In Florida, as in other states, there is a great deal of misinformation about how much the state pays for Medicaid. The program is jointly administered by both states and the federal government, and the feds pay for a majority of Medicaid’s costs in all states. However, some of Medicaid’s opponents obscure the federal government’s role in financing Medicaid and exaggerate how much the program costs state budgets.
Over the years here at Georgetown University CCF, we have kept a close eye out for the common error of counting the federal share of Medicaid costs as if it were part of the state budget. Most commonly, this occurs when someone counts the federal share of Medicaid costs as if they were paid for with state funding. A highlight for CCF was when the Washington Post fact-checker Glenn Kessler agreed with our point. The issue relates to exaggerated claims about the impact of Medicaid spending on state budgets.
CLAIM: Florida has recently been a prime example of this phenomenon. Just yesterday, in an op-ed published in the Tampa Bay Times, Florida House Speaker Steve Crisafulli states: “There are principled reasons for declining to grow a program that currently covers 3.7 million Floridians at a cost of $23.5 billion per year, or about one-third of Florida’s budget.” The Speaker includes federal Medicaid dollars coming into the state as part of the state’s budget as if state-based revenues were being used.
FACT: State spending on Medicaid in Florida accounts for one-fifth (20 percent, or $9.5 billion) of all state expenditures ($48 billion), which is comparable to state spending on other programs including elementary and secondary education (23%) and higher education (13%).
Florida Medicaid Spending in Context
Overall, Florida has a $74 billion budget, of which 65% ($48 billion) comes from state funds and 34% ($25 billion) comes from federal funds. The data cited to make the Speaker’s point – that Medicaid accounts for one-third (31.1%) of Florida’s budget – includes the money the federal government provides to Florida’s Medicaid program. In other words, this is money coming into the state, not money that comes from state coffers.
Citing the total amount spent on Medicaid in Florida ($23 billion in 2014), which includes federal funds – as accounting for 31 percent of state expenditures is misleading. Indeed, the amount of state funding that Florida contributes to its Medicaid program ($9.5 billion) actually accounts for 20 percent of total state spending ($48 billion).
Of the total $23 billion cost of Florida’s Medicaid program Medicaid in 2014, 41 percent ($9.5 billion) comes from state expenditures (state’s general funds and other state funds). The majority (59% or $13.5 billion) of Medicaid spending comes from funds that the federal government provides to the state.
This misperception is not limited to Florida and over the past several years we have pointed out this false claim in other states. Medicaid’s role in state budgets is often more modest than headlines would suggest. Despite claims that Medicaid spending is bankrupting state budgets, Medicaid remains a pretty good deal for states. Nationally, state expenditures on Medicaid account for only 15 percent of total state spending.
This is because the Federal Medical Assistance Percentage (FMAP), or the federal match rate that determines the share of the cost of Medicaid that is paid by the federal provides a majority of the funding across all state Medicaid programs. But the FMAP varies across states and is more generous in some states than others. In 2014, Florida had a 59% FMAP, which does not include enhanced FMAPS for certain services and populations. For every $1 that Florida spends on Medicaid, the federal government contributes $1.43 – making Medicaid a great deal for the state. Other industries in Florida would also benefit improving the state’s economy and employment (“multiplier effect”). According to one study, Medicaid expansion would increase economic activity in Florida by $8.9 billion and create 71,300 new jobs.