An overview of Medicaid

What is Medicaid?

• Medicaid is a program financed jointly by federal and state governments, providing medical care and long-term care to many of the nation’s most vulnerable lower-income people.

• Created in 1965, Medicaid pays physician and hospital bills, prescription drug costs, and other health care costs for lower-income mothers and children, frail seniors, and people with disabilities

• Each state decides how to structure benefits, eligibility, service delivery and payment rates with guidelines established by federal law.

• State spending on Medicaid is “matched” by the federal government. The federal financing share averages 57%. The federal match varies based on per-capita income in the state.

• Medicaid finances almost 75% of all state health spending.


What is Medicaid’s Impact?


• Medicaid covered 44 million people in 2000, including 22.6 million lower-income children, 12

million elderly and disabled persons, and 9.2 million lower-income adults.

• Over 25% of American children rely on the program for their health coverage.

• It pays for the care of about two-thirds of nursing home residents.

• Medicaid finances one-third of the baby deliveries in the country and covers more than half of people with AIDS.

• Medicaid spending for 2003 is expected to reach $280 billion, with the federal government share amounting to $159 billion.


What Does Medicaid Cover?

• States must provide all beneficiaries with a basic set of services, including doctor visits, hospital care, lab and x-ray services, family planning services and special health screening for children.

• States are also required to pay for care in nursing facilities and for home-based services. Medicaid pays for almost 50% of nursing home expenses nationally. Costly long-term institutional care is generally not covered by private insurers or Medicare.

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