Medicaid

Basic Concept:

• Founded in 1965, Medicaid is a joint state and federal program that provides medical services to low-income recipients.

Eligibility Requirements: 1

• Each state has a Medicaid program operating under federal guidelines

• All states are required to cover specific “mandatory” portions of the population such as:

  • Children ages 0-18 in families below 138 percent of the federal poverty line

  • Pregnant women with incomes below 138 percent of the poverty line

  • Each state can then choose whether or not to cover any other “optional” groups such as:

  • ”Medically needy” people who have high medical bills

  • Seniors and people with disabilities below the poverty line

  • Individuals with incomes above mandatory income limits

  • Because of this flexibility, individual's eligibility for Medicaid differs greatly in each state

Program Participants:

• According to the latest enrollment report (from April 2020 ), 65.6 million Americans are covered by Medicaid 2.

• Children are the largest group enrolled in Medicaid followed by adults, blind or disabled people, and the aged (see chart)

  • NOTE: The chart includes data from the Center on Budget and Policy Priorities. The categories represent the primary reason an individual is enrolled in Medicaid.

What Medicaid Covers: 3

• Medicaid funds go to health care providers that in turn cover Medicaid recipients

• Three-quarters of Medicaid funds pay for “acute-care services” such as hospital care and prescription drugs

• The remaining quarter of funds go to long term care institutions such as nursing homes

• Just like Medicaid’s eligibility requirements, states have the ability to choose which services Medicaid will cover as well as their duration and scope

  • All states must cover some mandatory services such as physician, midwife, and family planning services

  • States can choose whether or not to cover optional services such as dental care

  • Even if a state chooses to cover a service, it can limit how extensively it is covered

  • The result is major differences in coverage from state to state

Medicaid Expansion Under the Affordable Care Act:

• 37 states and the District of Columbia have expanded Medicaid as part of national health reform

  • These states cover non elderly adults with incomes below 138% of the poverty line

  • In the 14 other states, Medicaid is typically only available to working parents with incomes of just 44% of the poverty line 4.

  • States neglecting to expand Medicaid has led to people falling in the “Medicaid gap”

    • These are individuals who would have insurance if Medicaid were expanded

    • Without expansion, they have too much income to qualify for Medicaid in their state, but too little income to receive subsidies for health insurance from the Affordable Care Act

    • The federal government pays for 100% of the cost of expansion for the first three years

      • Federal funds will pay at least 90% of the costs of the expansion after this period

      • (See Affordable Care Act Factsheet for more information)

How Medicaid is Financed: 5

• The federal government and states spent $557 billion on Medicaid services in FY 2017

• 48% of Medicaid spending went towards the disabled and elderly despite these populations making up just 21% of Medicaid recipients

• The federal government pays a minimum of $1 for every $1 a state spends on Medicaid

• The Federal Medical Assistance Percentage (FMAP) is a formula that sets how much the federal government contributes to Medicaid in a state

  • In poorer states the FMAP is higher (up to 76% of the cost in a state in FY 2020)

  • On average, the federal government paid 64% of the cost per state in FY 2017

  • For Medicaid expansion to nonelderly adults below 138% of the poverty line, the federal government pays for 100% of the costs for the first three years

    • The federal government will pay at least 90% of the costs of the expansion after this three year period

Location

Federal Contribution to Medicaid(FY 2017)

State Contribution to Medicaid(FY 2017)

FMAP(FY 2020)

Montana 

80.0%

20.0%

64.78%

Washington DC

73.9%

26.1%

70%

Maryland

60.7%

39.3%

50%

Virginia

50.1%

49.9%

50%

Data comes from the Kaiser Family Foundation

• New York had the lowest rate of federal contribution to any state while Montana had the highest in FY 2017

• Because the federal government must pay at least $1 for every $1 spent by a state, 50% is the absolute lowest possible federal contribution to Medicaid in a state

Benefits of Medicaid:

• Medicaid provides health insurance to millions of people who otherwise would not receive care

• Medicaid expansion in 2014 has contributed to the number of uninsured Americans dropping from 45 million to 29 million 6.

• Medicaid is more cost efficient than private insurance companies due to lower payment rates to health care providers and much lower administrative costs

• Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services are mandatory

  • This ensures that Medicaid recipients under 21 get the necessary medical services

  • Medicaid covers 1 in 3 American children and covers over 60% of all births 7.

Shortcomings of Medicaid:

• Most legal immigrants cannot receive Medicaid for their first five years in the country.

• Differing eligibility requirements by state complicates Medicaid’s enrollment and payment

  • The 56 different programs that comprise Medicaid--one for each state and territory--leads to potential waste and unnecessary costs

  • The 14 states that have not expanded Medicaid leave millions of people uninsured

  • Generally, childless adults over the age of 21 who are not pregnant, elderly, or disabled are not eligible for Medicaid regardless of income level in these states

  • Even with Medicaid expansion, 27 million non elderly people do not have health insurance in the U.S.

  • Non-citizen immigrants, individuals who are eligible for Medicaid but did not sign up, and people who fall into the “Medicaid Gap” make up much of this group 8.

Endnotes

1. Information from the Center on Budget and Policy Priorities.

2. Statistic from Medicaid.gov.

3. Information from the Center on Budget and Policy Priorities.

4. Statistic from the Center on Budget and Policy Priorities.

5. Statistics from the Kaiser Family Foundation.

6. Statistic from the Center for Disease Control.

7. Statistic from the Kaiser Family Foundation.

8. Information from the Fiscal Times.