, "Rising Unemployment, Medicaid and the
Uninsured," Kaiser Commission on Medicaid and the Uninsured
(Washington, D.C.: January 2009). Holahan and Garrett report that a 1
percentage point increase in the unemployment rate is associated with
about a $1.5 billion increase in the state share of Medicaid spending,
which is about 1.0 percent increase in state spending on Medicaid.
[35] GAO, State and Local Governments: Knowledge of Past Recessions
Can Inform Future Federal Fiscal Assistance, [hyperlink,
http://www.gao.gov/products/GAO-11-401] (Washington, D.C.: Mar. 31,
2011), pp. 48-49.
[36] The data for state wages and salaries by quarter are expressed in
real dollars by dividing Bureau of Economic Analysis (BEA) quarterly
wage and salary disbursements by the BEA implicit price deflator for
gross domestic product. The wages and salaries are a component of BEA
State Quarterly Personal Income and the deflator is from the National
Income and Product Accounts.
[37] For more detail on the across-the-board provision in the Recovery
Act see GAO, Medicaid: Improving Responsiveness of Federal Assistance
to States during Economic Downturns, [hyperlink,
http://www.gao.gov/products/GAO-11-395] (Washington, D.C.: Mar. 31,
2011), p. 25.
[38] The regular FMAP is calculated using the following formula:
FMAPstate=1-((PCIstate)2/(PCIU.S.)2*0.45). Under the regular FMAP
formula, a state's FMAP is adjusted annually based on changes to its
per capita personal income. If a state's economic condition as
measured by per capita personal income in preceding years showed
improvement relative to the national average, its FMAP will be
reduced. For federal fiscal year 2011, the regular FMAP for states
ranged from 50.00 percent to 74.73 percent. By statute, the minimum
regular FMAP for a state is 50 percent and the maximum is 83 percent.
The District of Columbia is not subject to this formula and instead by
law has its FMAP set at 70 percent.
[End of section]
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