Study Snapshot: Understanding the Tax Burden of Financing Medicaid with a Matching Grant

Medicaid comprises a significant portion of state budgets and is expected to grow as states expand coverage under the Affordable Care Act (ACA). Given this projected growth, understanding Medicaid’s financing structure, its burden on taxpayers, and any unintended consequences of the federal matching grant is particularly important. The matching grant, in place since the enactment of Medicaid, uses the Federal Medical Assistance Percentage (FMAP) to reimburse states for the federal share of states’ Medicaid expenditures. This study snapshot presents an overview of the estimated federal and state Medicaid tax burdens per family.