Research / Statistics
Medicaid is a means-tested entitlement program that in FY2012 financed the delivery of primary and acute medical services as well as long-term services and supports to an estimated 57 million people, and cost states and the federal government $431 billion. In comparison, the Medicare program provided health care benefits to nearly 50 million seniors and certain individuals with disabilities in FY2012 at a cost of roughly $557 billion. Because Medicaid represents a large component of federal mandatory spending, Congress is likely to continue its oversight of Medicaid's eligibility, benefits, and costs.
Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and U.S. territories choose to participate. In order to participate in Medicaid, the federal government requires states to cover certain mandatory populations and benefits, but the federal government also allows states to cover other optional populations and services. Due to this flexibility, there is substantial variation among the states in terms of factors such as Medicaid eligibility, covered benefits, and provider payment rates. In addition, there are several waiver and demonstration authorities that allow states to operate their Medicaid program outside of federal rules.
Historically, Medicaid eligibility has generally been limited to low-income children, pregnant women, parents of dependent children, the elderly, and individuals with disabilities; however, the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) included the ACA Medicaid expansion, which expands Medicaid eligibility to individuals under the age of 65 with income up to 133% of the federal poverty level (FPL) (effectively 138% FPL) at state option.
The ACA makes a number of other changes, which together represent the most significant reform to the Medicaid program since its establishment in 1965. In addition to the ACA Medicaid expansion, the ACA also expands Medicaid eligibility for children ages 6 to 18 and former foster care children; transitions to the modified adjusted gross income (MAGI) counting methodology for most nonelderly Medicaid enrollees; requires alternative benefit plan (ABP) coverage for certain Medicaid enrollees; provides enhanced federal matching funds for the ACA Medicaid expansion; increases uniformity among Medicare, Medicaid, and the State Children’s Health Insurance Program (CHIP) program integrity activities; and provides the Centers for Medicare & Medicaid Services (CMS) with the ability to test methods to improve coordination of care for dual-eligible beneficiaries, among a number of other changes.
This report describes the basic elements of Medicaid, focusing on who is eligible, what services are covered, how enrollees share in the cost of care, how the program is financed, and how providers are paid. The report also explains waivers, program integrity activities, and the dual-eligible population. In addition, the report describes the following selected issues: the ACA Medicaid expansion, the impact of the ACA health insurance annual fee on Medicaid, and the ACA maintenance of effort (MOE) with respect to Medicaid eligibility.