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The Facts About Medicaid

Tuesday, June 27, 2017  
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One of the biggest points of contention in the debate over Congressional legislation to repeal and replace the Affordable Care Act (“ObamaCare”) is the future of Medicaid. Medicaid is not the same as Medicare. Medicare is a federal program that provides health coverage if you are 65 or older or have a severe disability, no matter your income. Medicaid is a state and federal program that provides health coverage if you have a very low income.

Here are some basic facts about the 52-year-old Medicaid program.


What is Medicaid?

Medicaid is a public health insurance program largely for low-income people, though some middle-class people with disabilities and older adults also qualify. States and the federal government share the cost.


Whom does Medicaid cover?

  • Nearly one in five Americans, 74 million people, are covered by Medicaid.
  • Federal law guarantees Medicaid coverage to pregnant women, children, elderly and peple with disabilities under certain income levels.
  • It covers more than a third of the nation’s children and pays for half of all births.
  • It also covers almost two-thirds of nursing home residents, including many who are middle class and spent of all their savings on care before becoming eligible.
  • States also have the option of covering other groups, like children and pregnant women whose household incomes are higher than the federal thresholds, or young adults up to age 26 who were once in foster care.
  • The Affordable Care Act allowed a new optional group: any adults with income up to 138% of the poverty level, which would be $16,643 for an individual this year. Thirty-one states now offer Medicaid to this group.


When was it created?

Medicaid was created in 1965 as part of President Lyndon B. Johnson’s “Great Society.” There was little political debate; the bigger fight was over creating Medicare, the program to cover the elderly, which Medicaid is often confused with.


Is Medicaid an entitlement program?

Yes. Anyone who meets the eligibility rules has a right to Medicaid coverage. For the present, states are guaranteed open-ended financial support from the federal government.


How much does it cost?

  • Medicaid cost $553 billion in federal fiscal year 2016 (October 1, 2015 – September 30, 2016). Of that amount, $348.9 billion came from the federal government. The states paid $204.5 billion.
  • Medicaid accounts for 9% of federal domestic spending. For states, it is the biggest source of federal funding and the second-largest budget item behind education.
  • The biggest costs in Medicaid are for older adults and people with disabilities, often because of long-term care in nursing homes.
  • Washington pays 50 to 75% of Medicaid costs for most eligible groups, with poor states receiving more money.
  • Under the Affordable Care Act, the federal government initially covered all of the costs for the roughly 11 million people insured under the law’s expansion of Medicaid, who are largely adults without disabilities.
  • Under the Affordable Care Act, Washington picks up 95% of state costs for the expansion of Medicaid this year, whittling down to 90% in 2020.


What changes are in store?

  • Both the House and Senate repeal bills would fundamentally change the way the federal government pays its share of Medicaid costs, setting a per-person limit on spending that would adjust annually for inflation.
  • The bills would also effectively end the Medicaid expansion by sharply reducing how much the federal government pays for that population starting in 2020.
  • The result of these changes, according to independent analyses, would be major reductions in federal Medicaid spending over time.
  • Enrollment would drop, too, according to the nonpartisan Congressional Budget Office, with states making it more difficult to qualify for the program and eliminating certain benefits to make up for tightened federal spending.