Learn more about each topic by clicking on the title name.
One of the key tests of the effectiveness of a health care coverage program is whether it provides access to appropriate health care services in a timely manner and whether those services promote health improvements. Learn more about MACPAC's work on how Medicaid and CHIP enrollees use health services.
Medicaid covers routine health services as well as benefits that are limited or not typically covered under other health insurance plans such as long-term services and supports, translation assistance, and non-emergency transportation services that are important to low-income seniors, adults with disabilities, and children with special health care needs. There are also specific rules affecting use of cost sharing and premiums. Learn more about Medicaid benefits.
The State Children's Health Insurance Program (CHIP) is a joint federal-state program established to provide coverage to uninsured children in families whose incomes are too high to qualify for Medicaid. In fiscal year (FY) 2016, 8.9 million children received CHIP-funded coverage. Spending in states and territories for FY 2016 totaled $15.6 billion ($14.4 billion federal, $1.2 billion state). Under current law, CHIP allotments are provided through FY 2027. Learn more about CHIP and MACPAC's analysis of its future.
Dually eligible beneficiaries are people enrolled in both Medicare and Medicaid who are eligible by virtue of their age or disability and low incomes. This is a diverse population that includes people with multiple chronic conditions, physical disabilities, mental illness, and cognitive impairments such as dementia and developmental disabilities. It also includes individuals who are relatively healthy.
Medicare is the primary payer for acute and post-acute care services. Medicaid wraps around Medicare by providing assistance with Medicare premiums and cost sharing and by covering some services that Medicare does not cover, such as long-term services and supports (LTSS).
There were 10.7 million dually eligible beneficiaries enrolled in both programs in calendar year 2013, the most recent year of comprehensive data for both programs. A majority were:
- female (61 percent),
- age 65 and older (58 percent),
- white (57 percent), and
- had at least one limitation on their activities of daily living (56 percent).
Dually eligible beneficiaries accounted for a disproportionate share of spending:
- In Medicare, they account for 34 percent of spending and 20 percent of enrollees.
- In Medicaid, they account 32 percent of spending and 15 percent of enrollees. In 2013, combined Medicare and Medicaid spending on dually eligible beneficiaries totaled $312.4 billion of which Medicaid accounted for $118.9 billion (38 percent).
Medicaid covers people who would otherwise face considerable financial barriers to health care. Generally, a person must fall into a specific population group, referred to as categorical eligibility, and meet income thresholds in order to be eligible for Medicaid. Federal law mandates some of these eligibility groups; some are covered at state option. All states offer Medicaid coverage for low-income children, their parents, expectant mothers, seniors, and people with disabilities; some states have opted to expand eligibility further. To receive a full range of Medicaid benefits, individuals also must be U.S. citizens or qualified aliens. Learn more about eligibility pathways, eligibility and enrollment processes, and issues pertaining to specific populations.
The federal government and the states share responsibility for financing Medicaid. Historically, the federal share has averaged about 57 percent. With the new adult group under the Medicaid expansion receiving 100 percent federal match, the average federal share has increased to over 60 percent starting in 2014 (OACT 2016). General revenues fund federal spending for Medicaid, in contrast to Medicare, where funds in large part come from dedicated revenue sources that include payroll taxes and beneficiary premiums. Funding for the nonfederal, or state, share of Medicaid comes from a variety of sources; at least 40 percent must be financed by the state and up to 60 percent may come from local governments. In state fiscal year 2012, 69 percent of funds came from state general revenues, 16 percent from local governments (including intergovernmental transfers and certified public expenditures), 10 percent from health care related taxes, and 5 percent from other sources (GAO 2014).
Long-term services and supports (LTSS) refers to both institutional care and home- and community-based services (HCBS). Medicaid beneficiaries who use LTSS are a diverse group, spanning a range of ages with different types of physical and cognitive disabilities. They often receive services and supports for many years, or even decades. The types and intensity of services they require vary, both across and within subgroups.
People who receive Medicaid LTSS often have complex conditions and high needs, and thus are among the program’s most expensive beneficiaries. In fiscal year 2013, Medicaid spending for beneficiaries who used LTSS through fee-for-service arrangements was $171.7 billion, or approximately 42 percent of total Medicaid spending, a disproportionate amount given that this group comprised only about 6 percent (4.2 million) of Medicaid beneficiaries that year (MACPAC 2017).
Trends in LTSS delivery include increasing use of HCBS relative to institutional care, development of new quality measures for HCBS, and the increasing delivery of LTSS through managed care.
Managed care is the primary Medicaid delivery system in more than half the states. States have incorporated managed care into their Medicaid programs for a number of reasons, including:
- Managed care provides states with some control and predictability over future costs.
- Compared with fee for service, managed care can allow for greater accountability for outcomes and can better support systematic efforts to measure, report, and monitor performance, access, and quality.
- Managed care programs may provide an opportunity for improved care management and care coordination.
Close to half of federal and state Medicaid spending in fiscal year 2016 (over $258 billion) was on managed care. The proportion continues to grow each year. As of 2015, 80 percent of Medicaid beneficiaries were enrolled in some form of managed care, up from about 56 percent in 2000. MACPAC annually compiles updated information on managed care spending and enrollment.
Perhaps the most widely discussed change that the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) made to Medicaid was expanding eligibility to adults with incomes up to 138 percent of the federal poverty level (FPL). Originally a requirement, the June 2012 Supreme Court ruling in National Federation of Independent Business v. Sebelius effectively made the Medicaid expansion an option, and to date, more than half of states have opted to expand. The ACA also made a number of other significant Medicaid changes, such as preventing states from reducing children’s Medicaid eligibility until FY 2019; setting a uniform standard for children’s eligibility at 138 percent FPL; streamlining eligibility, enrollment, and renewal processes; and updating payments to safety-net hospitals.
Medicaid interacts with other payers when Medicaid beneficiaries have other sources that are legally liable for payment of their medical costs. These may include private insurance, Medicare, other public programs such as the Ryan White program, workers’ compensation, and amounts received for injuries in liability cases. The program also interacts with CHIP when states provide Medicaid coverage to beneficiaries using CHIP funds.
High rates of spending growth for prescription drugs have been of great concern to state and federal Medicaid officials. In 2014, Medicaid prescription drug spending experienced its highest rate of growth in almost three decades. And although spending growth slowed in 2015 and 2016, over the next 10 years prescription drugs could see the fastest average annual spending growth of any major health care good or service due to growth in high-cost specialty drugs.
Learn more about how Medicaid pays for outpatient prescription drugs, MACPAC's recommendations to improve the operations of the drug rebate program, and other issues by reading our featured publications.
The Centers for Medicare & Medicaid Services (CMS) and the individual states and territories jointly administer Medicaid and the State Children’s Health Insurance Program (CHIP). CMS is responsible for program administration at the federal level. CMS approves state plans and state plan amendments, waivers, and demonstration programs; enforces compliance; and provides guidance to states.
States may offer Medicaid benefits on a fee-for-service (FFS) basis, through managed care plans, or both. Under the FFS model, the state pays providers directly for each covered service received by a Medicaid enrollee. Under managed care, the state pays a fee to a managed care plan for each person enrolled in the plan. In turn, the plan pays providers for all of the Medicaid services an enrollee may require that are included in the plan's contract with the state. Learn more about how Medicaid programs pay providers and structure the delivery of care.
For a summary of major Medicaid payment policy developments, click here.
State Medicaid programs cover substance use disorder treatment and supportive services to varying degrees. They are working to integrate care for physical health and treatment for substance use disorders across providers and with other social programs. They also are implementing programs to reduce opioid overprescribing in order to prevent opioid use disorder from developing in the first place. Many of these efforts are being undertaken in conjunction with other state and federal initiatives.
In fiscal year (FY) 2015, total Medicaid spending was $556 billion. Of this amount, $351 billion was federal spending and $205 billion was state spending. This represents:
- 16.4 percent of U.S. health care spending (2014),
- 9.5 percent of federal outlays (FY 2015),
- 61 percent of spending on long-term services and supports (2012), and
- 26 percent of spending on mental health and substance abuse (2009).
Go to our MACStats data book for the most recent detailed data on spending including trends and information broken out by state and eligibility group.