Medicaid

Centers for Medicare and Medicaid Services (Medicaid administrator) logo

Medicaid is the United States health program for eligible individuals and families with low incomes and resources. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states. Among the groups of people served by Medicaid are certain eligible U.S. citizens and resident aliens, including low-income adults and their children, and people with certain disabilities. Poverty alone does not necessarily qualify an individual for Medicaid. It is estimated that approximately 60 percent of poor Americans are not covered by Medicaid. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States. Because of the aging Baby Boomer population, the fastest growing aspect of Medicaid is nursing home coverage.

History and participation

Medicaid was created on July 30, 1965, through Title XIX of the Social Security Act. Each state administers its own Medicaid program while the federal Centers for Medicare and Medicaid Services (CMS) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards.

Each state may have its own name for the program. Examples include "Medi-Cal" in California, "MassHealth" in Massachusetts, "Oregon Health Plan" in Oregon, and "TennCare" in Tennessee. States may bundle together the administration of Medicaid with other separate programs such as the State Children's Health Insurance Program (SCHIP), so the same organization that handles Medicaid in a state may also manage those additional programs. Separate programs may also exist in some localities that are funded by the states or their political subdivisions to provide health coverage for indigents and minors.

State participation in Medicaid is voluntary; however, all states have participated since 1982 when Arizona formed its Arizona Health Care Cost Containment System (AHCCCS) program. In some states Medicaid is subcontracted to private health insurance companies, while other states pay providers (i.e., doctors, clinics and hospitals) directly.

Some states have incorporated the use of private companies to administer portions of their Medicaid benefits. These programs, typically referred to as Medicaid managed care, allow private insurance companies or health maintenance organizations to contract directly with a state Medicaid department at a fixed price per enrollee. The health plans then enroll eligible individuals into their programs and become responsible for assuring Medicaid benefits are delivered to eligible beneficiaries.

Also included in the Social Security program under Medicaid are dental services. These dental services are an optional service for adults above the age of 21; however, this service is a requirement for those eligible for Medicaid and below the age of 21. Minimum services include pain relief, restoration of teeth and maintenance for dental health. Early and Periodic Screening, Diagnostic and Treatment (EPSDT) is a mandatory Medicaid program for children that aims to focus on prevention on early diagnosis and treatment of medical conditions. Oral Screenings are not required for EPSDT recipients and they do not suffice as a direct dental referral. If a condition requiring treatment is discovered during an oral screening, the state is responsible for taking care of this service, regardless if it is covered on that particular Medicaid plan.

The Medicaid Drug Rebate Program was created by the Omnibus Reconciliation Act of 1990. This act helped to add Section 1927 to the Social Security Act of 1935 which became effective on January 1, 1991. This program was formed due to the costs that Medicaid programs were paying for outpatient drugs at their discounted prices.

The Omnibus Reconciliation Act of 1993 (OBRA 93') amended Section 1927 of the Act as it brought changes to the Medicaid Drug Rebate Program.

Comparisons with Medicare

Medicare is an entitlement program funded entirely at the federal level. It is a social insurance focusing primarily on the older population. As stated in the CMS website, Medicare is a health insurance program for people age 65 or older, people under age 65 with certain disabilities, and people of all ages with end stage renal disease. The Medicare Program provides a Medicare part A which covers hospital bills, Medicare Part B which covers medical insurance coverage, and Medicare Part D which covers prescription drugs.

Medicaid is a program that is not solely funded at the federal level. States provide up to half of the funding for the Medicaid program. In some states, counties also contribute funds. Unlike the Medicare entitlement program, Medicaid is a means-tested, needs-based social welfare or social protection program rather than a social insurance program. Eligibility is determined largely by income. The main criterion for Medicaid eligibility is limited income and financial resources, a criterion which plays no role in determining Medicare coverage. Medicaid covers a wider range of health care services than Medicare.

Some individuals are eligible for both Medicaid and Medicare (also known as Medicare dual eligibles). In 2001, about 6.5 million Americans were enrolled in both Medicare and Medicaid.

Eligibility

Medicaid is a joint federal-state program that provides health insurance coverage to certain categories of low-income individuals, including children, pregnant women, parents of eligible children, and people with disabilities. Medicaid was created to help low-income individuals who fall into one of these eligibility categories "pay for some or all of their medical bills." Medicaid helps eligible individuals who have little or no medical insurance. While Congress and the Centers for Medicare and Medicaid Services (CMS) set out the main rules under which Medicaid operates, each state runs its own program. Under certain circumstances, any category of applicant may be denied coverage. As a result, the eligibility rules differ significantly from state to state, although all states must follow the same basic framework.

Poverty

Having a limited income is one of the primary requirements for Medicaid eligibility, but poverty alone does not qualify a person to receive Medicaid benefits unless they also fall into one of the defined eligibility categories. According to the CMS website, "Medicaid does not provide medical assistance for all poor persons. Even under the broadest provisions of the Federal statute (except for emergency services for certain persons), the Medicaid program does not provide health care services, even for very poor persons, unless they are in one of the designated eligibility groups."

Categories

There are a number of Medicaid eligibility categories; within each category there are requirements other than income that must be met. These other requirements include, but are not limited to, age, pregnancy, disability, blindness, income and resources, and one's status as a U.S. citizen or a lawfully admitted immigrant. Special rules exist for those living in a nursing home and disabled children living at home. A child may be covered under Medicaid if she or he is a U.S. citizen or a permanent resident. A child may be eligible for Medicaid regardless of the eligibility status of his or her parents or guardians. Thus, a child can be covered by Medicaid based on his or her individual status even if his or her parents are not eligible. Similarly, if a child lives with someone other than a parent, he or she may still be eligible based on his or her individual status.

HIV

Medicaid provides the largest portion of federal money spent on health care for people living with HIV/AIDS. Typically, low income people who are HIV positive must progress to AIDS before they can qualify under the "disabled" category(T-cell count drops below 200). More than half of people living with AIDS in the US are estimated to receive Medicaid payments. Two other programs that provide financial assistance to people living with HIV/AIDS are the Social Security Disability Insurance (SSDI) and the Supplemental Security Income. However, the Medicaid eligibility policy contrasts with the Journal of the American Medical Association (JAMA) guidelines which recommend therapy for all patients with T-cell counts of 350 or less, or in certain patients even higher. Many patients cannot afford expensive medicines without Medicaid help.

Recent changes

Both the federal government and state governments have made changes to the eligibility requirements and restrictions over the years. Most recently, the Deficit Reduction Act of 2005 (DRA) (Pub.L. No. 109-171) significantly changed the rules governing the treatment of asset transfers and homes of nursing home residents. The implementation of these changes will proceed state-by-state over the next few years.

The DRA now requires that anyone seeking Medicaid must produce documents to prove that he or she is a United States citizen or resident alien.

The DRA created a five-year "look-back period." That means that any transfers without fair market value (gifts of any kind) made by the Medicaid applicant during the preceding five years are penalizable, dollar for dollar. All transfers made during the five year look-back period are totaled, and the applicant is penalized that amount after having already dropped below the Medicaid asset limit. This means that after dropping below the asset level ($2,000 limit in most states), the Medicaid applicant then has to re-pay all transfers during the preceding five years by private-paying for nursing home costs. Since the person has less than $2,000, there is no source of funds to pay the penalty. Elders who gift or transfer assets can be caught in the situation of having no money but still not being eligible for Medicaid.

Medicaid does not pay benefits to individuals directly; Medicaid sends benefit payments to health care providers. In some states Medicaid beneficiaries are required to pay a small fee (co-payment) for medical services.

Budget

Unlike Medicare, which is solely a federal program, Medicaid is a joint federal-state program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive matching funds and grants. The federal matching formula is different from state to state, depending on each state's poverty level. The wealthiest states only receive a federal match of 50% while poorer states receive a larger match.

Medicaid funding has become a major budgetary issue for many states over the last few years, with states, on average, spending 16.8% of state general funds on the program. If the federal match expenditure is also counted, the program, on average, takes up 22% of each state's budget. According to CMS, the Medicaid program provided health care services to more than 46.0 million people in 2001. In 2002, Medicaid enrollees numbered 39.9 million Americans, the largest group being children (18.4 million or 46 percent). Some 43 million Americans were enrolled in 2004 (19.7 million of them children) at a total cost of $295 billion. In 2008, Medicaid provided health coverage and services to approximately 49 million low-income children, pregnant women, elderly persons, and disabled individuals. Federal Medicaid outlays were estimated to be $204 billion in 2008.

Medicaid payments currently assist nearly 60 percent of all nursing home residents and about 37 percent of all childbirths in the United States. The Federal Government pays on average 57 percent of Medicaid expenses.

Medicaid planners typically advise retirees and other individuals facing high nursing home costs to adopt strategies that will protect their financial assets in the event of nursing home admission. State Medicaid programs do not consider the value of one's home in calculating eligibility, therefore it is often recommended that retirees pursue home ownership. By adopting the recommended strategies, many seniors hope they will quickly qualify for Medicaid benefits if the need for long-term care arises.

During the 1990s, many states received waivers from the Federal government to create Medicaid managed care programs. Under managed care, Medicaid recipients are enrolled in a private health plan, which receives a fixed monthly premium from the state. The health plan is then responsible for providing for all or most of the recipient's healthcare needs. Today, all but a few states use managed care to provide coverage to a significant proportion of Medicaid enrollees. Nationwide, roughly 60% of enrollees are enrolled in managed care plans. Core eligibility groups of poor children and parents are most likely to be enrolled in managed care, while the aged and disabled eligibility groups more often remain in traditional "fee for service" Medicaid.

Some states operate a program known as the Health Insurance Premium Payment Program (HIPP). This program allows a Medicaid recipient to have private health insurance paid for by Medicaid. As of 2008 relatively few states had premium assistance programs and enrollment was relatively low. Interest in this approach remained high, however.

On November 25, 2008, a new federal rule was passed that allows states to charge premiums and higher co-payments to Medicaid participants. This rule will enable states to take in greater revenues, limiting financial losses associated with the program. Estimates figure that states will save $1.1 billion while the federal government will save nearly $1.4 billion. However, this means that the burden of financial responsibility will be placed on 13 million Medicaid recipients who will face a $1.3 billion increase in co-payments over 5 years. The major concern is that this rule will create a disincentive for low-income people to seek healthcare. It is possible that this will force only the sickest participants to pay the increased premiums and it is unclear what long term effect this will have on the program.

Important legislation

• 1965 PL 89-97 Medicaid
• 1997 PL 105-33 Balanced Budget Act (Children's Health Insurance Program)
• 1990 OBRA Federal legislation: the beginnings of the Health Insurance Premium Payment Program (HIPP), under the George H. W. Bush Administration
• 1993 Medicaid Estate Recovery Mandate requiring states to sue the estate of decedents for medical care costs paid by Medicaid

See also

• Health insurance in the United States
• State Children's Health Insurance Program (S-CHIP)
• United States National Health Care Act
• Medicaid managed care

Further reading

• House Ways and Means Committee, "2004 Green Book - Overview of the Medicaid Program", United States House of Representatives, 2004.

External links

• CMS official web site.
  • Medicaid
    • Overview
  • Medicare
    • Medicare official web site for beneficiaries.
• Trends in Medicare, October 2006. Staff Paper of the Office of the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services
• Read Congressional Research Service (CRS) Reports regarding Medicaid
• "Medicaid Research" and "Medicaid Primer" from Georgetown University Center for Children and Families.
• Kaiser Family Foundation - Substantial resources on Medicaid including federal eligibility requirements, benefits, financing and administration.
  • "The Role of Medicaid in State Economies: A Look at the Research," Kaiser Family Foundation, April 2004
  • State Health Facts Data on health care spending, utilization, and insurance coverage, including details extensive Medicaid information.
• Coverage By State - Information on state health coverage, including Medicaid, by the Robert Wood Johnson Foundation & AcademyHealth.
• Medicaid information from Families USA
• Medicaid Reform - The Basics from The Century Foundation
• National Association of State Medicaid Directors Organization representing the chief executives of state Medicaid programs.
• Ranking of state Medicaid programs by eligibility, scope of services, quality of service and reimbursement from Public Citizen.
• Center for Health Care Strategies, CHCS Extensive library of tools, briefs, and reports developed to help state agencies, health plans and policymakers improve the quality and cost-effectiveness of Medicaid.
• Medicare Interactive - Medicare resource presented by the Medicare Rights Center