State responses to federal matching grants: The case of medicaid

Pauline Leung

Journal of Public Economics, 2022, vol. 216, issue C

Abstract: While Medicaid is currently financed by open-ended matching, in which the federal government’s contribution is uncapped, there has been interest in transforming the financing structure to block grants, which limits federal cost-sharing to a fixed amount. To understand the implications of this reform, I measure the effect of match rates on Medicaid spending by using the variation induced by a kink in the match rate formula. I find that a percentage point increase in the federal match raises per-beneficiary spending by 3 to 6 percent and that these results are driven by high-spending states. Using this estimate, I discuss the welfare impact of a block grant reform.

Keywords: Medicaid; Matching grants (search for similar items in EconPapers)
JEL-codes: H53 H77 I13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:216:y:2022:i:c:s0047272722001487

DOI: 10.1016/j.jpubeco.2022.104746

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