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Report ranks Montana 15th for federal contributions to Medicaid

By   /   June 7, 2012  /   News  /   No Comments

By PHIL DRAKE | Montana Watchdog

HELENA – For every dollar the state of Montana puts into Medicaid, the federal government tosses in $1.95, ranking the Treasure State 15th nationwide for the highest federal contribution, according to a recent study by the Tax Foundation.

Mississippi ranked No. 1 with a $2.87 federal contribution, or Federal Medical Assistance Percentage (FMAP), for every $1 put in by the state.

The June 5 report noted that 14 states tied for having the lowest FMAPs in 2012, which meant that for every $1 they spent on Medicaid, they received $1 from the federal government for the federal-state program that helps pay for health care for the needy and aged.

FMAPs are determined by unemployment and poverty level, the Tax Foundation noted. It noted Mississippi’s FMAP was 74.18 percent and Montana’s was 66.11 percent.

About 104,000 Montanans participate in Medicaid, including about 69,000 children. Montana’s Medicaid program is budgeted to cost the state $1.14 billion in general funds and special revenue for fiscal 2012-13.The  state pays about one-third of the cost of Medicaid and Healthy Montana Kids Plus and the federal government pays the rest.

Montana’s neighboring states were also ranked on the chart. Idaho was seventh with $2.36 for every state dollar (70.23 percent), Wyoming tied with 13 other states for 37th with $1 (50 percent); North Dakota was 32nd with $1.24 federal dollar for every state dollar (55.40 percent) and South Dakota ranked 25th for receiving $1.45 for every dollar the state spent on Medicaid, or 59.13 percent.

The study warned the system could be easily abused to fill budget gaps as Medicaid federal matching is open-ended. “In 2004, the U.S. government’s General Accounting Office (GAO, now the Government Accountability Office) warned that the design of Medicaid matching funds enabled states to funnel Medicaid money into state general coffers. During the recent downturn, many states did exactly that,” the study noted.

Health care providers were taxed by using the collected revenue to qualify for federal matching funds, and then using the federal dollars to compensate Medicaid providers.

In 2009 or 2010, 20 states increased health provider taxes to take advantage of federal matching funds, particularly because the 2009 stimulus bill temporarily made FMAP federal matching fund rates more generous.

Montana was not among the states criticized as it did not increase the health provider tax, according to the chart.

 The “State Abuse of Medicaid Matching Funds” report by the Washington, D.C.-based Tax Foundation is one of 10 reports – “Top 10 State Tax Trends in Recession and Recovery, 2008-2012” – the nonpartisan tax research group is releasing June 4-15.

Reporter Dustin Hurst contributed to this story.


Phil formerly served as staff reporter for Watchdog.org.