- Brief Overview: Medicaid is a joint federal-state program that pays for health care services for low-income Americans.
- Unlike Medicare, which is available without regard to income, Medicaid is designed primarily for people who have incomes at or below the Federal Poverty Level (FPL).
- To qualify for Medicaid, beneficiaries must also fall within one of the several dozen specific eligibility categories that divide into three general groups: (1) families with children, (2) elderly people, and (3) people with mental or physical disabilities.
- While the Federal government usually pays more than half the cost of Medicaid services, the program itself is administered by the States—subject to minimum Federal requirements on basic benefits that must be provided.
- Medicaid pays for a broad range of services with an emphasis on: comprehensive care for children; mental health services; and long-term care for the elderly and disabled.
- As a result of the Affordable Care Act (ACA) and a subsequent Supreme Court ruling, each state has the option to expand eligibility for Medicaid to all nonelderly adults with income below 138 percent of the federal poverty guidelines (commonly referred to as the federal poverty level, or FPL). The people who will be newly eligible for Medicaid consist primarily of non-elderly adults with low income. CRS: ACA Medicaid Expansion
- The federal government’s share of Medicaid’s spending for benefits varies among the states. That share historically has averaged about 57 percent. Beginning in calendar year 2014, the federal government pays all of the costs of covering enrollees newly eligible under the ACA’s coverage expansion. From 2017 to 2020, the federal share of that spending will decline gradually to 90 percent, where it will remain thereafter. According to CBO’s estimates, those changes will result in a federal share of Medicaid’s spending that averages 60 percent by 2020.
- Under the terms of Federal funding, required Medicaid services include inpatient and outpatient hospital services, services provided by physicians and laboratories, and nursing home and home health care.
- Groups that must be eligible for Medicaid include children in low-income families and families who would have qualified for the former Aid to Families with Dependent Children program, certain other children in low-income families and pregnant women, and most elderly and disabled individuals who qualify for the Supplemental Security Income program.
- States may choose to make additional groups of people eligible (such as individuals with income above the standard eligibility limits and those who have high medical expenses relative to their income) or to provide additional benefits (such as coverage for prescription drugs and dental services), and they have exercised those options to varying degrees.
- Many states seek and receive federal waivers that allow them to provide benefits and cover groups that would otherwise be excluded.
- Currently, almost half of Medicaid’s enrollees are children in low-income families, and just under one-third are either the parents of those children or low-income pregnant women.
- The elderly and disabled constitute the remaining almost one-quarter of enrollees. Expenses tend to be higher for beneficiaries who are elderly and disabled, many of whom require long-term care, than for other beneficiaries. In 2012, about 32 percent of federal Medicaid spending for benefits was for long-term services and supports, which include institutional care provided in nursing homes and other facilities as well as care provided in a person’s home or in the community. Overall, the elderly and disabled account for almost two-thirds of Medicaid’s payments for benefits.
Nonpartisan Reports on Medicaid
Medicare v. Medicaid
- Medicare is an entitlement based on age (65 or older) or disability without regard to income; Medicaid is a means-tested entitlement where eligibility is based on being at or near the Federal poverty level.
- Medicare is a health insurance program similar to private sector health insurance, with specified coverage and beneficiary cost-sharing; Medicaid is a health coverage program where States pay healthcare providers for services on behalf of beneficiaries, usually without any cost-sharing.
- Medicaid assists millions of low-income Medicare enrollees (called “dual eligibles”) by paying Medicare premiums, deductibles and coinsurance.
- Medicare is funded by federal payroll (HI) taxes, general tax revenues, and premiums; Medicaid is funded jointly by the Federal and State governments.
- Medicare is national health insurance administered by the Federal Centers for Medicare and Medicaid (CMS); Medicaid is administered by the States.