Medicaid Matching Formula

Pursuant to a congressional request, GAO provided an analysis of what New York's federal Medicaid matching percentage and funding would have been if the current matching formula had included certain factors that affect state financing burdens, such as the number of people in poverty and the cost of health care services.

GAO noted that: (1) it estimated that, had the Medicaid matching formula reflected poverty and other factors affecting state financing burdens between fiscal years (FY) 1989 and 1996, New York's matching percentage would have fluctuated between 50 and 60 percent, depending on the particular year in question and the indexes used; (2) on the basis of these rates, GAO estimated that the state would have received between $3.4 billion and $6.5 billion in additional federal assistance during this period; (3) because recent trends in poverty and health care costs have adversely affected the state's financing burdens, the state's matching percentage would continue to increase in FY 1997 and 1998; and (4) with a modified matching formula, GAO estimates federal funding for New York's Medicaid program would be between $4.9 billion and $7.2 billion higher than under the current formula based on projected spending for these years.