Medicaid

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Medicaid

Definition

Medicaid is a federal-state entitlement program for low-income citizens of the United States. The Medicaid program is part of Title XIX of the Social Security Act Amendment that became law in 1965. Medicaid offers federal matching funds to states for costs incurred in paying health care providers for serving covered individuals. State participation is voluntary, but since 1982, all 50 states have chosen to participate in Medicaid.

Description

Medicaid benefits

Medicaid benefits cover basic health care and long-term care services for eligible persons. About 58% of Medicaid spending covers hospital and other acute care services. The remaining 42% pays for nursing home and long-term care.

States that choose to participate in Medicaid must offer the following basic services:

KEY TERMS

Categorically needy— A term that describes certain groups of Medicaid recipients who qualify for the basic mandatory package of Medicaid benefits. There are categorically needy groups that states participating in Medicaid are required to cover, and other groups that the states have the option to cover.

Department of Health and Human Service (DHHS)— It is a federal agency that houses the Centers for Medicare and Medicaid Services, and distributes funds for Medicaid.

Entitlement— A program that creates a legal obligation by the federal government to any person, business, or government entity that meets the legally defined criteria. Medicaid is an entitlement both for eligible individuals and for the states that decide to participate in it.

Federal poverty level (FPL)— The definition of poverty provided by the federal government, used as the reference point to determine Medicaid eligibility for certain groups of beneficiaries. The FPL is adjusted every year to allow for inflation.

Health Care Financing Administration (HCFA)— A federal agency that provides guidelines for the Medicaid program.

Medically needy— A term that describes a group whose coverage is optional with the states because of high medical expenses. These persons meet category requirements of Medicaid (they are children or parents or elderly or disabled) but their income is too high to qualify them for coverage as categorically needy.

Supplemental Security Income (SSI)— A federal entitlement program that provides cash assistance to low-income blind, disabled, and elderly people. In most states, people receiving SSI benefits are eligible for Medicaid.

hospital care, both inpatient and outpatient
nursing home care
physician services
laboratory and diagnostic x-ray services
immunizations and other screening, diagnostic, and treatment services for children
family planning
health center and rural health clinic services
nurse midwife and nurse practitioner services
physician assistant services

Participating states may offer the following optional services and receive federal matching funds for them:

prescription medications
institutional care for the mentally retarded
home- or community-based care for the elderly, including case management
personal care for the disabled
dental and vision care for eligible adults

Because participating states are allowed to design their own benefits packages as long as they meet federal minimum requirements, Medicaid benefits vary considerably from state to state. About half of all Medicaid spending covers groups of people and services above the federal minimum.

Eligibility for Medicaid

Medicaid covers three major groups of low-income Americans:

All recipients. In 2006, Medicaid covered an estimated 46.5 million low-income persons in the United States.
Parents and children. In 2005, Medicaid covered approximately 25.2 million low-income children, approximately one-fifth of all children in the United States. It provided coverage to an estimated 10.2 million low-income adults in families with children; most of these low-income adults were women.
The elderly. In 2006, Medicaid covered an estimated 5.8 million adults over the age of 65. Medicaid is the largest single purchaser of long-term and nursing home care in the United States.
The disabled. About 17% of Medicaid recipients are blind or disabled. Most of these persons are eligible for Medicaid because they receive assistance through the Supplemental Security Income (SSI) program.

All Medicaid recipients must have incomes and resources below specified eligibility levels. These levels vary from state to state depending on the local cost of living and other factors. For example, in 2006, the federal poverty level (FPL) was determined to be $16,600 for a family of three on the mainland of the United States, but $24,900 in Hawaii and $29,050 in Alaska.

In most cases, persons must be citizens of the United States to be eligible for Medicaid, although legal immigrants may qualify in some circumstances depending on their date of entry. Illegal aliens are not eligible for Medicaid, except for emergency care.

Persons must fit into an eligibility category to receive Medicaid, even if their income is low. Childless couples and single childless adults who are not disabled or elderly are not eligible for Medicaid.

Medicaid costs

Medicaid is by far the government’s most expensive general welfare program. In 1966, Medicaid accounted for 1.4% of the federal budget, but by 2006, its share had risen to nearly 9.1%. Combined federal and state spending for Medicaid takes approximately 21 cents of every tax dollar. The federal government covers about 56% of costs associated with Medicaid. The states pay for the remaining 44%.

As of 2006, costs for Medicaid continued to rise at an average annual rate of approximately 8%. The states spent $303 billion in FY 2006 to cover Medicaid costs. These costs are projected to continue to increase.

Although more than half (54%) of all Medicaid beneficiaries are children, most of the money (more than 70%) goes for services for the elderly and disabled. The single largest portion of Medicaid money pays for long-term care for the elderly. Only 18% of Medicaid funds are spent on services for children.

There are several factors involved in the steep rise of Medicaid costs:

The rise in the number of eligible individuals. As the lifespan of most Americans continues to increase, the number of elderly individuals eligible for Medicaid also rises. The fastest-growing age group in the United States is people over 85.
The price of medical and long-term care. Advances in medical technology, including expensive diagnostic imaging tests, cause these costs to rise.
The increased use of services covered by Medicaid.
The expansion of state coverage from the minimum benefits package to include optional groups and optional services.

Normal results

The need to contain Medicaid costs is considered one of the most problematic policy issues facing legislators. In addition, the complexity of the Medicaid system, its vulnerability to billing fraud and other abuses, the confusing variety of the benefits packages available in different states, and the time-consuming paperwork are other problems that disturb both taxpayers and legislators.

Medicaid has increased the demand for health care services in the United States without greatly impacting or improving the quality of health care for low-income Americans. Medicaid is the largest health insurer in the United States. As such, it affects the employment of several hundred thousand health care workers, including health care providers, administrators, and support staff. Participation in Medicaid is optional for physicians and nursing homes . Many do not participate in the program because the reimbursement rates are low. As a result, many low-income people who are dependent on Medicaid must go to overcrowded facilities where they often receive substandard health care.

Resources

BOOKS

Atlantic Publishing Company. The Complete Guide to Medicaid and Nursing Home Costs: How to Keep Your Family Assets Protected - Up to Date Medicaid Secrets You Need to Know. Ocala, FL: Atlantic Pub Co, 2008.

Engel, J. Poor People’s Medicine: Medicaid and American Charity Care since 1965. Durham, NC: Duke University Press, 2006.

Scott, S. W. The Medicaid Handbook 2007: Protecting Your Assets From Nursing Home Costs. 3rd ed. Largo, FL: Masveritas Publishing, 2007.

Smith, D., and J. D. Moore. Medicaid Politics and Policy. New Brunswick, NJ: Transaction Publishers, 2007.

PERIODICALS

Bhuridej, P., KR. A. Kuthy, S. D. Flach, K. E. Keller, D. V. Dawson, M. J. Kanellis, and P. C. Damiano. “Four-year cost-utility analyses of sealed and nonsealed first permanent molars in Iowa Medicaid-enrolled children.” Journal of Public Health Dentistry 67, no. 4 (2007): 191–198.

Churchill, S. S., B. J. Williams, and N. L. Villareale. “Characteristics of publicly insured children with high dental expenses.” Journal of Public Health Dentistry 67, no. 4 (2007): 199–207.

Goetzel, R. Z., D. Schecter, R. J. Ozminkowski, D. C. Stapleton, P. J. Lapin, J. M. McGinnis, C. R. Gordon, and L. Breslow. “Can health promotion programs save Medicare money?.” Clinical Interventions in Aging 2, no. 1(2007): 117–122.

Grabowski, D. C. “Medicare and Medicaid: conflicting incentives for long-term care.” Milbank Quaterly 85, no. 4 (2007): 579–610.

Perry, C. D., and G. M. Kenney. “Preventive care for children in low-income families: how well do Medicaid and state children’s health insurance programs do?” Pediatrics 120, no. 6 (2007): e1393–e1401.

ORGANIZATIONS

Kaiser Family Foundation. 2400 Sand Hill Road, Menlo Park, CA 94025, Phone: (650) 854-9400, Fax: (650) 854-4800 http://www.kff.org/.

National Center for Policy Analysis. 12770 Coit Rd., Suite 800, Dallas, TX 75251-1339, Phone: (972) 386-6272, Fax: (972) 386-0924. http://www.ncpa.org.

National Library of Medicine. http://www.nlm.nih.gov/medlineplus/medicaid.html.

United States Department of Health and Human Services. 200 Independence Avenue SW, Washington, DC 20201. http://www.hhs.gov.

OTHER

Centers for Medicare and Medicaid Services, US Department of Health and Human Services. Information about Medicaid. 2007 [cited December 26, 2007]. http://cms.hhs.gov/.

National Association of State Medicaid Directors. Information about Medicaid. 2007 [cited December 26, 2007]. http://www.nasmd.org/Home/home_news.asp.

National Governor’s Association. Information about Medicaid. 2007 [cited December 26, 2007]. http://www.nga.org/portal/site/nga.

Social Security Administration. Information about Medicaid. 2007 [cited December 26, 2007]. http://www.ssa.gov/.

L. Fleming Fallon, Jr, MD, DrPH

The Gale Encyclopedia of Surgery and Medical Tests