Medicaid: Health Coverage, Mental Health Services, and Long-Term Care for Low-Income Americans

Medicaid Overview

Medicaid is a joint federal-state program that pays for primary and acute health care services, and long-term care for 85 million low-income Americans (near or below the Federal poverty level).
Unlike Medicare, in Medicaid premiums are generally prohibited, although states can impose nominal copayments, coinsurance, or deductibles. For most enrollees, cost sharing is limited to 5% of income.
Jointly financed and state administered: While the Federal government 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 and populations that must be covered.
Medicaid is voluntary for all states and all states have opted to participate. By opting in, States agree to to cover certain mandatory populations and services; however, federal Medicaid waivers grant states flexibility to design their own programs.
Medicaid is an open-ended entitlement to states which receive reimbursements for costs ranging from from 50% (for high per capita income states) to 78% (low per capita income). The federal contribution is called the “federal medical assistance percentage (FMAP).
Prior to enactment of the Affordable Care Act (ACA), Medicaid was generally limited to low-income families with children, pregnant women, seniors, and people with mental or physical disabilities.
The Affordable Care Act (P.L. 111-148) gave states the option to expand Medicaid eligibility to all low-income adults with incomes up to 133% of the FPL, with the federal government paying nearly the entire cost of the expansion.
Benefits:For traditional Medicaid benefits, states are required to cover a wide array of services including inpatient hospital, physician, and nursing facility care. States may cover additional services, such as prescription drugs and physical therapy. There is an Alternative Benefit Plan with more flexibility for enrollees in the Medicaid expansion.
Delivery of care: Medicaid enrollees generally receive benefits through managed care or fee-for-service (FFS). Under FFS, health care providers are paid by the state Medicaid program for each service. Under managed care, Medicaid enrollees get some or all of their services through an organization under contract with the state. Most Medicaid enrollees are now covered by some form of managed care.
Required Medicaid services include inpatient and outpatient hospital services, services provided by physicians and laboratories, and nursing home and home health care.
Expenditures: Highest portion of expenditures are for low-income disabled (34%), followed by low-income adults (28%), low-income seniors (22%), and low-income children (16%).
Medicaid provider payment rates are set by states within federal rules, but some states make supplemental payments. An ongoing challenge is low provider participation due to low payment rates.

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, premiums, and beneficiary cost-sharing; Medicaid is a health coverage program where States pay healthcare providers for services to 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 Services (CMS), while Medicaid is administered by the States.