Overview:
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Medicaid is a complex entitlement program for many people who can’t afford adequate health care, including single parents and their children, the disabled and the elderly (some of whom also receive Medicare benefits as so-called “dual eligibles”). It is funded as a joint venture by states and the federal government, with each state determining the exact scope of its program, payment rates and specific eligibility standards. The federal government, meanwhile, establishes general guidelines for the programs and monitors their enforcement through the Centers for Medicare and Medicaid Services (CMS). Participation is voluntary; however, every state has been signed up since the last holdout, Arizona, created its Medicaid variant in 1982.
The wide latitude states have in shaping their Medicaid programs means they may vary substantially from one state to the next. They also may choose a name other than Medicaid. In California, for example, the program is known as Medi-Cal, while in Oklahoma it’s called SoonerCare. Arizona’s is the Arizona Health Care Cost Containment System.
The major sticking point for Medicaid can be summed up in one word: money. Many people view with alarm the gradually escalating costs associated with the program, and some states have had to devote as much as one-fifth of their budgets to sustaining it. Fraud is also a major issue. Medicaid reform of some kind or another is therefore a perennial item on the political agenda.
History:
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President Lyndon B. Johnson helped establish Medicaid when he signed the Social Security Act of 1965 into law on July 30 of that year. The new program was an outgrowth of the Social Rehabilitation Administration in the Department of Health, Education and Welfare. Originally viewed as a narrow measure targeting specific segments of the poor population, Medicaid started expanding beyond its original scope almost immediately, eventually going from some 15 million enrollees in the 1960s to over 50 million by 2008. As enrollment has increased, so too has the assortment of benefits and their associated costs (for more information, see the Reform section below).
Medicaid has changed substantially since it was created. For one thing, more and more states have won waivers for opting out of certain federal rules. These waivers led to the proliferation of Medicaid managed care programs in the 1990s. Now, the majority of beneficiaries are enrolled in these programs, which receive a fixed amount of money each month from Medicaid, and then must use that money to take care of the beneficiaries’ health services. Some states also run programs in which Medicaid pays for private health insurance.
Medicaid: A Timeline of Key Developments (Kaiser Family Foundation)
History (Centers for Medicare and Medicaid Services)
What it Does:
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The Centers for Medicare and Medicaid Services, a division in the Department of Human and Health Services, works with states to provide Medicaid. Each state administers its own Medicaid program, with the CMS setting minimum eligibility, funding and quality standards by which they must abide.
States have the option of providing broader coverage than mandated by the CMS, and they often bundle Medicaid with other public-health services in one administrative unit or office. (For example, some jurisdictions have combined the State Children’s Health Insurance Program with Medicaid, with SCHIP covering children whose families make too much money to be eligible for Medicaid, but not enough to buy private insurance.) The proliferation of optional services is a major concern for those advocating fiscal constraint (see the Debate section below). According to the Congressional Budget Office, one estimate indicates that “spending on optional populations and benefits accounted for about 65 percent of Medicaid spending in 1998.”
The complicated way in which Medicaid disperses money for health services varies. In some states, Medicaid pays doctors and medical institutions directly, while in others, people are enrolled in private plans reimbursed by Medicaid. The majority of beneficiaries are now enrolled in managed care programs (see History above). The federal government ultimately agrees to pick up at least 50 percent of each state’s Medicaid tab, no matter what they spend, with poorer states shouldering an even smaller proportion of the costs. Many observers call this “an open-ended agreement.”
Eligibility and Services
Not all low-income people are eligible for Medicaid. According to the Medicaid Web site, individuals and families must fall into one of three general classes: the categorically needy, the medically needy or special groups.
Categorically needy groups lack money for health care. In order to qualify federal Medicaid funds, states must include these groups in their program:
- Families eligible for the now-defunct Aid to Families with Dependent Children program as of July 16, 1996.
- Pregnant women and children whose family income is at or below 133 percent of the federal poverty level.
- Children ages 6 to 19 whose families earn up to 100 percent of the federal poverty level.
- Relatives or legal guardians who care for children under 18 (or under 19 if a child is still in school).
- Supplemental Security Income recipients (or elderly or disabled who meet state requirements that are stricter than those in the SSI program).
- Individuals or couples living in medical institutions who have a monthly income up to three times greater than the SSI benefit rate.
According to the Medicaid Web site, categorically needy groups are generally entitled to the following benefits:
- Inpatient (excluding mental-disease institutions) and outpatient hospital services
- Laboratory and X-ray work
- Certified pediatric and family nurse practitioner consultations
- Nursing facility services for those 21 or over
- “Early and periodic screening, diagnosis and treatment” for those under 21
- Family planning services and supplies
- Physicians’ services
- Dental services
- Home health care for those entitled to nursing facility services under a state’s Medicaid program
- Midwife services
- Pregnancy-related services
- 60-day postpartum services for mothers
The categorically needy also may enjoy some or all of nearly three dozen optional benefits, depending on the state:
- Diagnostic services
- Optometry services
- Transportation services
- Clinic services
- Prescription drugs and prostheses
- Rehabilitation and physical therapy
- Home or community care for those with chronic illnesses
The medically needy are those with too much money - and often too many other assets, such as savings - to qualify as categorically needy. Not all states offer benefits to these people, but if they do, they must at least cover women through a 60-day postpartum period, children under 18, some newborns for one year and certain blind people. States may also expand the category to include people over 65, caretakers and others. Services offered to this group are not as extensive as those offered to the categorically needy.
States may also choose to extend Medicaid benefits to special groups in particular circumstances. For example, some states provide limited health care to people who have tuberculosis, while others cover qualified disabled people who have lost Medicare eligibility because they work.
Medicaid: The Basics (Kaiser Family Foundation)
Detailed Assessment on Medicaid
(White House)
Controversies:
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Fraud
Medicaid fraud is a persistent concern. Most states have offices dedicated to combating systemic abuses.
Medicaid Fraud (New York State Department of Health)
New York Medicaid Fraud May Reach Into Billions (by Clifford J. Levy and Michael Luo, New York Times)
How to Stop Medicaid Fraud (by Steven Malanga, City Journal)
East Meadow doctor charged in $30G Medicaid fraud (by Alfonso A. Castillo, Newsday)
Pharmacist Accused of $3.2 Million Fraud Scram (by Alex Wood, Hartford Business Journal)
Inadequate Funding
Many health care providers and insurers claim that Medicaid payments don’t actually cover their costs.
Insurers say Medicaid payments too low (Christopher Snowbeck, Pittsburgh Post-Gazette)
Mothers on Medicaid Overcharged for Pain Relief (by Robert Pear, New York Times)
Medicaid Payments vs. Medical Costs: Raises a ‘start’ toward a fix
(by Andy Miller, Atlanta Journal-Constitution)
Suggested Reforms:
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The Congressional Budget Office has laid out the following options in reforming Medicaid:
- Reduce the rate at which the federal government reimburses states
- Reduce eligibility and the number of mandatory services
- Force beneficiaries to assume more costs
- Promote lower-cost services, such as alternatives to nursing home care
Successive Republican administrations have floated the idea of doing away with the “open-ended” federal commitment to match state spending on Medicaid, instead paying states a block grant, or set amount, each year.
Reforming Medicaid (National Center for Policy Analysis) (PDF)
The Future of Medicaid (James Frogue, Heritage Foundation)
Pressure for Market-Based Medicaid Reform Rises (by Christie Raniszewski Herrera, Heritage Institute
Medicaid’s Unseen Costs (by Michael F. Cannon, Cato Institute) (PDF)
Running in Place: How the Medicaid Model Falls Short, and What to Do About It (Eliot Fishman, Century Foundation)
New Congressional Budget Office Estimates Indicate Millions of Low-Income Beneficiaries Would Be Harmed by Medicaid Provisions in Budget Bill (by Edwin Park, Center on Budget and Policy Priorities)
Out-of-Pocket Expenses for Medicaid Beneficiaries are Substantial and Growing (by Leighton Ku and Matthew Broaddus, Center on Budget and Policy Priorities)
Medicaid Budget Proposals Would Shift Costs to States and Be Likely to Cause Reductions in Health Coverage (by Victoria Wachino, Andy Schneider and Leighton Ku, Center on Budget and Policy Priorities)
Short-Run Medical Reform (National Governors Association) (PDF)
Can Medicaid Do More With Less? (by Alan Weil, Commonwealth Fund)
Health Policy Online: Timely Analyses of Current Trends and Policy Options (by John Holahan and Alan Weil, Urban Institute) (PDF)
Medicaid: Overview and Impact of New Regulations (Kaiser Family Foundation) (PDF)
Florida Medicaid Reform (Florida Agency for Health Care Administration)
Medicaid and Block Grant Financing Compared
(Kaiser Family Foundation)
Debate:
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Can Medicaid Survive?
The steady growth of Medicaid costs has some concerned about its long-term sustainability. The Congressional Budget Office says costs have outpaced growth in the U.S. economy since 1975. In 2003, spending on Medicaid, Medicare and the State Children’s Health Insurance Program accounted for nearly 4 percent of U.S. gross domestic product. By 2050, the CBO predicts that proportion may jump to anywhere between 6.4 to 21 percent.
The nonprofit, non-partisan Kaiser Family Foundation has amassed a considerable amount of information on Medicaid. Their Web site links to statistics and policy views representing the full spectrum of political ideology.
Key Organizations (Kaiser Family Foundation)
Policy Research (Kaiser Family Foundation)
The Continuing Medicaid Budget Challenge: State Medicaid Spending Growth and Cost Containment in Fiscal Years 2004 and 2005 (Kaiser Commission on Medicaid and the Uninsured) (PDF)
Costs, Access and Utilization Under Medicaid: A Review of the Evidence (by John Holahan and Sharon K. Long, Urban Institute)
Bush’s new budget to ask for large cuts in growth of Medicare (by Robert Pear, International Herald Tribune)
U.S. Nears Clash with Governors on Medicaid Cost (by Robert Pear, New York Times)
Medicaid spending sees first decline (by Dennis Cauchon, USA Today)
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
- Comments
- Leave a comment
Founded: 1965
Annual Budget: $203 billion (2008)
Employees:
Official Website: http://www.cms.hhs.gov/home/medicaid.asp
Medicaid
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