Medicaid Information

Medicaid was created in 1965 and it is a federal and state-funded program that most people think of as a health insurance program for low-income Americans. Medicaid is the largest public or private health insurance program in the United States. Medicaid covers two-thirds of nursing home residents, one in five persons under age 65 with chronic disabilities (including about 70 percent of poor children), one-third of all births, and half of the spending for states' mental health services.

There are many misconceptions about the program, about what it covers, and the people it helps, including the myth that most Medicaid beneficiaries are on welfare. Medicaid is today's safety net for those who are unable to pay for their health and long-term care.

Within broad national guidelines established by Federal statutes, regulations, and policies, each State (1) establishes its own eligibility standards; (2) determines the type, amount, duration, and scope of services; (3) sets the rate of payment for services; and (4) administers its own program.

Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among States of similar size or geographic proximity. Therefore, a person who is eligible for Medicaid in one State may not be eligible in another State, and the services provided by one State may differ considerably in amount, duration, or scope from services provided in a similar or neighboring State. In addition, State legislatures may change Medicaid eligibility, services, and/or reimbursement during the year.

Individual States have broad discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility. To be eligible for Federal funds, however, States are required to provide Medicaid coverage for certain individuals who receive federally assisted income-maintenance payments, as well as for related groups not receiving cash payments. In addition to their Medicaid programs, most States have additional "State-only" programs to provide medical assistance for specified poor persons who do not qualify for Medicaid. Federal funds are not provided for State-only programs.

Medicaid and the 2009 Stimulus Package

The 2009 economic stimulus package, which has now been passed by lawmakers after a contentious debate, included a number of items that hospitals hoped to see pass.

These items include an extension of a moratorium on Medicaid regulations that they argued would cut their funding, moving the deadline up from March 31 to June 30. The stimulus package also proposes a temporary $87 billion increase for the federal share of Medicaid funding, along with a temporary increase of $500 million for disproportionate share hospitals.

In addition, the package also includes a measure that would block a scheduled Medicare pay cut for teaching hospitals.

Other health-related items in the package include $19 billion to provide incentives for health IT adoption, and $21 billion to subsidize health plan premiums for workers paying through the COBRA program.