Medicaid: The Basics
Skip to main content
Robert Wood Johnson Foundation
  • Our Mission
    • Our Mission Overview
    • Why Health Equity
    • Focus Areas
    • Measuring RWJF Progress
    • Activation test
  • Grants
    • Grants Overview
    • Active Funding Opportunities
    • Awarded Grants
    • Grantee Stories
    • Grant Process
    • Grantee Resources
  • Insights
    • Insights Overview
    • Blog
    • Our Research
    • Advocacy And Policy
  • About RWJF
    • About RWJF Overview
    • Our Guiding Principles
    • How We Work
    • Impact Investments
    • Staff And Trustees
    • Newsroom
    • Careers
    • Contact Us
Find A Grant

    Medicaid: The Basics

    Brief Feb-01-2019 | Manatt, Phelps & Phillips, LLP | 4-min read
    1. Insights
    2. Our Research
    3. Medicaid
    Download brief

    Additional Briefs in the Series

    #1: Priority Medicaid Issues for New State Officials

    #2: Medicaid: The Basics

    #3: Medicaid’s Impact on Health Care Access, Outcomes and State Economies

    #4: Medicaid’s Role in Children’s Health

    #5: Medicaid’s Role in Addressing Social Determinants of Health

    #6: Medicaid’s Role in Fighting the Opioid Epidemic

    #7: Medicaid Managed Care: Increasing Expectations and Accountability

    Interpreter Heather Cazarin helps nurse Barbara Heintz communicate with a new mother. AnMed Health, Anderson, S.C. MedVerse - Hablamos Juntos

     

    This brief is one in a series of seven on key Medicaid issues for state policymakers. The series is designed to assist new state leaders in understanding the Medicaid program and their role in using it to improve the health of their states’ residents and communities.

    The Issue

    Since its creation in 1965, Medicaid has evolved from a small welfare program to the nation’s single largest health insurer, covering over 66 million people—one in five Americans—in a given month, including one-third of all children and nearly half of all births. The $565 billion program constitutes 17 percent of health expenditures nationally and serves as the largest single payer for long-term care, behavioral health services, and maternity care in the country. It is the largest payer and the biggest source of federal revenue in states. This brief outlines the basics of the Medicaid program for new state policymakers in order to lay the groundwork for considering the challenges and opportunities that lie ahead.

    Medicaid Financing

    Medicaid is governed by a unique partnership in which states and the federal government share responsibility for program design, operations, and costs. Each state administers its own Medicaid program according to federal guidelines. In return, federal funds match state dollars to pay for Medicaid-covered services. Generally, the federal matching rate ranges from 50 percent to 76 percent. Certain programs and services receive a higher federal match, including: family planning services (90 percent); Health Home services (90 percent); care provided in Indian Health Service facilities (100 percent); and care for low-income adults enrolled through state Medicaid expansion programs (93 percent in 2019 and 90 percent in 2020 and beyond).

    To pay the nonfederal share of Medicaid costs, states primarily rely on state general funds collected through sales and income taxes. States also finance the program through intergovernmental transfers, using funds transferred within the state or between state and local governments (i.e., by using local tax revenue), and taxes or assessments on health plans and providers. These taxes are capped at six percent of a provider’s net patient revenues, and must be levied uniformly on all providers in a class.

    Federal Medicaid Rules

    To qualify for federal matching funds, states must operate their Medicaid programs consistent with federal Medicaid law and file a State Plan and State Plan Amendments with the Centers for Medicare and Medicaid Services (CMS) outlining state rules and operating protocols for program administration. States seeking to test program features otherwise barred by federal Medicaid law may seek CMS approval to waive the applicable provisions under Section 1115 of the Social Security Act—also known as Section 1115 or Medicaid demonstration waivers. While CMS has broad discretion in approving waivers, it is not limitless: CMS may only approve a waiver if it finds that the waiver would advance the objectives of the Medicaid program. Currently, 46 states have approved Section 1115 waivers. These waivers permit states, among other things, to test new health care delivery models; cover interventions that address social determinants of health; expand coverage for substance use disorder (SUD) treatment; and impose additional conditions on Medicaid coverage, such as premiums.

    Medicaid Eligibility and Benefits

    Federal rules provide minimum standards for Medicaid eligibility and coverage. All Medicaid programs must cover low-income children, parents, pregnant women, elderly adults, and individuals with disabilities. To date, 37 states, including the District of Columbia, have also opted to expand eligibility to include adults with incomes up to 138 percent of the Federal Poverty Level under the Affordable Care Act (ACA). In 2018, Medicaid enrollment included 30 million children, six million seniors, 11 million people with disabilities, as well as 12.6 million adults eligible through Medicaid expansion programs. Despite making up the smallest share of enrollees, the aged and disabled beneficiaries account for the largest portion—48 percent—of Medicaid costs.

    Reflecting the health care needs of the low-income and medically complex people Medicaid covers, federal law requires states to provide a comprehensive benefit package that includes medical services and nonemergency transportation to health care services and appointments. For children under 21, Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit covers medical, vision, hearing, dental screenings, and any medically necessary treatment services (regardless of whether a state covers such services for adults). For adults and children, states may elect to provide additional optional benefits, such as prescription drugs, case management, personal care, and dental care. Unlike Medicare and most commercial plans, Medicaid also covers long-term services and supports provided in nursing homes or home and community-based settings.

    Conclusion

    Each state Medicaid program is different, reflecting states’ diverse health care landscapes and economic, policy, and political priorities. Yet, there are common issues that have implications for state economies, Medicaid beneficiaries, and the future of the program. The briefs that follow in this series call out some of the issues that merit policymakers’ immediate attention.

    For additional information on how states can get the most out of their Medicaid managed care programs, please refer to the resources included in the downloadable PDF.

    About Manatt Health

    Manatt Health is an interdisciplinary policy and business advisory division of Manatt, Phelps & Phillips, LLP, one of the nation’s premier law and consulting firms. Manatt Health helps clients develop and implement strategies to address their greatest challenges, improve performance, and position themselves for long-term sustainability and growth. For more information, visit www.manatt.com/Health.

    Related Content

    RWJF Feature
    Parents  smiling while holding their toddler.

    Medicaid

    Stable, affordable health coverage for people in the U.S. is the starting point to improving health outcomes and building a Culture of Health. In the U.S. nearly 75 million people rely on Medicaid for health coverage.

    1-min read

    • About this Grant
    SHOW MORE
    +

    SHARE

    Subscribe to receive Funding Alerts & more

    Explore the latest in reflection and research from subject matter experts at RWJF and our wide network of partners.

    Email address already subscribed. Please check your inbox to manage your subscriptions.

    Subscribed!

    Thank you. You are now subscribed.

    Tell us what type of content you want to receive.

    Be informed with our weekly newsletter updating you with relevant news and research around a Culture of Health, as well as the latest funding opportunities.

    Get funded by RWJF: Receive notifications when new funding opportunities are released.

    Receive monthly updates on RWJF-sponsored research that informs many robust health policy debates on Capitol Hill, covering topics like health equity, improving access to quality healthcare, equitable housing, and more.

    Shop talk for researchers. This monthly newsletter covers research news and opportunities from the Robert Wood Johnson Foundation.

    Sometimes we have news, announcements or opportunities that don't quite fit the subscription parameters above. If you're interested, we'll send you this information under "There's more...". *If you've indicated you are an EU resident, we will only send these communications if you intentionally check this box.

    Yes! I want to tell you more about myself and receive personalized communications in the future.

    Area(s) Of Interest

    Which profession or pursuit best describes you?

    Unsubscribe

    Stop receiving all emails from RWJF

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    • CONTACT RWJF

      50 College Road East

      Princeton, NJ 08540-6614

       

      US Toll Free: (877) 843-7953

      International: +1 (609) 627-6000

    • MANAGE YOUR GRANTS

      MyRWJF Login

      • Twitter link
      • Facebook link
      • LinkedIn link
      • YouTube link

    • Our Mission
      • Our Mission Overview
      • Why Health Equity
      • Focus Areas
      • Measuring RWJF Progress
      • Activation test
    • Grants
      • Grants Overview
      • Active Funding Opportunities
      • Awarded Grants
      • Grantee Stories
      • Grant Process
      • Grantee Resources
    • Insights
      • Insights Overview
      • Blog
      • Our Research
      • Advocacy And Policy
    • About RWJF
      • About RWJF Overview
      • Our Guiding Principles
      • How We Work
      • Impact Investments
      • Staff And Trustees
      • Newsroom
      • Careers
      • Contact Us

    ©2001- 

    Robert Wood Johnson Foundation. All Rights Reserved. 

     

    • Manage Email
    • Privacy Statement
    • Terms and Conditions