Medicaid

[MEDIC(AL) + AID.]

Definition

Medicaid is a federal-state entitlement program for low-income citizens of the United States. The Medicaid program is part of Title XIX of the Social Security Act Amendment that became law in 1965. Medicaid offers federal matching funds to states for costs incurred in paying health care providers for serving covered individuals. State participation is voluntary, but since 1982, all 50 states have chosen to participate in Medicaid.

Description

Medicaid Benefits

Medicaid benefits cover basic health care and long-term care services for eligible persons. About 58% of Medicaid spending covers hospital and other acute care services. The remaining 42% pays for nursing home and long-term care.

States that choose to participate in Medicaid must offer the following basic services:

• hospital care, both inpatient and outpatient
• nursing home care
• physician services
• laboratory and diagnostic x ray services
• immunizations and other screening, diagnostic, and treatment services for children
• family planning
• health center and rural health clinic services
• nurse midwife and nurse practitioner services
• physician assistant services

Participating states may offer the following optional services and receive federal matching funds for them:

• prescription medications
• institutional care for the mentally retarded
• home- or community-based care for the elderly, including case management
• personal care for the disabled
• dental and vision care for eligible adults

Because participating states are allowed to design their own benefits packages as long as they meet federal minimum requirements, Medicaid benefits vary considerably from state to state. About half of all Medicaid spending covers groups of people and services above the federal minimum.

Eligibility for Medicaid

Medicaid covers three major groups of low-income Americans:

• All recipients. In 2001, Medicaid covered 44 million low-income persons in the United States.
• Parents and children. In 2001, Medicaid covered 24 million low-income children, approximately one-fifth of all children in the United States. It provided coverage to an estimated 9.3 million low-income adults in families with children; most of these low-income adults were women.
• The elderly. In 2001, Medicaid covered five million adults over the age of 65. Medicaid is the largest single purchaser of long-term and nursing home care in the United States.
• The disabled. About 17% of Medicaid recipients are blind or disabled. Most of these persons are eligible for Medicaid because they receive assistance through the Supplemental Security Income (SSI) program.

All Medicaid recipients must have incomes and resources below specified eligibility levels. These levels vary from state to state depending on the local cost of living and other factors. For example, in 2001, the federal poverty level (FPL) was determined to be $14,630 for a family of three on the mainland of the United States, but $16,830 in Hawaii and $18,290 in Alaska.

In most cases, persons must be citizens of the United States to be eligible for Medicaid, although legal immigrants may qualify in some circumstances depending on their date of entry. Illegal aliens are not eligible for Medicaid, except for emergency care.

Persons must fit into an eligibility category to receive Medicaid, even if their income is low. Childless couples and single childless adults who are not disabled or elderly are not eligible for Medicaid.

Medicaid Costs

Medicaid is by far the government's most expensive general welfare program. In 1966, Medicaid accounted for 1.4% of the federal budget, but by 2001, its share had risen to nearly 9%. Combined federal and state spending for Medicaid takes approximately 20 cents of every tax dollar. The federal government covers about 56% of costs associated with Medicaid. The states pay for the remaining 44%.

As of 2001, costs for Medicaid rose at an average annual rate of 7.9%. The federal government spent $107 billion on Medicaid in fiscal year (FY) 1999, a sum that is expected to rise to $159 billion in 2004. The states spent $81 billion to cover Medicaid costs in FY 1999. These costs are projected to increase to $120 billion by FY 2004.

Although more than half (54%) of all Medicaid beneficiaries are children, most of the money (more than 70%) goes for services for the elderly and disabled. The single largest portion of Medicaid money pays for long-term care for the elderly. Only 18% of Medicaid funds are spent on services for children.

There are several factors involved in the steep rise of Medicaid costs:

• The rise in the number of eligible individuals. As the lifespan of most Americans continues to increase, the number of elderly individuals eligible for Medicaid also rises. The fastest-growing age group in the United States is people over 85.
• The price of medical and long-term care. Advances in medical technology, including expensive diagnostic imaging tests, cause these costs to rise.
• The increased use of services covered by Medicaid.
• The expansion of state coverage from the minimum benefits package to include optional groups and optional services.

Normal Results

The need to contain Medicaid costs is considered one of the most problematic policy issues facing legislators. In addition, the complexity of the Medicaid system, its vulnerability to billing fraud and other abuses, the confusing variety of the benefits packages available in different states, and the time-consuming paperwork are other problems that disturb both taxpayers and legislators.

Medicaid has increased the demand for health care services in the United States without greatly impacting or improving the quality of health care for low-income Americans. Medicaid is the largest health insurer in the United States. As such, it affects the employment of several hundred thousand health care workers, including health care providers, administrators, and support staff. Participation in Medicaid is optional for physicians and nursing homes. Many do not participate in the program because the reimbursement rates are low. As a result, many low-income people who are dependent on Medicaid must go to overcrowded facilities where they often receive substandard health care.

See also Medicare.

Resources

Books

Albanese, Beverly H. and Heidi Macomber. Medicaid EZ: AGuide to Get Those Nursing Home Bills Paid. New York: iUniverse, 2000.

Conklin, Joan H. Medicare for the Clueless: The CompleteGuide to This Federal Program. New York: Kensington Publishing, 2002.

Pratt, David A., and Sean K. Hornbeck. Social Security andMedicare Answer Book Gaithersburg, MD: Aspen, 2002.

Stevens, Robert, and Rosemary Stevens. Welfare Medicine inAmerica: A Case Study of Medicaid. Somerset, NJ: Transaction Publishers, 2003.

Periodicals

Benko, L. B. "Health Hazard. Medicaid Cuts Could Endanger Patients." Modern Healthcare 33 (2003): 26–27.

Chaudry, R. V, W. P. Brandon, C. R. Thompson, R. S. Clayton, and N. B. Schoeps. "Caring for Patients under Medicaid Mandatory Managed Care: Perspectives of Primary Care Physicians." Qualitative Health Research 13 (2003): 37–56.

Lambert, D., J. Gale, D. Bird, and D. Hartley. "Medicaid Managed Behavioral Health in Rural Areas." Journal of Rural Health 19 (2003): 22–32.

Vastag, B. "Capitol Health Call: Proposal for State Medicaid Autonomy under Fire." Journal of the American Medical Association, 289 (2003): 1093–1094.

Organizations

Health Care Financing Administration. United States Department of Health and Human Services. 200 Independence Avenue SW, Washington, D.C. 20201. http://www.hcfa.gov.

Kaiser Commission on Medicaid and the Uninsured. 1450 G Street NW, Suite 250, Washington, DC 20005. (202) 347-5270; Fax: (202) 347-5274. http://www.kff.org.

National Center for Policy Analysis. 655 15th Street NW, Suite 375, Washington, DC 20005. (202) 628-6671; Fax: (202) 628-6474. http://www.ncpa.org.

United States Department of Health and Human Services. 200 Independence Avenue SW, Washington, DC 20201. http://www.hhs.gov.

Other

Centers for Medicare and Medicaid Services, US Department of Health and Human Services [cited March 14, 2003]. http://cms.hhs.gov/.

National Association of State Medicaid Directors [cited March 14, 2003]. http://www.nasmd.org/.

National Governor's Association [cited March 14, 2003]. http://www.nga.org/.

Social Security Administration [cited March 14, 2003]. http://www.ssa.gov/.

— L. Fleming Fallon, Jr, MD, DrPH

A joint federal and state program that helps low-income individuals or families pay for the costs associated with long-term medical and custodial care, provided they qualify. Although largely funded by the federal government, Medicaid is run by the state where coverage may vary.

Investopedia Says:
In many states, nursing home stays for non-skilled, custodial care is all that is covered, meaning staying at home and receiving medical care is not always an option. In addition, Medicaid may not be accepted by all nursing homes nor will it cover recreational activities or any other forms of non-medical care. However, it does cover the entire cost for your stay in a facility as long as you need the care.

Related Links:
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Jointly administered federal and state government health insurance provided under Title XIX of the 1965 amendment of the Social Security Act. Medicaid provides health insurance assistance for people who have low income and limited assets. It is usually run by state welfare or human service agencies. A person may qualify for both Medicare and Medicaid or for only one of the programs.

Assistance program for the financially needy. Medicaid, also referred to as Title XIX of the Social Security Act, was enacted in 1965 at the same time as Medicare. It is a joint federal-state program that provides medical assistance for the aged, blind, and disabled, and families with dependent children who cannot pay for such assistance themselves. Benefits vary widely among the states.

A federal assistance program established as Title XIX under the Social Security Amendments of 1965, which provides payment for medical care for certain low-income individuals and families. The program is funded jointly by the state and federal governments and administered by the states.

Enacted in 1965, Medicaid is the major public financing program for providing health and long-term care coverage to the low-income population of the United States. It was originally enacted as a means of providing funds to help states provide health care for welfare recipients and has evolved into a program that finances care for more than one in seven Americans. Medicaid enables millions of Americans to gain access to needed health services, helping to close the gaps in care between the poor and nonpoor, ease the financial burdens of health care, and provide a health care safety net for the nation.

Authorized under Title XIX of the Social Security Act, Medicaid is a means-tested entitlement program financed by the states and the federal government and administered by the states. Federal financial assistance is provided to states for coverage of specific groups of people, and benefits are paid for by the states and through federal matching payments based on each state's per capita income. The federal share ranges from 50 to 80 percent of Medicaid expenditures and averaged 56.5 percent in 1998. State participation in the Medicaid program is voluntary, but all states have chosen to participate.

Medicaid Coverage

Although Medicaid was created to assist low-income Americans, coverage is dependent upon several other criteria in addition to income. Eligibility is primarily for those persons falling into particular categories, such as low-income children, pregnant women, elderly people, people with disabilities, and parents not exceeding specific income thresholds. Single adults are generally ineligible, no matter how poor, unless they are disabled. Within federal guidelines, states set their own income and asset eligibility criteria for Medicaid, resulting in large variations in coverage among states.

In 1998, 40.4 million people were enrolled in Medicaid. This included 20.7 million low-income children and 8.6 million low-income adults in families with children. The vast majority of adults were women. Historically, most women and children have been eligible for Medicaid because they received cash assistance through Aid to Families with Dependent Children (AFDC). Over time, eligibility was expanded to women and children not receiving welfare. The Temporary Assistance to Needy Families (TANF) welfare reforms implemented in 1996 officially severed the automatic link between Medicaid coverage and cash assistance for families.

There were 4.1 million elderly persons covered by Medicaid in 1998. Some elderly persons are eligible because they receive cash assistance through Supplemental Security Income (SSI), and others have incomes too high to qualify for cash assistance but spend-down to Medicaid by incurring high health care expenses. Many elderly Medicaid beneficiaries are "dual eligibles," or people who receive both Medicare and Medicaid. These people rely on Medicaid for assistance with Medicare's cost-sharing requirements and premiums, and sometimes for coverage of services not included in the Medicare benefits package (i.e., long-term care or prescription drugs).

Medicaid also covered 7.0 million blind and disabled persons in 1998. Most disabled persons are eligible for Medicaid because they receive SSI cash assistance, though some spend-down to eligibility. Some disabled Medicaid beneficiaries are also dual eligibles.

From the perspective of whom is served, Medicaid is predominantly a program assisting low-income families, but from the perspective of how Medicaid dollars are spent, Medicaid funds primarily serve the low-income aged and low-income disabled populations. Adults and children in low-income families make up nearly three quarters (73%) of enrollees, but account for only 25 percent of spending. In contrast, the elderly and disabled account for 27 percent of enrollees and the majority (67%) of spending, largely due to their intensive use of acute care services and the costliness of long-term care in institutional settings. In 1998, the average per capita cost for a child on Medicaid was $1,225, almost all of which went to basic acute care, while the corresponding figures for the disabled and elderly were $9,558 and $11,235, respectively, a significant portion of which went to long-term care services.

Although Medicaid is a key source of coverage for the low-income population, in 1998 it covered only about a quarter of nonelderly Americans with incomes below 200 percent of the poverty level. Limits on coverage were largely due to limits on eligibility, especially for adults, and enrollment obstacles for those who are eligible. The decoupling of Medicaid and welfare, as well as the 1997 State Children's Health Insurance Program to extend coverage additional low-income children, offers states new opportunities to extend Medicaid coverage to millions of low-income children and their parents. Many states, however, have yet to draw on this new flexibility to extend Medicaid.

Covered Services

Medicaid covers a broad range of services with nominal, if any, cost sharing by beneficiaries. Every individual entitled to Medicaid is guaranteed a minimum package of federally mandated services, including:

• Inpatient and outpatient hospital care
• Physician, midwife, and certified nurse practitioner services
• Laboratory and X-ray services
• Nursing home care and home health care

• Early and periodic screening, diagnosis, and treatment (EPSDT) for children under twenty-one years of age
• Family planning
• Rural health clinic/federally qualified health center services

States also have the option to cover additional services and still receive federal matching funds. Commonly offered services include prescription drugs, clinic services, case management, hearing aids, dental care, and intermediate care facilities for the mentally retarded (ICF/MR).

Because they are so costly, long-term care services account for a significant amount of Medicaid spending. Of the $169.3 billion spent in 1998, 38 percent was spent on long-term care services, primarily nursing home care. Acutecare services were about half (53%) of total spending, with nearly half of all acute-care spending allocated for premiums to managed care organizations (MCOs). About 9 percent of Medicaid spending does not go directly to benefits for enrollees, but provides supplemental payments for hospitals with a disproportionately large population of indigent patients; these are called disproportionate share hospital payments (DSH). These additional payments are intended to enable these hospitals to offset some of the costs of providing services to uninsured patients.

Care Delivery

Traditionally, Medicaid services have been delivered on a fee-for-service basis. Beginning in the 1990s, however, many states began to look to managed care as a model of service delivery in an effort to decrease costs and emphasize primary care and care coordination. Medicaid managedcare models range from health maintenance organizations (HMOs) that use prepaid capitated contracts to loosely structured networks that contract with selected providers for discounted services and use gatekeeping to control utilization.

States initially targeted low-income families for managed-care enrollment, but efforts to enroll aged or disabled beneficiaries increased in the late 1990s. In 1997, states were given more latitude in using Medicaid managed care under the Balanced Budget Act (BBA) of 1997, including the authority to mandate managed-care enrollment for most Medicaid populations. AS of June 1999,17.8 million Medicaid beneficiaries—over half of all Medicaid beneficiaries—were enrolled in managed care, a sixfold increase from the 2.7 million enrolled in 1991.

States may also seek waivers of federal Medicaid rules to design new service delivery models for Medicaid beneficiaries. Home and community-based service (HCBS) waivers (also called 1915(c) waivers) are often used by states to deliver targeted community-based care for frail elderly or disabled individuals. Although all states have such waivers, the population served remains small.

Trends in Enrollee and Expenditure Growth

Medicaid enrollment rose dramatically in the early 1990s, peaking at 41.7 million beneficiaries in 1995. This growth was mostly attributable to expanded coverage of low-income pregnant women and young children and increases in the number of blind and disabled beneficiaries. However, from 1995 to 1998, enrollment declined, especially for low-income adults and children eligible for Medicaid based on receipt of cash assistance under welfare programs, due in part to state and federal changes in welfare and immigration policy.

During the early 1990s, Medicaid expenditures grew nearly 30 percent annually, due to a combination of health care inflation, state use of alternative financing mechanisms, and an increase in enrollment. Only a small fraction of spending growth was due to the expansions in coverage of low-income pregnant women and children. Legislation enacted to limit the states' capacity to raise funds through provider taxes and to limit DSH payments played a role in slowing Medicaid spending growth during these years. By 1995, growth in annual expenditures had dropped to under 10 percent, and it had nearly leveled off by 1998 rising less than 4 percent annually from 1995 to 1998.

Medicaid's Impact

Since the mid-1960s, Medicaid has been a major force in shaping health and long-term care services for the most vulnerable and needy Americans. In the year 2000, Medicaid covered more Americans than any other health insurer, accounted for 15 percent of the nation's spending on health care, and was the major source of federal financial assistance to the states, accounting for 40 percent of all federal grant-in-aid payments to states. It covers one-quarter of all American children, 40 percent of all births, and is the single largest source of public financing for HIV/AIDS (human immunodeficiency virus/acquired immunodeficiency syndrome) care. Medicaid is also the only significant public program providing financing for long-term care, covering 70 percent of nursing home residents and nearly half of nursing home costs nationwide. It has impacted every sector of health care in America, from hospital care to nonmedical support services.

More importantly, Medicaid has a significant impact on the individuals it serves. Before Medicaid, the poor saw providers less often than the nonpoor, and they faced serious financial burdens in obtaining care. Medicaid has reshaped the availability and provision of care to the poor, raising access to levels similar to those with private coverage. In contrast, poor Americans who do not have Medicaid coverage continue to face significant barriers to care.

(SEE ALSO: Access to Health Services; Medicare; National Health Systems; Poverty and Health; Uninsurance)

Bibliography

Coughlin, T. A.; Ku, L..; and Holahan, J. (1994). Medicaid Since 1980. Washington, DC: The Urban Institute Press.

Hurley, R.; Freund, D.; and Paul, J. (1993). Managed Care in Medicaid: Lessons for Policy and Program Design. Chicago: The Health Administration Press.

Iglehart, J. (1994). "The American Health Care System—Medicaid." New England Journal of Medicine 340(5): 403–408.

—— (1995). "Medicaid and Managed Care." New England Journal of Medicine 332(25):1727–1731.

Kaiser Commission on Medicaid and the Uninsured (1999). Medicaid: A Primer. Washington, DC: The Kaiser Family Foundation.

Lillie-Blanton, M.; Martinez, R. M.; Lyons, B.; and Rowland, D., eds. (1999). Access to Health Care: Promises and Prospects for Low-Income Americans. Washington, DC: The Kaiser Family Foundation.

Riley, T. (1995). "Medicaid: The Role of the States." Journal of the American Medical Association 274(3):267–270.

Rogers, D. E.; Blendon, R. J.; and Moloney, T. W. (1982). "Who Needs Medicaid?" New England Journal of Medicine 307(1):13–18.

Rowland, D. (1995). "Medicaid at 30." Journal of the American Medical Association 274(3):271–273.

Rowland, D.; Salganicoff, A.; and Keenan, P. S. (1999). "The Key to the Door: Medicaid's Role in Improving Health Care for Women and Children." Annual Review of Public Health 20:403–426.

— DIANE ROWLAND; RACHEL GARFIELD

Medicaid, a program of publicly funded health insurance for the poor, was established under the Social Security Amendments of 1965. Health insurance was excluded from the original Social Security Act of 1935 because of the opposition of the medical profession and private insurance interests. Similar pressure kept the program from being enacted during the 1940s and 1950s. Public support for the concept grew during these years, however, leading to the Kerr-Mills Act of 1960, which provided federal support for state medical programs serving the aged poor.

By 1965, there was a growing consensus that a broader program was needed, with a stronger federal role and wider eligibility. Thus, when the Medicare legislation creating health insurance for the elderly and the disabled was being worked out, Senator Wilbur Mills added another section establishing Medicaid, a similar program for the poor of all ages. Medicaid was designed to serve both those eligible for public assistance and those whose incomes fell just above that level but were judged to be "medically indigent." Like Medicare, Medicaid permits those who are eligible to purchase health care from the same hospitals and physicians as the general public, with the fees paid by the program. Unlike Medicare, however, which is run by the federal government, Medicaid is administered by the individual states, with a combination of state and federal funding.

Medicaid was passed by Congress with little debate, but it has developed into a highly important aspect of the nation's social welfare system. Program data show that millions of poor people have gained access to regular health care because of Medicaid. The program has weaknesses, however, including the wide variation in the quality and range of services in the different states. Furthermore, since the program was designed to have recipients purchase their health care in the private market at whatever fee the providers customarily charge, Medicaid has had little control over the cost of the services given to its clients. When health-care costs soared during the 1970s and 1980s, so did the Medicaid budgets. Various efforts have been made at the state and federal levels to limit eligibility, regulate providers' fees, and restrict the range of services covered, but program costs remain a major concern. In spite of these problems, however, Medicaid represents a historic step forward in America's system of services for the poor.

See also Medicine.

A joint federal-state program that provides health care insurance to low-income persons.

Medicaid was enacted in 1965 as an amendment to the Social Security Act of 1935 (title XIX, 42 U.S.C.A. § 1396), entitling low-income persons to medical care. The program is a joint federal-state endeavor, with the federal government providing money to the states, which provide additional financing and administer medical programs for the poor that satisfy federal standards. Medicaid has become a major social welfare program. By 1995 thirty-four million people were covered by Medicaid, including seventeen million children.

Before 1965 a patchwork of programs financed by state and local governments, along with charities and community hospitals, provided indigent persons with limited health care. Most of these programs provided emergency health care services. President Lyndon B. Johnson supported Medicaid as well as Medicare legislation for retired persons in 1965. The enactment of Medicaid meant that persons who met federal financial eligibility requirements were entitled to health care.

Medicaid furnishes at least five general categories of treatment: inpatient hospital services, outpatient hospital services, laboratory and X-ray services, skilled nursing home services, and physicians' services. Generally each of these services is available to treat conditions that cause acute suffering, endanger life, result in illness or infirmity, interfere with the capacity for normal activity, or present a significant handicap. In addition, all states provide eye and dental care, and prescription drugs. Almost all states provide physical therapy, hospice care, and rehabilitative services.

Medicaid is a "vendor" plan because payment is made directly to the vendor (the person or entity that provides the services) rather than to the patient. Only approved nursing homes, physicians, and other providers of medical care are entitled to receive Medicaid payments for their services. Since the early 1970s, rising medical costs have placed financial pressures on the Medicaid program. Consequently, health care providers are not fully reimbursed for the services they provide to Medicaid patients. Because of lower reimbursement payments, one-third of physicians limit the number of Medicaid patients they see, and one-quarter of them refuse to accept any Medicaid patients.

The federal government, through statutes and regulations, has enacted an increasing number of criteria for the states to follow in administering the Medicaid program. For example, from 1987 to 1992, the federal government imposed thirty mandates on states that related to eligibility, reimbursement, and services. The intent of these mandates was to reduce variations among the states and to create more consistency in the coverage to low-income persons.

Under federal law states cannot reduce other welfare benefits people receive when they become eligible for Medicaid. State plans cannot impose a citizenship or residency requirement other than requiring that an applicant be a resident of the state. No age requirement exists, and everyone receiving welfare may apply for Medicaid. People who are "medically needy" because they are unable to cover costs for their medical care are also eligible, even if their incomes or resources exceed the level that would qualify them for welfare. Beginning in 1988, Medicaid was extended to the "working poor" — low-income persons who have jobs with no health coverage.

When Medicaid began, persons who were eligible had the right to select their own doctors, hospitals, or other medical facilities. Because of skyrocketing medical expenditures, almost all states have received waivers from the federal government concerning the choice of physician. These states now direct most of their Medicaid clients to private, managed care programs. Managed care is a general term that refers to health plans that attempt to control the cost and quality of care by coordinating medical and other health-related services.

The federal government has also granted waivers to states that prefer to pay for home and community care for elderly beneficiaries who otherwise would end up in nursing homes. This type of care is less expensive than nursing home care and allows state funds to be stretched further.

The federal government reimburses states based mainly on their per capita income. States with high per capita incomes, such as New York and Illinois, receive fifty cents from the federal government for every dollar they spend on Medicaid. Poorer states receive more, with Mississippi receiving reimbursement of 79 percent. The average reimbursement level is 57 percent.

Medicaid fraud has plagued the program. The size and complexity of the system, with each state administering Medicaid differently, create opportunity for health care providers and state employees to engage in abuse. It is estimated that 10 percent of Medicaid expenditures are paid on fraudulent claims by vendors. Relatively little fraud is attributable to individuals who provide false information to receive Medicaid benefits.

Another problem for Medicaid has been the growing number of elderly middle-class persons who divest their assets, usually to their children, to meet the Medicaid financial guidelines and qualify for state-paid nursing home care. This results in cases where the truly needy cannot find a bed in a nursing home. In addition, the divestiture of assets imposes additional financial pressures on a program that already has difficulty meeting the demands of the truly needy. If an individual or couple gives away or sells a resource at less than fair market value the Social Security Administration must report such a transfer to the state Medicaid agency. A transfer of assets may result in a period of ineligibility for certain Medicaid-covered nursing home services.

The seriousness of these fraudulent transfers led Congress in 1996 to make a person criminally liable who "knowingly and willfully disposes of assets (including by any transfer in trust) in order for an individual to become eligible for medical assistance" (42 U.S.C.A. § 1320a-7b(a)). A person convicted of this offense may be fined $25,000 and imprisoned for five years.

The increase in state and federal expenditures on Medicaid and in federal mandates to states on administration of the program have led to calls for reform. Reform efforts, which have been based on the payment to the states of block grants for medical assistance, have been unsuccessful.

See: health care law; health insurance.

A state and federally funded program that reimburses healthcare providers for care given to qualifying people who cannot pay for their medical expenses.

Not to be confused with Medicare.

Centers for Medicare and Medicaid Services (Medicaid administrator) logo

Medicaid is the United States health program for eligible individuals and families with low incomes and resources. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states.^[1] Among the groups of people served by Medicaid are certain eligible U.S. citizens and resident aliens, including low-income adults and their children, and people with certain disabilities. Poverty alone does not necessarily qualify an individual for Medicaid.^[2] It is estimated that approximately 60 percent of poor Americans are not covered by Medicaid.^[3] Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States. Because of the aging Baby Boomer population, the fastest growing aspect of Medicaid is nursing home coverage.

Contents 1 History and participation 2 Comparisons with Medicare 3 Eligibility 3.1 Poverty 3.2 Categories 3.3 HIV 3.4 Recent changes 4 Budget 5 Important legislation 6 See also 7 References 8 Further reading 9 External links

History and participation

Health care in the United States
Public health care
Federal Employees Health Benefits Program Indian Health Service Medicaid Medicare Military Health System / TRICARE State Children's Health Insurance Program (SCHIP) Veterans Health Administration
Private health coverage
Blue Cross / Blue Shield Consumer-driven health care Flexible spending account (FSA) Health reimbursement account Health savings account High-deductible health plan (HDHP) Medical savings account Health maintenance organization (HMO) Managed care Medical underwriting Preferred provider organization (PPO)
Health care law
Emergency Medical Treatment and Active Labor Act (1986) Health Insurance Portability and Accountability Act (1996) Medicare Prescription Drug, Improvement, and Modernization Act (2003) Patient Safety and Quality Improvement Act (2005)
State/municipal level reform
Healthy Howard Healthy San Francisco Massachusetts health care reform Oregon Health Plan
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Medicaid was created on July 30, 1965, through Title XIX of the Social Security Act. Each state administers its own Medicaid program while the federal Centers for Medicare and Medicaid Services (CMS) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards.

Each state may have its own name for the program. Examples include "Medi-Cal" in California, "MassHealth" in Massachusetts, "Oregon Health Plan" in Oregon, and "TennCare" in Tennessee. States may bundle together the administration of Medicaid with other separate programs such as the State Children's Health Insurance Program (SCHIP), so the same organization that handles Medicaid in a state may also manage those additional programs. Separate programs may also exist in some localities that are funded by the states or their political subdivisions to provide health coverage for indigents and minors.

State participation in Medicaid is voluntary; however, all states have participated since 1982 when Arizona formed its Arizona Health Care Cost Containment System (AHCCCS) program. In some states Medicaid is subcontracted to private health insurance companies, while other states pay providers (i.e., doctors, clinics and hospitals) directly.

Some states have incorporated the use of private companies to administer portions of their Medicaid benefits. These programs, typically referred to as Medicaid managed care, allow private insurance companies or health maintenance organizations to contract directly with a state Medicaid department at a fixed price per enrollee. The health plans then enroll eligible individuals into their programs and become responsible for assuring Medicaid benefits are delivered to eligible beneficiaries.

Also included in the Social Security program under Medicaid are dental services. These dental services are an optional service for adults above the age of 21; however, this service is a requirement for those eligible for Medicaid and below the age of 21.^[4] Minimum services include pain relief, restoration of teeth and maintenance for dental health. Early and Periodic Screening, Diagnostic and Treatment (EPSDT) is a mandatory Medicaid program for children that aims to focus on prevention on early diagnosis and treatment of medical conditions.^[4] Oral Screenings are not required for EPSDT recipients and they do not suffice as a direct dental referral. If a condition requiring treatment is discovered during an oral screening, the state is responsible for taking care of this service, regardless if it is covered on that particular Medicaid plan. ^[5]

The Medicaid Drug Rebate Program was created by the Omnibus Reconciliation Act of 1990. This act helped to add Section 1927 to the Social Security Act of 1935 which became effective on January 1, 1991. This program was formed due to the costs that Medicaid programs were paying for outpatient drugs at their discounted prices. ^[6]

The Omnibus Reconciliation Act of 1993 (OBRA 93') amended Section 1927 of the Act as it brought changes to the Medicaid Drug Rebate Program. ^[6]

Comparisons with Medicare

Medicare is an entitlement program funded entirely at the federal level.^[7] It is a social insurance focusing primarily on the older population. As stated in the CMS website,^[8] Medicare is a health insurance program for people age 65 or older, people under age 65 with certain disabilities, and people of all ages with end stage renal disease. The Medicare Program provides a Medicare part A which covers hospital bills, Medicare Part B which covers medical insurance coverage, and Medicare Part D which covers prescription drugs.

Medicaid is a program that is not solely funded at the federal level. States provide up to half of the funding for the Medicaid program. In some states, counties also contribute funds. Unlike the Medicare entitlement program, Medicaid is a means-tested, needs-based social welfare or social protection program rather than a social insurance program. Eligibility is determined largely by income. The main criterion for Medicaid eligibility is limited income and financial resources, a criterion which plays no role in determining Medicare coverage. Medicaid covers a wider range of health care services than Medicare.

Some individuals are eligible for both Medicaid and Medicare (also known as Medicare dual eligibles).^[9] In 2001, about 6.5 million Americans were enrolled in both Medicare and Medicaid.

Eligibility

Medicaid is a joint federal-state program that provides health insurance coverage to certain categories of low-income individuals, including children, pregnant women, parents of eligible children, and people with disabilities. Medicaid was created to help low-income individuals who fall into one of these eligibility categories "pay for some or all of their medical bills."^[10] Medicaid helps eligible individuals who have little or no medical insurance. While Congress and the Centers for Medicare and Medicaid Services (CMS) set out the main rules under which Medicaid operates, each state runs its own program. Under certain circumstances, any category of applicant may be denied coverage. As a result, the eligibility rules differ significantly from state to state, although all states must follow the same basic framework.

Poverty

Having a limited income is one of the primary requirements for Medicaid eligibility, but poverty alone does not qualify a person to receive Medicaid benefits unless they also fall into one of the defined eligibility categories.^[2] According to the CMS website, "Medicaid does not provide medical assistance for all poor persons. Even under the broadest provisions of the Federal statute (except for emergency services for certain persons), the Medicaid program does not provide health care services, even for very poor persons, unless they are in one of the designated eligibility groups."^[2]

Categories

There are a number of Medicaid eligibility categories; within each category there are requirements other than income that must be met. These other requirements include, but are not limited to, age, pregnancy, disability, blindness, income and resources, and one's status as a U.S. citizen or a lawfully admitted immigrant.^[11] Special rules exist for those living in a nursing home and disabled children living at home. A child may be covered under Medicaid if she or he is a U.S. citizen or a permanent resident. A child may be eligible for Medicaid regardless of the eligibility status of his or her parents or guardians. Thus, a child can be covered by Medicaid based on his or her individual status even if his or her parents are not eligible. Similarly, if a child lives with someone other than a parent, he or she may still be eligible based on his or her individual status.^[12]

HIV

Medicaid provides the largest portion of federal money spent on health care for people living with HIV/AIDS. Typically, low income people who are HIV positive must progress to AIDS before they can qualify under the "disabled" category(T-cell count drops below 200). More than half of people living with AIDS in the US are estimated to receive Medicaid payments. Two other programs that provide financial assistance to people living with HIV/AIDS are the Social Security Disability Insurance (SSDI) and the Supplemental Security Income. However, the Medicaid eligibility policy contrasts with the Journal of the American Medical Association (JAMA) guidelines which recommend therapy for all patients with T-cell counts of 350 or less, or in certain patients even higher. Many patients cannot afford expensive medicines without Medicaid help.

Recent changes

Both the federal government and state governments have made changes to the eligibility requirements and restrictions over the years. Most recently, the Deficit Reduction Act of 2005 (DRA) (Pub.L. No. 109-171) significantly changed the rules governing the treatment of asset transfers and homes of nursing home residents.^[13] The implementation of these changes will proceed state-by-state over the next few years.

The DRA now requires that anyone seeking Medicaid must produce documents to prove that he or she is a United States citizen or resident alien.

The DRA created a five-year "look-back period." That means that any transfers without fair market value (gifts of any kind) made by the Medicaid applicant during the preceding five years are penalizable, dollar for dollar. All transfers made during the five year look-back period are totaled, and the applicant is penalized that amount after having already dropped below the Medicaid asset limit. This means that after dropping below the asset level ($2,000 limit in most states), the Medicaid applicant then has to re-pay all transfers during the preceding five years by private-paying for nursing home costs. Since the person has less than $2,000, there is no source of funds to pay the penalty. Elders who gift or transfer assets can be caught in the situation of having no money but still not being eligible for Medicaid.

Medicaid does not pay benefits to individuals directly; Medicaid sends benefit payments to health care providers. In some states Medicaid beneficiaries are required to pay a small fee (co-payment) for medical services.^[11]

Budget

Unlike Medicare, which is solely a federal program, Medicaid is a joint federal-state program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive matching funds and grants. The federal matching formula is different from state to state, depending on each state's poverty level. The wealthiest states only receive a federal match of 50% while poorer states receive a larger match.

Medicaid funding has become a major budgetary issue for many states over the last few years, with states, on average, spending 16.8% of state general funds on the program. If the federal match expenditure is also counted, the program, on average, takes up 22% of each state's budget.^{[14] [15]} According to CMS, the Medicaid program provided health care services to more than 46.0 million people in 2001.^[16][17] In 2002, Medicaid enrollees numbered 39.9 million Americans, the largest group being children (18.4 million or 46 percent)^{[citation needed]}. Some 43 million Americans were enrolled in 2004 (19.7 million of them children) at a total cost of $295 billion. In 2008, Medicaid provided health coverage and services to approximately 49 million low-income children, pregnant women, elderly persons, and disabled individuals. Federal Medicaid outlays were estimated to be $204 billion in 2008. ^[18]

Medicaid payments currently assist nearly 60 percent of all nursing home residents and about 37 percent of all childbirths in the United States. The Federal Government pays on average 57 percent of Medicaid expenses.

Medicaid planners typically advise retirees and other individuals facing high nursing home costs to adopt strategies that will protect their financial assets in the event of nursing home admission. State Medicaid programs do not consider the value of one's home in calculating eligibility, therefore it is often recommended that retirees pursue home ownership. By adopting the recommended strategies, many seniors hope they will quickly qualify for Medicaid benefits if the need for long-term care arises.

During the 1990s, many states received waivers from the Federal government to create Medicaid managed care programs. Under managed care, Medicaid recipients are enrolled in a private health plan, which receives a fixed monthly premium from the state. The health plan is then responsible for providing for all or most of the recipient's healthcare needs. Today, all but a few states use managed care to provide coverage to a significant proportion of Medicaid enrollees. Nationwide, roughly 60% of enrollees are enrolled in managed care plans.^[19] Core eligibility groups of poor children and parents are most likely to be enrolled in managed care, while the aged and disabled eligibility groups more often remain in traditional "fee for service" Medicaid.

Some states operate a program known as the Health Insurance Premium Payment Program (HIPP). This program allows a Medicaid recipient to have private health insurance paid for by Medicaid. As of 2008 relatively few states had premium assistance programs and enrollment was relatively low. Interest in this approach remained high, however.^[20]

On November 25, 2008, a new federal rule was passed that allows states to charge premiums and higher co-payments to Medicaid participants.^[21] This rule will enable states to take in greater revenues, limiting financial losses associated with the program. Estimates figure that states will save $1.1 billion while the federal government will save nearly $1.4 billion. However, this means that the burden of financial responsibility will be placed on 13 million Medicaid recipients who will face a $1.3 billion increase in co-payments over 5 years.^[22] The major concern is that this rule will create a disincentive for low-income people to seek healthcare. It is possible that this will force only the sickest participants to pay the increased premiums and it is unclear what long term effect this will have on the program.

Important legislation

• 1965 PL 89-97 Medicaid
• 1997 PL 105-33 Balanced Budget Act (Children's Health Insurance Program)
• 1990 OBRA Federal legislation: the beginnings of the Health Insurance Premium Payment Program (HIPP), under the George H. W. Bush Administration
• 1993 Medicaid Estate Recovery Mandate requiring states to sue the estate of decedents for medical care costs paid by Medicaid^[23]

See also

• Health insurance in the United States
• State Children's Health Insurance Program (S-CHIP)
• United States National Health Care Act
• Medicaid managed care

References

1. ^ Medicaid General Information from the Centers for Medicare and Medicaid Services (CMS) website
2. ^ ^{a b c} Overview - What is Not Covered, U.S. Department of Health & Human Services
3. ^ Unsettling Scores: A Ranking of State Medicaid Programs, P. 15
4. ^ ^{a b} Medicaid Dental Coverage Overview
5. ^ http://www.cms.hhs.gov/MedicaidDentalCoverage/Downloads/dentalguide.pdf
6. ^ ^{a b} Overview
7. ^ Medicare.gov - Long-Term Care
8. ^ Overview
9. ^ Overview
10. ^ "Medicaid Eligibility: Overview," from the Centers for Medicare and Medicaid Services (CMS) website
11. ^ ^{a b} Overview
12. ^ http://www.cms.hhs.gov/MedicaidEligibility/Downloads/MedicaidataGlance05.pdf
13. ^ http://www.cms.hhs.gov/NewFreedomInitiative/downloads/LTC%20Roadmap%20to%20Reform.pdf
14. ^ Microsoft Word - Final Text.doc
15. ^ "Medicaid and State Budgets: Looking at the Facts", Georgetown University Center for Children and Families, May 2008.
16. ^ CMS, Medicaid and Medicare Summaries
17. ^ CMS, Medicaid General Information
18. ^ "Budget of the United States Government, FY 2008", DEPARTMENT OF HEALTH AND HUMAN SERVICES, 2008.
19. ^ Overview
20. ^ Joan Alker, "CHOOSING PREMIUM ASSISTANCE: WHAT DOES STATE EXPERIENCE TELL US?," The Kaiser Family Foundation, 2008
21. ^ http://www.gpoaccess.gov/fr/ search: 42 CFR Parts 447 and 457
22. ^ New Medicaid Rules Allow States to Set Premiums and Higher Co-Payments - NYTimes.com
23. ^ "Medicaid Estate Recovery", "U.S. Department of Health and Human Services", April 2005

Further reading

• House Ways and Means Committee, "2004 Green Book - Overview of the Medicaid Program", United States House of Representatives, 2004.

External links

• CMS official web site.
  • Medicaid
    • Overview
  • Medicare
    • Medicare official web site for beneficiaries.
• Trends in Medicare, October 2006. Staff Paper of the Office of the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services
• Read Congressional Research Service (CRS) Reports regarding Medicaid
• "Medicaid Research" and "Medicaid Primer" from Georgetown University Center for Children and Families.
• Kaiser Family Foundation - Substantial resources on Medicaid including federal eligibility requirements, benefits, financing and administration.
  • "The Role of Medicaid in State Economies: A Look at the Research," Kaiser Family Foundation, April 2004
  • State Health Facts Data on health care spending, utilization, and insurance coverage, including details extensive Medicaid information.
• Coverage By State - Information on state health coverage, including Medicaid, by the Robert Wood Johnson Foundation & AcademyHealth.
• Medicaid information from Families USA
• Medicaid Reform - The Basics from The Century Foundation
• National Association of State Medicaid Directors Organization representing the chief executives of state Medicaid programs.
• Ranking of state Medicaid programs by eligibility, scope of services, quality of service and reimbursement from Public Citizen.
• Center for Health Care Strategies, CHCS Extensive library of tools, briefs, and reports developed to help state agencies, health plans and policymakers improve the quality and cost-effectiveness of Medicaid.
• Medicare Interactive - Medicare resource presented by the Medicare Rights Center

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