Medicaid

MEDICAID

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 It was originally enacted as a means of providing funds to help states provide health care for welfare recipients and has evolved into a program that finances care for more than one in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

Figure 1

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 (see Figure 1). 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

Figure 2

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.

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Author Info: DIANE ROWLAND, RACHEL GARFIELD, The Gale Group Inc., Macmillan Reference USA, New York, Gale Encyclopedia of Public Health, 2002

This feature is for informational purposes only and should not be used to replace the care and information received from your healthcare provider. Please consult a healthcare professional with any health concerns you may have.