Medicaid 101

Medicaid is a joint federal-state program that provided health care coverage to an estimated 67.3 million people in fiscal year (FY) 2015. As a major payer in the U.S. health care system, it accounted for about 16 percent of national health care spending.

Medicaid’s role among payers is unique. It provides coverage for health and other related services for the nation’s most economically disadvantaged populations, including low-income children and their families, low-income seniors, and low-income people with disabilities. These populations are distinguished by the breadth and intensity of their health needs; the impact of poverty, unemployment, and other socioeconomic factors on their ability to obtain health care services; and the degree to which they require assistance in paying for care. Medicaid provides benefits not typically covered (or covered to a lesser extent) by other insurers, including long-term services and supports. It also pays for Medicare premiums and cost sharing for more than 10 million people who are enrolled in both programs. It is also a major source of financing for care delivered by certain providers, particularly safety net institutions that serve both low-income and uninsured individuals.

The Medicaid program was enacted as part of the Social Security Amendments of 1965 (P.L. 89-97), the same legislation that created Medicare. Like Medicare, Medicaid is an entitlement program. Eligible individuals have rights to payment for medically necessary health care services defined in statute; the federal government is obligated to fund a share of the outlays for those services.

Variability in Medicaid is the rule rather than the exception. States establish their own eligibility standards, benefit packages, provider payment policies, and administrative structures under broad federal guidelines, effectively creating 56 different Medicaid programs—one for each state, territory, and the District of Columbia. States also differ in Medicaid financing. Learn more about different aspects of Medicaid by following the links below.

Click here for information on CHIP. Click here for federal legislative milestones in Medicaid and CHIP.