Issue Brief 11-28
July 1, 2011

In April 2011, the president released a framework for reducing the federal budget deficit that included several changes to Medicaid: replacing current federal matching formulas with a single matching rate (referred to as a “blended rate”); limiting states’ ability to use provider taxes; establishing upper limits on Medicaid payments for durable medical equipment; improving program integrity; implementing Medicaid prescription drug changes that focus on high utilization; incentivizing more efficient, higher quality care for high-cost beneficiaries; and improving patient safety.

In recent weeks, the blended rate proposal has received significant attention because it is rumored to be one of the changes being considered by budget negotiators as part of the proposal to raise the debt ceiling and reduce the deficit. Few details on the blended rate proposal are available and, as such, it is impossible to determine its impact on states. That said, any proposal focused on modifying federal matching rates, with the goal of reducing federal spending, will likely increase state costs.