Medicaid

Background

Medicaid, established as Title XIX of the 1965 Social Security Act, serves all categorically eligible beneficiaries. The program is part of President Lyndon B. Johnson's “Great Society” social welfare policy initiative; its enactment following several decades of debate over how to meet the healthcare needs of the vulnerable and elderly in the United States. Prior to Medicaid, healthcare services for those unable to afford them were provided through a patchwork of state and local programs, charities, and community hospitals. Currently, Medicaid provides healthcare to 19 percent of the U.S. population and is an integral component of the nation's rapidly changing health-care system. The exponential growth in healthcare costs, decline in employer-sponsored health insurance and the changing demographics of American society have further solidified its necessity.

Fundamentals of the Program

Medicaid is monitored by the federal Centers for Medicaid and Medicare Services (CMS) which establishes [Page 1077]the requirements for service delivery, quality assurance, funding, and eligibility standards. State participation is voluntary. Every state creates eligibility thresholds, benefits packages, and payment rates within the scope of broad federal guidelines. State Medicaid programs are distinct and often have their own program names (e.g., Medi-Cal in California, TennCare in Tennessee). States are reimbursed via block grants from the federal government, the rates of which vary by state ranging from 50 to 77 percent of states’ costs and are contingent on adherence to federal guidelines, including more than 60 federal statutory requirements.

Section 1115 of the Social Security Act provides the secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that promote the objectives of the Medicaid statute.

States may apply for a federal waiver to utilize innovative service delivery systems, expand eligibility to individuals, and/or provide services not otherwise covered under the Medicaid program. Projects are generally approved to operate for a five-year period and states may submit renewal requests to continue the project.

Medicaid Eligibility

Medicaid is a means-tested entitlement program; to qualify, individuals must meet both categorical and financial eligibility requirements. The CMS sets mandatory guidelines on eligibility criteria, while states have the authority to broaden eligibility beyond these minimum standards, mandatory and optional eligibility groups, respectively.

Federal law guarantees eligibility to Aid to Families with Dependent Children (AFDC)-eligible individuals as of July 16, 1996, poverty-related groups, children born after September 30, 1983, current and some former recipients of Supplemental Security Income (SSI), recipients of adoption and foster care assistance, special protected groups, and certain Medicare beneficiaries. Income eligibility requirements vary depending on which categorical criteria an individual meets. States can augment coverage for optional eligibility groups by including other “categorically needy” groups and by expanding the income requirements.

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