In December 2008, the National Bureau of Economic Research (NBER) announced that the economy was in a recession and that the recession had begun a year earlier in December 2007. However, some economists and forecasters had been concerned that a combination of factors might make this economic contraction much worse than other post-war slowdowns. At first, economic instability seemed limited to the housing sector as housing values decreased in many markets, forcing some subprime and highly leveraged home owners into foreclosure. The problems that began in housing, quickly spread to banking and financial services and were compounded earlier in 2008 by spikes in energy prices. The solvency of automobile manufacturers rapidly deteriorated, possibly due in part to tight credit policies, rising unemployment, and high fuel costs. National unemployment rose steadily throughout 2008 reaching 7.2% in December. Due to slower economic activity caused by the recession, many states also faced large tax revenue decreases, forcing them to reduce Medicaid eligibility and spending, just when the demand for additional public sector health care was expanding to fill the gap left when unemployed individuals no longer could afford employer-based health insurance for their families. Although by themselves the problems in housing, financial services, manufacturing, and energy sectors might not have forced the economy into recession, taken together these problems had contributed to the emergence of a recession and, if the underlying fundamentals have changed as some forecasters suspect, perhaps a prolonged, global economic slow down that could have widespread impact on living standards here and abroad. In response, policymakers quickly moved to prevent the instability in housing and financial services from spilling over into the broader economy. Looking to the future, members of Congress and the Obama Administration sought additional mechanisms to stimulate economic activity. Various approaches were considered to ensure that an economic stimulus package could reach many different segments of the economy, provide a sustained economic boost, and wide spread job growth. Some economic stimulus proposals included infrastructure spending, revenue sharing with states, middle class tax cuts, business tax cuts, unemployment benefits, and food stamps. On January 22, 2009 the House Committee on Energy and Commerce marked-up selected health components and approved a stimulus bill, the American Recovery and Reinvestment Act of 2009 (ARRA, H.R. 1 ). The full House amended and approved H.R. 1 on January 28, 2009. Similar legislation to H.R. 1 was introduced in the Senate (ARRA, S. 350 ) and referred to the Committee on Finance, among others, where provisions were approved on January 27. An amendment in the nature of a substitute ( S.Amdt. 570 ) was offered as a substitute for H.R. 1 and was approved by the full Senate on February 10, 2009. The Senate version of ARRA was referred to a joint Senate and House conference committee. The conference committee reached agreement and referred ARRA to the House and Senate, where it was passed on February 13, 2009. President Obama signed ARRA ( P.L. 111-5 ) on February 17, 2009. This report is a summary the Medicaid provisions in P.L. 111-5 . For more information on the Medicaid provisions included in House and Senate versions of ARRA, see CRS Report R40158, Medicaid Provisions in the House and Senate American Recovery and Reinvestment Act of 2009 (ARRA, H.R. 1, S.Amdt. 570) , coordinated by [author name scrubbed]. For further information on implementation of the FMAP adjustments in ARRA, see CRS Report RL32950, Medicaid: The Federal Medical Assistance Percentage (FMAP) . Table 1 displays a summary of the Medicaid provisions in P.L. 111-5 . Although Table 1 displays 14 Medicaid provisions, ARRA included only eight provisions. Some provisions presented separately in the Senate or House Bills were aggregated under one provision in P.L. 111-5 . For instance, there was one provision for Medicaid Indian protections in the Conference Agreement that included five provisions from the earlier House and Senate versions (premiums and cost sharing, eligibility determinations, estate recovery, consultation with Indian health programs, and managed care protections). In addition, the nursing home prompt payment provision from the Senate bill was integrated into the Temporary Federal Medical Assistance Percentage (FMAP) Increase provision in P.L. 111-5 , but $5 million in funding to implement the FMAP provision was added to ARRA in the Conference Agreement under the OIG Oversight provision from the Senate Bill. Thus, there are eight Medicaid provisions included in Title V of the Conference Agreement. An additional provision providing funding for Medicaid Health Information Technology (HIT) is in Title IV of P.L. 111-5 . The Congressional Budget Office (CBO) estimated that ARRA's Medicaid provisions (under TITLE V—State Fiscal Relief ) would increase federal expenditures by $33.96 billion in FY2009 and $89.74 billion from FY2009 to FY2013, although one provision, a temporary FMAP increase, accounts for $87.2 billion of the five-year increase. The federal medical assistance percentage (FMAP) is the rate at which states are reimbursed for most Medicaid service expenditures. It is based on a formula that provides higher reimbursement to states with lower per capita incomes relative to the national average (and vice versa); it has a statutory minimum of 50% and maximum of 83%. Exceptions to the FMAP formula have been made for certain states and situations. For example, the District of Columbia's Medicaid FMAP is set in statute at 70%, and the territories have FMAPs set at 50% (they are also subject to federal spending caps). Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ), all states received a temporary increase in Medicaid FMAPs for the last two quarters of FY2003 and the first three quarters of FY2004 as part of a fiscal relief package. In addition to Medicaid, the FMAP is used in determining the federal share of certain other programs (e.g., foster care and adoption assistance under Title IV-E of the Social Security Act) and serves as the basis for calculating an enhanced FMAP that applies to the State Children's Health Insurance Program. . During a recession adjustment period that begins with the first quarter of FY2009 and runs through the first quarter of FY2011, the provision holds all states harmless from any decline in their regular FMAPs, provides all states with an across-the-board increase of 6.2 percentage points, and provides qualifying states with an additional unemployment-related increase. It allows each territory to choose between an FMAP increase of 6.2 percentage points along with a 15% increase in its spending cap, or its regular FMAP along with a 30% increase in its spending cap. States are evaluated on a quarterly basis for the unemployment-related FMAP increase, which equals a percentage reduction in the state share. The percentage reduction is applied to the state share after the hold harmless increase and after one-half of the 6.2 percentage point increase (i.e., 3.1 percentage points). For example, after applying the across-the-board increase, a state with a regular FMAP of 50% would have an FMAP of 56.20%. If the state share (after the hold harmless and one-half of the across-the-board increase) were further reduced by 5.5%, the state would receive an additional FMAP increase of 2.58 percentage points (46.9 state share * 0.055 reduction in state share = 2.58). The state's total FMAP increase would be 8.78 points (6.2 + 2.58 = 8.78), providing an FMAP of 58.78%. The unemployment-related FMAP increase is based on a state's unemployment rate in the most recent 3-month period for which data are available (except for the first two and last two quarters of the recession adjustment period, for which the 3-month period is specified) compared to its lowest unemployment rate in any 3-month period beginning on or after January 1, 2006. The criteria are as follows: unemployment rate increase of at least 1.5 but less than 2.5 percentage points = 5.5% reduction in state share; unemployment rate increase of at least 2.5 but less than 3.5 percentage points = 8.5% reduction in state share; unemployment rate increase of at least 3.5 percentage points = 11.5% reduction in state share. If a state qualifies for the unemployment-related FMAP increase and later has a decrease in its unemployment rate, its percentage reduction in state share could not decrease until the fourth quarter of FY2010 (for most states, this corresponds with the first quarter of SFY2011). If a state qualifies for the unemployment-related FMAP increase and later has an increase in its unemployment rate, its percentage reduction in state share could increase. The full amount of the temporary FMAP increase only applies to Medicaid, excluding disproportionate share hospital payments and expenditures for individuals who are eligible for Medicaid because of an increase in a state's income eligibility standards above what was in effect on July 1, 2008. A portion of the temporary FMAP increase (hold harmless plus across-the-board) applies to Title IV-E foster care and adoption assistance.