"Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older."State participation in Medicaid is voluntary, although all states, the District of Columbia, and the territories<sup>1</sup> choose to participate. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute’s basic framework. This flexibility results in variability across state Medicaid programs.The federal government…
Medicaid Enrollment
"The ACA Medicaid expansion has significantly increased Medicaid enrollment and federal Medicaid expenditures. In FY2017, an estimated 12 million individuals were newly eligible for Medicaid through the ACA Medicaid expansion (i.e., expansion adults), and total Medicaid expenditures for the expansion adults were an estimated $71 billion. Enrollment for the expansion adults is projected to be 13 million in FY2026, and expenditures for the expansion adults are projected to be $120 billion in FY2026 (with the federal government paying $108 billion and states paying $12 billion)."Between FY2014 and FY2015, the average per enrollee costs for expansion adults is projected to have…
Financial Eligibility for Medicaid
"Medicaid is also a means-tested program that is limited to those with financial need. However, the criteria used to determine financial eligibility—income and sometimes resource (i.e., asset) tests—vary by eligibility group."For most eligibility groups the criteria used to determine eligibility are based on modified adjusted gross income (MAGI) income counting rules. There is no resource or asset test used to determine Medicaid financial eligibility for MAGI-eligible individuals.26"While MAGI applies to most Medicaid-eligible populations, certain populations such as older adults and individuals with disabilities are statutorily exempt from MAGI income counting rules. Instead, Medicaid financial eligibility for MAGI-exempted populations is based…
Categorical Eligibility for Medicaid
"Medicaid categorical eligibility criteria are the characteristics that define the population qualifying for Medicaid coverage under a particular eligibility pathway; in other words, the nonfinancial requirements that an individual must meet to be considered eligible under an eligibility group. Medicaid covers several broad coverage groups, including children, pregnant women, adults, individuals with disabilities, and individuals 65 years of age and older (i.e., aged). There are a number of distinct Medicaid eligibility pathways within each of these broad coverage groups."Historically, Medicaid eligibility was limited to poor families with dependent children who received cash assistance under the former Aid to Families with…
Medicaid Expenditures
"The cost of Medicaid, like most health expenditures, historically increased at a rate significantly faster than the overall rate of U.S. economic growth, as measured by gross domestic product. In the past, much of Medicaid’s expenditure growth has been due to federal or state expansions of Medicaid eligibility criteria, such as the ACA Medicaid expansion."Medicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates (see the “Medicaid Enrollment” section for a discussion of the impact of the unemployment rate on Medicaid enrollment, which also impacts expenditures), and individuals’ wages. Demographic factors include…
Medicaid Financing
"The federal government and the states jointly finance Medicaid.47 The federal government reimburses states for a portion (i.e., the federal share) of each state’s Medicaid program costs. Because federal Medicaid funding is an open-ended entitlement to states, there is no upper limit or cap on the amount of federal Medicaid funds a state may receive. In FY2018, Medicaid expenditures totaled $616 billion. The federal share totaled $386 billion and the state share was $230 billion.48" Source: U.S. Congressional Research Service. Medicaid: An Overview (R43357; June 24, 2019). https://crsreports.congress.gov/product/pdf/R/R43357
State Share of Medicaid Financing
"The federal government provides broad guidelines to states regarding allowable funding sources for the state share (also referred to as the nonfederal share) of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources."States can use state general funds (i.e., personal income, sales, and corporate income taxes) and other state funds (e.g., provider taxes,53 local government funds, tobacco settlement funds, etc.) to finance the state share of Medicaid. Federal statute allows as much as 60% of…
Federal Share of Medicaid Financing
"The federal government’s share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate, which generally is determined annually and varies by state according to each state’s per capita income relative to the U.S. per capita income.49 The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes."FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%.50 For a state with an FMAP of 60%, the state gets 60 cents back from the…
Total National Health Expenditures in the US
"NHE [National Health Expenditures] increased by 3.9 percent in 2017 to $3.5 trillion or $10,739 per capita. This growth rate is lower than what was observed in 2016 (4.8 percent) and 2015 (5.8 percent). After a period of relatively fast growth in 2014 and 2015 during the implementation of the Affordable Care Act (ACA), 2017 was characterized by slower growth that continued from 2016. In fact, growth in 2017 was similar to the 3.7 percent average annual rate of the 5-year period ending in 2013. These growth rates are the lowest since the early 1960s when health spending was first…
Total Health Care Spending in the US by Type
"Exhibit 1 decomposes health care spending in 2017 by type of expenditure. In this breakdown, health spending can go towards investment or HCE [Health Consumption Expenditures]. Investment accounted for $167.6 billion (or 4.8 percent of total health spending). The remainder went to the HCE category, which CMS divides into spending on personal health care, government public health activities, government administration, and the net cost of health insurance."The bulk of the HCE category is made up of personal health care spending, which was $2,961 billion or 84.9 percent of total health spending in 2017. The four main categories of personal health…
