"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…
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 Healthcare Spending In the US by Sponsor
"PHI [Private Health Insurance] spending was to $1,183.9 billion in 2017. Through employer contributions to employer sponsored health insurance premiums, private businesses financed 45.3 percent ($536.3 billion) of PHI spending - the largest contribution among sponsors. Households were the second largest sponsor of PHI spending, financing 31.5 percent ($372.4 billion) of PHI spending through employee contributions to employer-sponsored health insurance premiums (23.5 percent), household contributions to direct purchase insurance (4.6 percent) and the medical portion of property and casualty insurance (3.4 percent). The government had the smallest contribution to PHI spending with state and local governments financing 16.2 percent ($192.3…
Total Healthcare Spending In the US by Funding Source
"PHI [Private Health Insurance] had the largest share of total health spending at 33.9 percent ($1,183.9 billion), as has been the case for the past four decades (Kane, 2017). Medicare spending accounted for 20.2 percent of total health spending ($705.9 billion) and Medicaid spending made up 16.7 percent ($581.9 billion). Out-of-pocket spending, which includes all payments made directly by all patients regardless of insurance status, was 10.5 percent of total health spending ($365.5 billion). Spending on other health insurance programs was 3.8 percent of total health spending ($132.6 billion) and spending on other third-party payers and programs and public health…
ACA’s Medicaid Expansion and NFIB v Sebelius
"As enacted, the ACA Medicaid expansion was a mandatory expansion of Medicaid eligibility to non-elderly adults with incomes up to 133% of the federal poverty level (FPL). However, on June 28, 2012, in National Federation of Independent Business v. Sebelius, the U.S. Supreme Court found that the federal government could not withhold payment for a state’s entire Medicaid program for failure to implement the ACA Medicaid expansion. Instead, the federal government could withhold only funding for the ACA Medicaid expansion if a state did not implement the expansion, which effectively made the expansion optional."After the Supreme Court ruling, the Centers…
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