#6 Medicaid Explained: Facts and Benefits

Now that you’re an expert on Medicare it’s time to learn about the second tier of public insurance programs: Medicaid. While they are similar in name, these two insurance programs are significantly different. 

For starters, Medicaid is run by the federal government and covers uninsured Americans with incomes up to 138% of the Federal Poverty Line (FPL). However, as it is run jointly with the state governments, each state can institute their own policies about how they expand the core Medicaid program, as allowed by the Affordable Care Act (ACA).  While many states have expanded, 48% of the people eligible for Medicaid live in states that have not, which are mostly in the South and Midwest.

Originally, Medicaid covered low-income individuals including pregnant women, children, parents, and the elderly, as well as those with disabilities.  After the enactment of the ACA , low-income adults without children are also eligible to be covered by the expansion.  

In typical insurance plans, the enrollee is required to participate in cost-sharing, through things like a copay or coinsurance, which is paid out-of-pocket.  Though some enrollees who fall in a higher income bracket may pay some fees like these, most groups covered by Medicare are not required to. For this reason, Medicaid accounts for the largest category of state budgets.  This money comes from both income and sales taxes, as well as aid from the federal government, which is through a matching percentage of a state’s per capita income, called a Federal Medical Assistance Percentage (FMAP).  

For example, Rhode Island’s FMAP is 52%. For every dollar spent on Medicaid, the federal government would reimburse the state $0.52.  Additionally, as an incentive for states to expand, the federal government covers all extra costs post-expansion and will decrease this gradually (90% in 2020).

In addition to the various groups covered, more benefits can be offered, depending on the state.  While there are specific mandatory benefits, states can opt to cover other services that are not required, such as vision, prescriptions, and dental.

Not only does the government cover services of those under Medicaid, it also helps reimburse safety-net hospitals, which care for a proportionately large number of Medicaid enrollees (25%).  Another program under Medicaid, called the Children’s Health Insurance Program (CHIP), helps cover uninsured, low-income children who are not eligible for Medicaid. Pregnant women and parents of CHIP children are also covered in certain states depending on expansion level.

There are also people who are eligible for and enrolled in both Medicare and Medicaid. In these scenarios, Medicaid covers the premiums and cost-sharing aspects of Medicare, as well as some additional benefits, such as long-term home health care.  This population of individuals, though small, is incredibly expensive as they are usually low-income, elderly enrollees. Even though these people exist and benefit greatly from the intersection, Medicare and Medicaid are completely separate programs and don’t merge often or easily.  While Medicare policies do not change often, due to the importance of the elderly vote, Medicaid is constantly undergoing revision, giving the state governments more flexibility depending on their population and resources.  With the massive funding it requires and the large amount of people it affects (75M) Medicaid is still under constant political debate.