Medicaid

What Is Medicaid?

The term Medicaid refers to a public health insurance program that provides health care coverage to low-income families and individuals in the United States. The program is jointly funded by the federal government and individual states. It is operated at the state level which means that coverage and administration vary greatly from state to state. It is available only to individuals and families who meet specific income-based criteria.

Recipients are U.S. citizens, permanent residents, or legal immigrants. Approximately 70.6 million people were covered by Medicaid as of September 2020.

Understanding Medicaid

Medicaid was signed into law in 1965 by President Lyndon B. Johnson and authorized by Title XIX of the Social Security Act, which also created Medicare. It is a government-sponsored insurance program for individuals of any age whose resources and income are insufficient to cover health care. Medicaid does not provide health care directly to individuals. Instead, it covers their doctor visits, hospital stays, long-term medical care, custodial care, and other health-related costs.

Individual states decide on who qualifies for coverage, the type of coverage, and the process of paying health care workers and hospitals. That's because each state is responsible to manage and administer its own Medicaid program. The federal government matches state spending and the matching rate varies by state from about a statutory minimum of 50% to a maximum of 83%. States are not required to participate in Medicaid, although all states do.

The program is the largest source of funding for health-related services for low-income individuals in the U.S. Total Medicaid spending came to $613.5 billion in 2019, accounting for 16% of the nation's health care bill. The federal government paid 64.5% of the tab while individual states paid 35.6%.

Medicaid coverage has typically included the following groups:

Special Conditions

Eligibility for Medicaid is determined by filling out an application through the Health Insurance Marketplace website or directly through your state’s Medicaid agency.

Your eligibility is determined by income in relation to the FPL. The FPL is used to determine whether a family or individual's income allows them to qualify for federal benefits. In general, if an individual's income is less than 100% to 200% of the FPL, and they are either disabled, a child, pregnant, or elderly, there will be a program available for them. If their income is less than 138% of the FPL, then there may be a program available for them.

The income taken into consideration in determining eligibility is an individual's modified adjusted gross income (MAGI). This is taxable income plus certain deductions, such as Social Security benefits and tax-exempt interest.

Make sure you check the Medicaid website for any changes to eligibility and other up-to-date information about the program.

Trump's Changes to Eligibility

The Trump administration allowed U.S. states to remove Medicaid coverage for individuals who do not meet certain work requirements or who are not engaged in work activities for a specific number of hours each month. Arkansas was the first state to implement this policy and it resulted in 18,000 people losing health care coverage. However, this policy was repeatedly blocked in federal courts and Arkansas has suspended the requirements.

Medicaid vs. the Patient Protection and Affordable Care Act (PPACA)

Advantages of Medicaid

Medicaid has helped to reduce the number of people without health insurance and the ACA has helped even further. In 2013, the year before major provisions of the ACA went into effect, an estimated 44 million people didn't have health insurance. By 2017, that number dropped down to 27.4 million.

Many Americans would be without health insurance if Medicaid didn't exist. This is so because low-income individuals often don't have access to insurance through their jobs, and purchasing private health insurance in the marketplace is simply not affordable. Medicaid has provided access to health care that has statistically shown improvements in the overall well-being of individuals who otherwise would not be covered for even simple doctor visits or medication.