What is Medicaid, and how is it funded?

• Medicaid is the nation’s single largest health care insurer, covering approximately 79.3 million people in the United States in 2024. 
• In 2024 at Allina Health, 17% of all care encounters were with patients covered by Medicaid. 
• Funding: Medicaid is a joint federal and state program that helps cover medical costs for people with limited income and resources. 
  • The federal government funds a significant portion of the Medicaid program, by matching a percentage of the state’s spending. This is known as the Federal Medical Assistance Percentage (FMAP). FMAP numbers vary by state but cannot be lower than 50%.  Statewide, Minnesota’s FMAP is typically around 51%, meaning for every dollar the state spends on Medicaid, the federal government contributes about 49%. 
  • The Affordable Care Act provided states an opportunity to receive higher FMAP rates if the state elected to expand Medicaid coverage to additional patient populations. Minnesota’s Medicaid program became fully expanded in 2014, allowing more individuals to get coverage, while maximizing the amount of federal dollars coming into Minnesota.
• The federal government has general requirements that all state Medicaid programs must follow, but each state runs its own program. This means eligibility requirements and benefits can vary from state to state. 

Medicaid in Minnesota – How it Works and Who is Covered 

• Minnesota’s Medicaid program is called ‘Medical Assistance’. 
• Medical Assistance is Minnesota's largest health care program.
• 1.3 million Minnesotans (21% of our state’s population) rely on Medicaid, including those in urban, suburban, and rural communities. 
  • This includes the Medicaid expansion population, which provides coverage to an additional 327,000 Minnesotans, including working adults, caregivers, and students. 
• Medicaid provides coverage for 1 in 3 births in our state and provides 12 months of postpartum coverage to new mothers, reducing maternal and infant mortality. 
• Medicaid covers 500,000+ Minnesota children – ensuring they receive routine checkups, vaccinations, and emergency care. 
• Medicaid funds nearly 50% of all long-term care in Minnesota 
• Nearly 60% of Minnesota’s nursing home residents rely on Medicaid for care, along with thousands receiving home and community-based services, ensuring access to Seniors and People with Disabilities.

Why does Medicaid matter?

• Protects Those We Love the Most: Medicaid is a lifeline for millions by providing access to care for some of Minnesota’s most vulnerable residents.
• Supports Patient Access: Medicaid ensure that patients can receive care when they need it, including primary and preventive care. This keeps patients healthier and leads to fewer urgent or emergent care visits.
• Eases Burden on States: The shared financial responsibility for Medicaid between states and the federal government protects access to care without overwhelming individual state budgets.
• Provides Stability for Health Care Services: While non-profit hospitals and health systems play a critical role in providing care, Medicaid funding ensures they can continue serving patients, especially in rural and underserved areas. 
• Reduces Uncompensated Care: Without Medicaid, thousands of patients would be uninsured, increasing unpaid hospital bills and shifting costs elsewhere in the system.