Health United States 2020-2021

Medicaid

Authorized in 1965, becoming Title XIX of the Social Security Act. Medicaid is a state–federal partnership jointly funded by the states and federal government and administered by the states according to federal requirements to assist states in providing medical care to eligible people. Within broad federal guidelines, each state establishes its own eligibility standards; determines the type, amount, duration, and scope of services; sets the rate of payment for services; and administers its own program.

Medicaid is the largest program providing medical and health-related services to low-income people. Medicaid was originally available only to people receiving cash assistance, but over time, Congress has expanded eligibility for children and selected adult groups. The Patient Protection Affordable Care Act (ACA) (P.L. 111–148) and the Health Care and Education Reconciliation Act of 2010 (HCERA) (P.L. 111–152) initiated significant changes to Medicaid. Subsequent references to ACA in Health, United States include changes enacted by ACA or HCERA.

States are mandated by federal law to cover certain population groups but are granted flexibility in covering other groups (42 USC 1396 et seq). In the standard benefit package, states must cover mandatory benefits (for example, physician services) but may choose to cover optional benefits (for example, tuberculosis-related services). States set individual eligibility criteria within federal minimum standards. Before ACA, many states expanded Medicaid coverage above the federal minimums, and many states have chosen to continue this additional coverage.

Broadly, there are four major eligibility groups covered by most states: Children, Adults with Disabilities, Aged Adults, and Nondisabled Adults. Detailed discussion of each group follows.

Major eligibility groups

Children

Youth under age 19 are eligible based on income below a specified percentage of the federal poverty level (FPL). ACA raised the minimum Medicaid eligibility for nondisabled children not exceeding 138% FPL (133% by statute with an additional 5% income disregard). Other eligible child groups include: infants born to women covered by Medicaid (known as “deemed newborns”), certain children in foster care or adoption assistance programs, certain children with disabilities, and children who use long-term services and supports.

Adults with Disabilities

Adults with disabilities from physical conditions, intellectual or developmental disabilities, serious behavioral disorders, or serious mental illness and who meet financial limits may be eligible for Medicaid.

Aged Adults

People aged 65 and over who meet financial limits may be eligible for Medicaid. Most Medicaid enrollees aged 65 and over are also Medicare beneficiaries. Members of this group (who also may be adults under 65 with disabilities) are known as dually-eligible beneficiaries or “dual eligibles.” Dual eligibles are eligible for the same Medicare benefits as other Medicare beneficiaries but also may qualify for partial Medicaid benefits (to cover Medicare premiums and cost sharing) or full Medicaid benefits.

Nondisabled Adults

Before the enactment of ACA, most low-income nondisabled adults were not eligible for Medicaid unless they qualified for a specific categorical eligibility group (for example, pregnant women, low-income parents, or other caretaker relatives with dependent children) or in states with demonstration programs that provided expanded coverage. (“Nondisabled” means that disability status is not an eligibility factor in the group, although a person may be eligible for such a group and have a disability.) ACA gave states the authority to expand Medicaid eligibility to certain low-income adults. As of August 2021, 38 states and the District of Columbia (D.C.) had chosen to expand their Medicaid programs to adults with incomes not exceeding 138% of FPL.

States may choose from among numerous optional eligibility groups to cover populations of adults. For example, states can offer access to full benefits and treatment through Medicaid to eligible people diagnosed with cancer through the Centers for Disease Control and Prevention-funded National Breast and Cervical Cancer Early Detection Program. In addition, states can choose to provide Medicaid coverage of tuberculosis-related services for people of low-income who are infected with tuberculosis.

Medicaid operates as a vendor payment program. States may pay health care providers directly on a fee-for-service basis, or states may pay for Medicaid services through various prepayment arrangements, such as through Medicaid managed care organizations or other forms of managed care. Within federally imposed upper limits and restrictions, each state generally has broad discretion in determining both the payment method and rate for services. As a result, the Medicaid program varies considerably from state to state, as well as within each state over time. For more information, see: https://www.medicaid.gov/ and https://www.macpac.gov/. (Also see  Sources and Definitions, Children’s Health Insurance Program; Health expenditures, national; Health insurance coverage; Health maintenance organization [HMO]; Managed care; Medicare.)

Page last reviewed: August 12, 2022