What is Medicaid Role?

Medicaid, the nation’s public health insurance program for low-income people, now covers nearly 60 million Americans, including many working families, as well as many of the poorest and most fragile individuals in the US society. Medicaid is the largest source of financing for nursing home and community-based long-term care, and it provides essential funding for the safety-net delivery system on which many Americans rely. Most Medicaid enrollees would be uninsured without the program. Medicaid is a counter-cyclical program; during the economic recession, it expanded as intended, assisting millions of people affected by loss of employment and health coverage and declining income, but also straining state budgets.

A Growing Program

In 1965, the United States enacted Medicare for the elderly – and also Medicaid to help pay for health care for very poor children, the disabled, and seniors. At first, the types of people eligible for Medicaid were those receiving cash welfare assistance. But as the years went by, Medicaid benefits were extended to many low-income workers. Medicaid has also expanded to cover additional services, such as nursing home care for elderly people who exhaust family resources. Grandmothers and grandfathers in many middle class families end up using benefits.

From the start, Medicaid was popular with a majority of Americans, and public affection for it has only grown. During the budget crisis of the summer of 2011when citizens were asked whether they supported cuts in Medicaid as a way to reduce the federal budget deficit, 72% of the public said they were opposed to cuts, and 54% were strongly opposed. Most Americans want to help the poor, yet Medicaid also touches people and families who are not desperately poor. A recent Kaiser Family Fund Survey found that 51% of Americans have some personal connection to the Medicaid program; a fifth have received benefits personally at some time, and 31% have a family member or close friend that is covered by the program.

What is Medicaid’s role?

Medicaid has assisted millions affected by the recession, stemming greater increases in the number of uninsured. In recent years, Medicaid has filled gaps in coverage, especially for children, left by steadily eroding job-based coverage and worsened by the impact of the recession. While the uninsured rate among adults has continued to rise, Medicaid and CHIP have provided a safety-net of coverage for children. Indeed, nearly 600,000 fewer children were uninsured in 2009 than in 2007, as 4.6 million children gained Medicaid or CHIP coverage.

Medicaid is the largest source of funding for safety-net providers and the dominant payer for long-term care. Medicaid is the largest source of funding for health centers and public hospitals that serve the poor and uninsured, often in underserved areas. Children’s hospitals also rely heavily on Medicaid payment. Seven in 10 people living in nursing homes are covered by Medicaid. The program also provides over a quarter of all funding for mental health care.

Medicaid is a major item in federal and state budgets. Medicaid spending per person has been growing more slowly than other health care costs. Medicaid is the third-largest domestic program in the federal budget after Social Security and Medicare, and accounts for 8% of federal spending. It is the second largest program in most states’ budgets after elementary and secondary education, with states spending about 16% of their own funds on the program on average.

The use of managed care is not the only approach to achieving high performance in the delivery of Medicaid services. Yet, activity and interest in Medicaid managed care are high and likely to increase with the expansion of Medicaid to cover more low-income adults in many states under the Affordable Care Act. Therefore, certain policy and operational changes, as well as ongoing program monitoring and evaluation, are recommended to promote patient-centered, coordinated care.