Projected total Medicaid expenditure 2020-2027

Medicaid expenditure continues to grow and is projected to surpass one trillion U.S. dollars for the first time in 2027. It is estimated that the federal government will continue to pay around 60 percent of total Medicaid costs over the coming years, with states picking up the other 40 percent.

Federal government pays a higher share

The Medicaid expenditure forecasts are similar to spending patterns of recent years, with an approximate 60:40 split between the federal government and the states. In 2017, the federal government spent around 370 billion U.S. dollars on Medicaid costs, while states paid nearly 230 billion U.S. dollars. Total Medicaid expenditure increased for eleven consecutive years between 2006 and 2017, and much of the growth is the result of higher enrollment numbers.

How are state costs matched by the federal government?

Although the federal government establishes a framework for all states to follow, each state can administer its own Medicaid program differently. The costs of operating the program are shared between the two, with the federal government matching state spending for eligible beneficiaries based on a formula called the federal medical assistance percentage (FMAP). This calculation is designed so that the federal government pays a larger share of costs in poorer states, such as West Virginia and Mississippi. In 2020, the FMAP ranged from a base level of 50 percent up to 77 percent.