Medicaid

Title XIX, “Grants to States for Medical Assistance Programs,” also known as Medicaid, was created in Public Law 89-97, the Social Security Amendments of 1965. The Centers for Medicare and Medicaid Services (CMS), an agency in the U.S. Department of Health and Human Services (DHHS), has responsibility for the administration of the program. Medicaid, jointly funded by federal and state dollars, provides payments for medical services to over 40 million low-income individuals. In 2000, federal and state Medicaid expenditures amounted to $194.7 billion: $111.1 billion federal and $83.6 billion state funded. Federal expenditures have reached $85 billion during the first half of federal fiscal year (FFY) 2002. Medicaid is the largest single payer of long-term care services, providing over 44% of the funding, which in 2000 totaled $44.4 billion. Medicaid is the largest single payer of direct medical services to people living with AIDS, with expenditures estimated to total $7.7 billion in FFY 2002.

Medicaid evolved from two earlier federal grant programs. Federal matching funds were made available to states for payment of medical services provided to persons receiving public assistance in the Social Security[Page 358] Amendments of 1950. The 1960 Kerr-Mills legislation provided federal matching grants to states providing medical assistance to the indigent aged. Medicaid became a joint entitlement program between federal and state governments that provides federal matching dollars to states that provide medical services to low-income persons receiving welfare assistance, pregnant women and single parents with dependent children, the needy aged, blind, and disabled, and supplemental coverage for low-income Medicare beneficiaries. Federal statutes and policies establish broad guidelines within which each state determines the eligibility standards, type, amount, duration, and scope of services, payment rate for services, and program administration.

Eligibility determination is based on both financial and categorical requirements. Medicaid, a means-tested program, requires the individual to have low income and to meet certain asset and resource standards established by each state within federal guidelines. In 1965, eligibility was linked to receipt of Aid to Families with Dependent Children (AFDC), and in 1972, Supplemental Security Income (SSI) was added as a qualifying program. Later legislation has allowed the coverage of certain Medicaid beneficiary groups based solely on income and resources and not on receipt of cash assistance. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 replaced the AFDC cash assistance program with Temporary Assistance for Needy Families (TANF), a block grant program. PRWORA removed the automatic eligibility for Medicaid by TANF recipients but allowed families Medicaid coverage if they met AFDC requirements in effect before welfare reform, July 16, 1996.

Title XIX mandates the coverage of certain populations and allows the states the option of the inclusion of certain other groups. The groups that fall under the mandatory criteria known as the “categorically needy” include the following:

• AFDC-eligible individuals as of July 16, 1996
• Poverty-related groups: all pregnant women and children below the age of 6 years with incomes up to 133% of the federal poverty level (FPL)
• All children born after September 30, 1983, with incomes up to 100% of FPL
• Current and some former recipients of SSI
• Recipients of foster care and adoption assistance
• Certain Medicare beneficiaries

Low-income Medicare recipients that have limited resources may qualify for Medicaid benefits and are known as the “dually eligible.” If qualified for full Medicaid coverage, Medicare benefits are supplemented by the state' Medicaid program. Other Medicare recipients may receive certain Medicaid supplemental assistance in the following

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