What is Medicaid?

Medicaid is a publicly funded health insurance programme which assists with healthcare costs for low income individuals in the United States. The Medicaid programme is administered at the state level to allow for flexibility in delivery models while being subject to federal standards. As of July 2021, there were over 76.7 million Americans receiving some form of benefits through the programme.

The US Department of Health and Human Services (HHS) defines Medicaid as follows:

“Medicaid is available only to certain low-income individuals and families who fit into an eligibility group that is recognised by federal and state law. Medicaid does not pay money to you; instead, it sends payments directly to your health care providers. Depending on your state's rules, you may also be asked to pay a small part of the cost (co-payment) for some medical services. In general, you should apply for Medicaid if you have limited income and resources.”

Medicaid explained

Medicaid was introduced in 1965 when it was authorised through the Social Security Act with federal contributions of at least 50% of total state healthcare costs to a maximum of 83% for more impoverished states. As a result all 50 states as well as the District of Columbia and US territories participate in Medicaid.

Explaining the broader Medicaid meaning, Medicaid.gov states: “Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government.

Until 1972 Medicaid coverage was only supplied to those individuals receiving social assistance, with states having the ability to offer expanded coverage. The link between welfare and Medicaid was officially terminated in 1996 with the enactment of the Children's Health Insurance Program (CHIP).

In 2010 President Obama introduced the Affordable Care Act (ACA), known as Obamacare, which expanded income eligibility for Medicaid and federal matching criteria.

President Trump was able to force through aspects of his American Health Care Act (AHCA) which reduced some of the key provisions of Obamacare. An example of Medicaid benefits cut by the Trump administration is the reduction of the annual enrollment period from 90 days to 45 days in 2018.

What is covered by Medicaid?

Federal law requires states to provide health coverage to certain mandatory groups such as low income families, qualified pregnant women and children, individuals receiving social security benefits and people over the age of 65 who earn less than 133% of the defined state poverty level.

Individual states may choose to offer coverage to expanded groups such as children in foster care within their state level healthcare budget. Benefits included vary from state to state but must provide a minimum required set of standards. These minimum requirements include inpatient and outpatient hospital services, access to a physician and physician services.

All states must also pay for long-term nursing home care or home healthcare. Most states also provide funding for access to community-based services such as rehabilitory health therapies, respite care and home health aides. While these services are not required at the federal level, funding eligibility through Medicaid means that the costs are covered if states choose to offer them.

Advantages of Medicaid

In the United States healthcare is privatised. The cost can be extremely high for those without privately funded health insurance. Medicaid provides access to healthcare for millions of Americans who otherwise may be unable to afford private insurance.

According to the Center on Budget and Policy Priorities: “A wide body of research demonstrates that Medicaid provides critical access to comprehensive, cost-effective care for tens of millions of children and families, seniors, people with disabilities, and other adults.”

What is the difference between Medicaid and Medicare?

While Medicaid is a state programme aimed for various groups of people with low income, Medicare is a federal programme for people over the age of 65 or those under 65, but with a disability, regardless of income, according to HHS.