Medicaid: Alternative Measures Could Be Used to Allocate Funding More Equitably

Source: U.S. Government Accountability Office, GAO-13-434, May 10, 2013

From the summary:
GAO identified multiple data sources that could be used to develop measures to allocate Medicaid funding to states more equitably than the current funding formula–known as the Federal Medical Assistance Percentage (FMAP)–which is based solely on per capita income (PCI). To be equitable from the perspective of beneficiaries and allow states to provide a comparable level of services to each person in need, a funding allocation mechanism should take into account the demand for services in each state and geographic cost differences among states. To be equitable from the perspective of taxpayers, an allocation mechanism should ensure that taxpayers in poorer states are not more heavily burdened than those in wealthier ones, by taking into account state resources. To illustrate, GAO identified at least one federal data source that could be used to develop measures of each of these aspects, in order to allocate Medicaid funding more equitably.