What is Medicaid?

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Medicaid Made Clear: What Medicaid is, who Medicaid serves & the history of Medicaid

What is Medicaid?

Medicaid is a federal and state program that provides health care coverage to qualified individuals. 

Medicaid programs are state-run. However, the federal government has rules and regulations under which all states must comply. The federal government also provides at least 50% of the funding for their Medicaid requirements.

Based on federal regulations, states create and run their own Medicaid program to best serve their residents who qualify. States may choose to provide more services than the federal government requires and they may also choose to provide coverage to larger groups of people.

Medicaid provides health care coverage for people who qualify, based on income and assets.

History of Medicaid

Medicaid began as part of the Social Security Act of 1965. The original law gave states the option of receiving federal funding to help provide health care coverage to children whose families have a low income, their caregiver relatives, people who are blind and people who are disabled. Throughout time, the federal government has strengthened the rules and requirements for states administering Medicaid. Through Medicaid expansion some states now extend coverage to other low-income adults.

Who does Medicaid serve?

 
  • Pregnant women with low income
  • Children of low income families
  • Children in foster care
  • People with disabilities
  • Seniors with low income
  • Parents or caregivers with low income

States may choose to expand eligibility to additional groups, like such as people with low income who may or may not have children

What is the Federal Poverty Level?

The Federal Poverty Level (FPL) accounts for the minimum amount of gross income that a family needs for food, clothing, transportation, shelter and other necessities. The calculation is used to determine eligibility in multiple federal assistance programs. It is recalculated every year.


Each group of people eligible for Medicaid must meet certain FPL eligibility thresholds. 

Introduction to Medicaid

On-Demand Education: Medicaid

Medicaid Financing

Medicaid Spotlight: Financing

The Value of Medicaid Managed Care

Medicaid Spotlight: Managed Care

The History of Medicaid

Medicaid began as part of the Social Security Act of 1965. The original law gave states the option of receiving federal funding to help provide health care coverage to children whose families have a low income, their caregiver relatives, people who are blind and people who are disabled. Throughout time, the federal government has strengthened and expanded the rules and requirements for states administering Medicaid. Through Medicaid expansion some states now extend coverage to other low-income adults.

  • 1965

    Medicaid is established and provides states with the option of receiving federal funding for providing health care services to certain groups.

  • 1967

    Early, Periodic Screening, Diagnosis, and Treatement (EPSDT) comprehensive health services benefit is established for all children receiving Medicaid. 

  • 1972

    Medicaid eligibility for the elderly and people with disabilities was linked to the eligibility for the newly enacted Federal Supplement Security Income (SSI) program.

  • 1981

    Home- and Community- Based Services (HCBS) waivers were established.

  • 1986

    Medicaid coverage for pregnant women and infants (up to 1 year of age) up to 100% of the Federal Poverty Level (FPL) was established as a state option. 

  • 1989

    Medicaid coverage of pregnant women and children (under age 6) up to 133% of the Federal Poverty Level was mandated; expanded EPSDT requirements were established. 

  • 1990

    Federal Medicaid rules required coverage for children ages 6-8 in families under 100% of the FPL. The rules also created the prescription drug rebate program. 

  • 1996

    Temporay Assistance to Needy Families (TANF) replaced a program that linked Medicaid enrollment/termination with the receipt of Welfare cash assistance. 

  • 1997

    The Balance Budget Act of 1997 created the State Children's Health Insurance Program (SCHIP).

  • 1999

    The Ticket to Work Incentives Improvements Act allowed states to cover working people with disabilities up to 250% FPL and charge income-based premiums. 

  • 1999

    The Supreme Court ruled on a case that established expanded civil rights for people with disabilities. They determined that people with disabilities have a qualified right to receive state funded supports and services in the community rather than in nursing homes or other formal settings. 

  • 2010

    The Affordable Care Act was signed, providing states with the option to expand Medicaid to adults who earn up to 138% of the FPL.

  • 2019

    As of February, 2019, 72,232,316 individuals are currently enrolled in Medicaid and CHIP. 

Medicaid Definitions 
HCBS Home- and Community-Based Services that are delivered in an individual's home or a community setting like an assisted living facility. 
Low-income 138 percent of Federal poverty level.
Insitutional/Formal setting Things like a nursing home or an intermediate care facility for people with intellectual disabilities.
ABD This is a group that may be eligible for both Medicare and Medicaid. ABD stands for aged, blind, and disabled.
TANF TANF is a federal governement program that is delivered on the state level. Each state receives a lump sum of money that may be used to support single parents of dependent children on a time-limited basis. Each state's eligibility and program work differently.
LTSS Long-term services and supports are provided for Medicaid beneficiaries living with a chronic illness or a person with a disability. 
Waivers States may decide to waive Medicaid regulations to serve certain populations with certain services. 
Examples include providing services to people with intellectual or developmental disabilities, traumatic brain injuries, or serious emotional disturbances. 


For a full list of Medicaid-related terms visit our Medicaid Glossary

Medicaid Quiz

How well do you know the Medicaid program? Test yourself! Take the Medicaid knowledge quiz. 

In what year was Medicaid created?

Correct!

Medicaid was created in 1965 to be a health care coverage option for low income and disabled individuals.

Sorry, that wasn't right.

Medicaid was created in 1965 to be a health care coverage option for low income and disabled individuals.

The Medicaid program is a federal-state partnership?

Correct!

Medicaid is administered by states but funded by a combination of federal and state dollars.

Sorry, that wasn't right.

Medicaid is administered by states but funded by a combination of federal and state dollars.

What is the federal agency that oversees Medicaid?

Correct!

By law, states must designate a single state agency to administer their Medicaid program and submit a plan to CMS that demonstrates their understanding of and how they will adhere to federal Medicaid rules and regulations.

Sorry, that wasn't right.

By law, states must designate a single state agency to administer their Medicaid program and submit a plan to CMS that demonstrates their understanding of and how they will adhere to federal Medicaid rules and regulations.

What is the name of the companion program created with Medicaid?

Correct!

Medicare is administered by the federal government, whereas Medicaid is a federal-state partnership administered by the states. Medicare provides health care coverage for those 65 and over, or those under 65 with a disability — regardless of income.

Sorry, that wasn't right.

Medicare is administered by the federal government, whereas Medicaid is a federal-state partnership administered by the states. Medicare provides health care coverage for those 65 and over, or those under 65 with a disability — regardless of income.

The Affordable Care Act allows the optional coverage of childless adults under age 65?

Correct!

States were granted the option to extend coverage to parents or caretakers of dependent children with incomes below 133% of the federal poverty level under the Affordable Care Act. Collectively, this population is known as the Medicaid Expansion population.

Sorry, that wasn't right.

States were granted the option to extend coverage to parents or caretakers of dependent children with incomes below 133% of the federal poverty level under the Affordable Care Act. Collectively, this population is known as the Medicaid Expansion population.

What are two waivers used by states to accomplish certain goals in their Medicaid program?

Correct!

States use waivers to waive certain Medicaid program requirements, allowing the state to provide care for people who might not otherwise be eligible under Medicaid & personalize their Medicaid programs to meet their state’s unique needs. For example, waivers may be used to cap the number of individuals covered or to expand home and community-based services.

Sorry, that wasn't right.

States use waivers to waive certain Medicaid program requirements, allowing the state to provide care for people who might not otherwise be eligible under Medicaid & personalize their Medicaid programs to meet their state’s unique needs. For example, waivers may be used to cap the number of individuals covered or to expand home and community-based services.

All individuals must meet financial and non-financial requirements — which vary by state — to be eligible for Medicaid.

Correct!

All individuals must meet financial and non-financial requirements — which vary by state — to be eligible for Medicaid.

Sorry, that wasn't right.

All individuals must meet financial and non-financial requirements — which vary by state — to be eligible for Medicaid.

What percentage of children in the US are covered by Medicaid?

Correct!

The Medicaid program serves 50% of America’s children or approximately 37 million kids age 0-18.

Sorry, that wasn't right.

The Medicaid program serves 50% of America’s children or approximately 37 million kids age 0-18.

What advantages does managed care provide to states?

Correct!

States can authorize the use of managed care organizations (MCOs) to provide services to their Medicaid population. This helps states manage risk to taxpayers, control costs, make costs more predictable and improve care for those served by the program. The most common type of managed care structure is a comprehensive risk-based managed care arrangement, where a state contracts with an MCO, paying them a fixed dollar amount per member. 2/3 of Americans enrolled in Medicaid are served by Medicaid managed care.

Sorry, that wasn't right.

States can authorize the use of managed care organizations (MCOs) to provide services to their Medicaid population. This helps states manage risk to taxpayers, control costs, make costs more predictable and improve care for those served by the program. The most common type of managed care structure is a comprehensive risk-based managed care arrangement, where a state contracts with an MCO, paying them a fixed dollar amount per member. 2/3 of Americans enrolled in Medicaid are served by Medicaid managed care.

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