Medicaid is the largest health insurer in the United States. Created in 1965, the program now cov￾ers about 85 million low-income Americans at an annual cost of more than $700 billion.1 Although Medicaid is largely structured and operated by the states, the federal government contributes the majority of the program’s funding. State payments accounted for 31 percent of total Medicaid spending in 2021; the federal government paid 69 percent. Those proportions vary dramatically by state, however. Most federal Medicaid dollars are distributed to states on the basis of a formula that provides more (or less) assistance to states with low (or high) average personal income relative to the national average. The Federal Medical Assistance Percentage (FMAP), which is the share of Medicaid benefit spending covered by the federal government, generally ranges from 50 percent (the statutory minimum) to about 78 percent, depending on the state. Over the decades, however, federal rules governing Medicaid funding have grown complex, with special treatment given to certain groups and service categories. For example, states that expanded Medicaid under the Affordable Care Act (ACA) to cover all low-income, non-elderly adults receive a fixed FMAP for these enrollees that exceeds the FMAP for most other Medicaid-eligible populations. This policy brief considers whether the federal government’s involvement in Medicaid, which was meant to promote equitable funding between the states, has its intended effect.