Medicaid

MEDICAID IS A U.S. program that pays for medical and health-related services for certain individuals and families with low incomes and resources. It does not provide medical assistance for all poor persons because the program is not based on income alone. Individuals must meet eligibility criteria to be enrolled in the program and fall within certain coverage categories. Medicaid is the largest source of funding for medical and health-related services for America's poorest people. In 2000 it provided coverage to approximately 46 million persons.

The program became law in 1965 with the passage of Title XIX of the Social Security Act. Jointly funded by the federal and state governments (including the District of Columbia and the Territories), the federal government ultimately oversees the program via the Centers for Medicare and Medicaid Services (CMS). This is accomplished through established guidelines, statutes, regulations, and policies.

The states have discretion in the application of the program so long as they operate within the federal rules. Each state establishes its own eligibility standards; determines the type, amount, duration, and scope of services; sets the rate of payment for services; and administers its own program.

In order for states to receive federal funds to support the Medicaid program, the states must provide Medicaid coverage for most individuals who receive federally assisted income maintenance payments (generally referred to as welfare), as well as for related groups not receiving cash payments. Beyond that, the rules for eligibility can be complex and vary a great deal from state to state. Administrative and definition differences in financial criteria are important because cost of living and wages differ throughout the country.

Without the allowance for geographical differences, an inequitable economic climate would be created by the use of one calculation throughout the United States. The states use a variety of methodology to create a determination threshold, and eligibility in one state does not automatically make a person eligible in another state if he or she changes residence.

In addition to the required coverage, most states have additional, optional programs to provide medical assistance for specified poor persons who do not qualify for the Medicaid program. These programs do not receive federal funding.

Medicaid should not be confused with Medicare, which is an entirely different program. Medicare is an entitlement program that provides hospital insurance and supplementary medical insurance to persons over the age of 65 and certain disabled persons. Some persons are eligible for both programs. When dually eligible, Medicare is the primary insurer and Medicaid helps pay for out-of-pocket medical expenses.