Medicaid Financing: Dangers of Block Grants and Per Capita Caps Summary and Full Report
Updated April 2025
Since 1965, Medicaid has been providing affordable access to health care for children, workers, seniors, and persons with disabilities through a shared state-federal funding arrangement. Medicaid provides health insurance for more than one in five Americans, including 80 percent of children living in poverty; 44 percent of children with special health care needs; 43 percent of nonelderly adults with disabilities; and more than 60 percent of nursing home residents. Medicaid covers about one-third of the non-elderly Black and Hispanic populations and 17 percent of the white population. People of color are more likely to be insured by Medicaid because of systemic racism and economic oppression that has denied them access to quality jobs, including those that provide health insurance.
Medicaid is overwhelmingly popular among voters. More than 80 percent of people want to increase or maintain Medicaid spending. But despite the program’s popularity, Republicans are again threatening to make dangerous changes to Medicaid, some of which would impact its funding structure. Under current law, Medicaid is funded through a shared state-federal funding arrangement. The federal government pays states a percentage of Medicaid costs, called the Federal Medical Assistance Percentage (FMAP). The federal government’s contribution varies based on per capita income and other criteria. Republicans want to limit how much federal money flows to states to help pay for Medicaid coverage for every eligible person through per capita caps or block grants.