Medicaid Financing Issues:  Intergovernmental Transfers and Fiscal Integrity

Medicaid Financing Issues: Intergovernmental Transfers and Fiscal Integrity

Since its enactment in 1965, Medicaid has been a joint venture between the states and the federal government. While each state administers its own Medicaid program within broad federal guidelines, the federal government provides over half of the program’s financing. As a result, Medicaid represents a spending item, but it is also the single largest source of federal revenue to the states.

In recent years there has been much discussion about states’ use of creative financing to draw down additional federal funds for Medicaid financing. Some suggest a curb on these practices and the President’s FY2006 budget includes provisions targeting inter-governmental transfers (IGTs). This fact sheet provides an overview of Medicaid financing, the use of IGTs by states, and the current policy issues surrounding IGT rules.

Fact Sheet (.pdf)


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