This brief explores variations in state Medicaid programs. It concludes that the federal matching formula, which provides more generous matching funds for poorer than for richer states, reduces interstate disparities. The brief finds that long-term care expenditures vary to a greater degree than acute care spending; the greatest state-to-state variation in Medicaid spending is the use of the disproportionate share hospital (DSH) program; and high-spending states tend to have higher per capita incomes and thus lower federal matching contributions.