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Friday, April 12, 2013

Medicaid: A Primer

Elicia J. Herz
Specialist in Health Care Financing

In existence for 48 years, Medicaid is a means-tested entitlement program that financed the delivery of primary and acute medical services as well as long-term care to more than 71 million people in FY2012. The estimated annual cost to the federal and state governments was roughly $432 billion in FY2011. In comparison, the Medicare program provided health care benefits to nearly 49 million seniors and certain persons with disabilities in CY2011, and cost roughly $560 billion in FY2011. Because Medicaid represents a large component of federal mandatory spending, Congress is likely to continue its oversight of Medicaid’s eligibility, benefits, and costs.

Understanding the complex statutory and regulatory rules that govern Medicaid is further complicated by the fact that each state designs and administers its own version of the program under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) makes both mandatory and optional changes to Medicaid along some of these dimensions.

This report describes the basic elements of Medicaid, focusing on the federal rules governing who is eligible, what services are covered, how the program is financed, how beneficiaries share in the cost of care, how providers are paid, and the role of special waivers in expanding eligibility and modifying benefits. Examples of both mandatory and optional eligibility groups and benefits as defined in the federal statute are described. Basic program statistics are also provided. Finally, selected legislative changes at the federal level via the ACA, and the Supreme Court decision in National Federation of Independent Business v. Sebelius announced on June 28, 2012, that affect Medicaid in significant ways are also described.

Date of Report: April 4, 2013
Number of Pages: 19
Order Number: RL33202
Price: $29.95

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