Medicaid is a public health insurance program in the United States providing medical coverage to millions of Americans with limited income and resources. It funds health-related services for people who might otherwise be unable to afford them. The program ensures that low-income children, pregnant women, elderly adults, and individuals with disabilities can receive necessary care. By covering costs for doctor visits, hospital stays, and long-term care, Medicaid reduces the financial burden of illness on vulnerable populations.
Defining the Program and its Purpose
Medicaid operates as a joint federal and state partnership, sharing administration and funding between the national government and individual states. The federal government sets broad guidelines, but each state establishes its own eligibility standards, determines the scope of services offered, and manages the program. This structure results in 56 different programs—one for each state, the District of Columbia, and the territories—with varying rules and benefit packages.
Medicaid was authorized in 1965 by Title XIX of the Social Security Act. This legislation established Medicaid as an entitlement program, guaranteeing payment for medically necessary services defined in the statute for eligible individuals. The federal government is obligated to fund a share of these expenditures, with the federal matching rate ranging across states from a minimum of 50 percent up to 83 percent.
The program provides comprehensive health coverage to specific groups of low-income individuals. These groups traditionally include children, pregnant women, adults, the elderly, and people with disabilities. Medicaid is the largest source of funding for medical services for America’s poorest people.
Determining Eligibility Requirements
Eligibility for Medicaid depends on meeting both categorical and financial requirements. The categorical requirement means an applicant must fall into a specific group the program is mandated or permitted to cover, such as children, pregnant women, parents of dependent children, or individuals who are aged, blind, or disabled. Low-income families and individuals receiving Supplemental Security Income (SSI) are examples of groups that states are federally required to cover.
The financial criteria involve limits on an applicant’s income and assets. Income eligibility for most groups, including children, pregnant women, and the expansion population, is determined using Modified Adjusted Gross Income (MAGI). MAGI rules simplify the process by using income counting rules that align with the Health Insurance Marketplace.
Before recent federal legislation, eligibility levels for adults were low, and childless adults were excluded in most states. The Affordable Care Act (ACA) of 2010 provided states the option to expand Medicaid coverage to nearly all non-elderly Americans under age 65. This expansion allows states to cover adults with incomes at or below 133 percent of the Federal Poverty Level (FPL), which is effectively 138 percent of the FPL due to an income disregard.
Although the Supreme Court ruling in 2012 made the ACA expansion optional, a majority of states have implemented it. In non-expansion states, adults with incomes below 100 percent of the FPL may fall into a coverage gap. Their income is too high for pre-ACA Medicaid rules but too low to receive subsidies for private plans on the Marketplace. Individuals must also be residents of the state where they are applying and be either United States citizens or qualified non-citizens.
Scope of Covered Health Services
Medicaid coverage varies because states define the type, amount, and scope of services within federal parameters. Federal law dictates that states must cover a set of mandatory benefits to receive federal funding. These required services include inpatient and outpatient hospital care, physician services, laboratory and X-ray services, and nurse midwife services.
The Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) service is a mandatory benefit for children under age 21. EPSDT ensures that children receive comprehensive, preventive, and developmental health screenings, along with any necessary treatment to correct or improve a health condition found during screening. This benefit requires coverage for medically necessary services even if they are not included in the state’s standard benefit package for adults.
States have the flexibility to offer optional benefits. States often use these optional benefits to provide services like long-term services and supports (LTSS), which help people with disabilities or the elderly receive care in their homes and communities. Common optional services include:
- Prescription drugs
- Physical therapy
- Dental care
- Vision services