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Introduction to Medicaid

  • Created in 1965, Medicaid is a public insurance program that provides health coverage to low-income families and individuals, including children, parents, pregnant women, seniors, and people with disabilities; It is funded jointly by the federal government and the states. Each state operates its own Medicaid program within federal guidelines. Because the federal guidelines are broad, states have a lot of flexibility in designing and administering their programs. As a result, Medicaid eligibility and benefits can and often do vary widely from state to state.



    In 2018, Medicaid provided health coverage to 97 million low-income Americans over the course of the year. In any given month, Medicaid served 32 million children, 28 million adults (mostly in low-income working families), 6 million seniors and 9 million people with disabilities, according to estimates from the US Department of Budget's Office. Congress (CBO).


    Children make up more than two-fifths of Medicaid enrollees, but only one-fifth of Medicaid spending. Only a fifth of Medicaid enrollees are elderly or disabled, but because they need more (and more expensive) health care services, they account for almost half of Medicaid spending.


    Medicaid is sometimes confused with Medicare, the federally funded and administered health insurance program for people age 65 and older and some people with disabilities. And there is an overlap between the two programs: Nearly 10 million low-income seniors and people with disabilities, the so-called "dual eligibles," are enrolled in both Medicare and Medicaid.


    Medicaid is a countercyclical program: its enrollment expands to meet growing needs during an economic downturn, when people lose their jobs and job-based health coverage. During the Great Recession of 2007-09 and its aftermath, more than 10 million additional people, about half of them children, signed up for Medicaid. In addition, Medicaid enrollment will increase in the coming months due to the COVID-19 public health and economic crisis, preventing millions of people who lose their jobs or income from becoming uninsured.


    Who is eligible for Medicaid?


    Medicaid is an "entitlement" program, which means that anyone who meets the eligibility rules has the right to enroll in Medicaid coverage. It also means that states have guaranteed federal financial support for part of the cost of their Medicaid programs.


    To receive federal funds, states must cover certain "mandatory" populations:


    children up to age 18 in families with income below 138 percent of the federal poverty line ($29,974 for a family of three in 2020);

    people who are pregnant and have income below 138 percent of the poverty line;

    certain very low-income parents or caregivers; Y

    most seniors and people with disabilities who receive cash assistance through the Supplemental Security Income (SSI) program.

    States may also receive federal Medicaid funds to cover “optional” populations. These include: people in the groups listed above whose income is above the limits for "mandatory" coverage; Seniors and people with disabilities who do not receive SSI and whose income is below the poverty line; people with “medical need” (those whose income exceeds the state's regular Medicaid eligibility limit but who have high medical expenses, such as nursing home care, that reduce their disposable income below the eligibility limit) and others people with higher incomes who need long-term care. term services and supports; and, thanks to the Affordable Care Act (ACA), non-disabled adults with incomes below 138 percent of the poverty line, including those without children. The ACA intended to extend coverage to all of those adults, but a 2012 Supreme Court decision gave states the option to expand their programs.


    Not everyone with low income is eligible for Medicaid. In the 15 states that have not implemented the Medicaid ACA expansion (as of April 2020), adults age 21 and older are generally not eligible for Medicaid no matter how low their income, unless they are pregnant, caring for children , elderly or have a disability. And, in the typical no-expansion state, even parents are ineligible if their income is just above 42 percent of the poverty line ($9,122 for a family of three).


    Also, many people who are not US citizens are not eligible for Medicaid despite having legal immigration status. This group includes people with temporary protected status who have been allowed by the federal government to live in the country for humanitarian reasons and people who have been granted temporary permission to come to the United States for educational purposes, travel, or work in a variety of fields, among others. Also, lawful permanent residents (often called green card holders) cannot enroll in Medicaid for the first five years, even if they meet all eligibility requirements. (States have the option to extend eligibility to all lawfully present children and pregnant women without a five-year wait.)


    How did Medicaid change the Affordable Care Act?


    Medicaid plays an even bigger role in insuring low-income Americans because of the Affordable Care Act. As noted, the ACA provides coverage for poor and low-income adults by expanding Medicaid eligibility to 138 percent of the poverty line. As of April 2020, 35 states plus the District of Columbia implemented Medicaid expansion to serve low-income and poor adults. By 2029, 14 million more low-income adults will have enrolled in Medicaid and have access to affordable comprehensive health coverage thanks to the ACA, according to CBO estimates.


    The expansion is a very good financial deal for the states. After taking over all expansion costs for the first three years, the federal government now pays 90 percent of expansion costs permanently. And by greatly reducing the number of uninsured people, the expansion will save states and localities substantial sums in unpaid care for the uninsured. Some expanding states have also seen savings in mental health programs, criminal justice systems, and other budget areas.


    What services does Medicaid cover?


    Federal rules require state Medicaid programs to cover certain "mandated" services, such as hospital and medical care, laboratory and X-ray services, home health services, and adult nursing facility services. States are also required to provide a more comprehensive set of services, known as the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) benefit, for children under age 21.


    States can, and all do, cover certain additional services as well. All states cover prescription drugs and most cover other common optional benefits including dental care, vision services, hearing aids, and personal care services for frail seniors and people with disabilities. These services, while considered “optional” because states are not required to provide them, are critical to meeting the health needs of Medicaid recipients.


    How much does Medicaid cost? How is it financed?


    Together, states and the federal government spent about $630 billion on Medicaid services in fiscal year 2018. State policies have a substantial impact on how much the federal government spends on Medicaid, not just because states are guaranteed funding federal Medicaid equivalents for the costs of covered services. services provided to eligible individuals, but also because states have broad discretion to determine who is eligible, what services they will cover, and how much they will pay for covered services, as discussed above.


    How effective is Medicaid?


    Medicaid is very effective in providing health insurance coverage to the most vulnerable. Since the ACA's major coverage expansions went into effect in 2014, Medicaid has helped reduce the number of uninsured people from 45 million to 29 million. If there were no Medicaid, most of the tens of millions of Medicaid enrollees would be uninsured. This is because private health insurance is generally not an option for Medicaid recipients: many low-income workers do not have access to coverage for themselves and their families through their jobs and cannot afford to purchase coverage on the marketplace. individual. The creation of Medicaid, subsequent expansions of Medicaid coverage for children and pregnant women in the 1980s and 1990s, and the more recent expansion of Medicaid coverage for low-income adults under the ACA have all led to declines. significant in the proportion of Americans without health services. insurance coverage.


    Perhaps most surprising, several rigorous studies have found that Medicaid expansion saves lives. One study estimates that the expansion has saved more than 19,000 lives among the elderly alone, while state decisions not to expand cost more than 15,000 lives.

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