Medicaid: An Overview (CRS Report for Congress)
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| Release Date |
Revised Feb. 8, 2023 |
| Report Number |
R43357 |
| Report Type |
Report |
| Authors |
Alison Mitchell, Evelyne P. Baumrucker, Kirsten J. Colello, Angela Napili, Cliff Binder, Julia A. Keyser |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports (LTSS) to an estimated 75 million people at a cost to states and the federal government of $616 billion in FY2018. Medicaid is one of the largest payers in the U.S. health care system, representing 17% of national health care spending in CY2017; in that year, private health insurance and Medicare accounted for 34% and 20% of national health care spending, respectively.
Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate. The federal government requires states to cover certain mandatory populations and services, but the federal government also allows states to cover other optional populations and services. Due to this flexibility, there is substantial variation among the states in terms of factors such as Medicaid eligibility, covered benefits, and provider payment rates.
Historically, Medicaid eligibility generally has been limited to low-income children, pregnant women, parents of dependent children, the elderly, and individuals with disabilities; however, since 2014, states have had the option to cover nonelderly adults with income up to 133% of the federal poverty level (FPL) under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) Medicaid expansion.
Medicaid coverage includes a variety of primary and acute-care services as well as LTSS. Not all Medicaid enrollees have access to the same set of services. An enrollee's eligibility pathway determines the available services within a benefit package. Federal law provides two primary benefit packages for state Medicaid programs: (1) traditional benefits and (2) alternative benefit plans (ABPs). Beneficiary cost sharing (e.g., premiums and co-payments) is limited under the Medicaid program.
Medicaid enrollees generally receive benefits via one of two service delivery systems: fee-for-service (FFS) or managed care. Under FFS, health care providers are paid by the state Medicaid program for each service provided to a Medicaid enrollee. Under managed care, Medicaid enrollees get most or all of their services through an organization under contract with the state. Most states use a combination of FFS and managed care.
The federal government and the states jointly finance Medicaid. The federal government reimburses states for a portion of each state's Medicaid program costs. Federal Medicaid funding is an open-ended entitlement to states, which means there is no upper limit or cap on the amount of federal Medicaid funds a state may receive.
The Social Security Act authorizes several waiver and demonstration authorities that allow states to operate their Medicaid programs outside of federal rules. The primary Medicaid waiver authorities include Section 1115, Section 1915(b), and Section 1915(c).
Medicaid provider payment rates are set by states within federal rules. In some cases, states make supplemental payments to Medicaid providers that are separate from, and in addition to, the payment rates for services rendered to Medicaid enrollees. Also, Medicaid program integrity initiatives are designed to combat fraud, waste, and abuse in the Medicaid program.
