Medicaid: focusing on state innovation.

Introduction: An Overview of the Medicaid Program T he Medicaid program plays a key role in ensuring access to medical and long-term care services for millions of Americans. Medicaid, a jointly funded federal–state health care program for low-income individuals, covered more than 47 million people in 2002—one of every seven Americans. 2, 3 With financial assistance from the federal government, each state operates a separate program according to broad federal guidelines and a state’s own Medicaid Plan.While the federal government has established a framework for Medicaid’s mandatory eligibility categories and covered services, states have authority to cover optional groups and services and to determine payment rates for providers. During 2002, Medicaid covered 24 million children, 11 million adults, and more than 13 million elderly and disabled people. Medicaid eligibility generally excludes nondisabled, single adults between the ages of 21 and 64, and childless couples. As the availability and affordability of private health insurance coverage have decreased in recent years, states have sought to expand their Medicaid programs to provide for those who lose coverage from private sources and to improve coverage for vulnerable low-income populations.These efforts, however, have led to some further declines in private insurance, the magnitude of which is controvertible. In recent years, Medicaid enrollment has increased, after declining between 1995 and 1998. With the downturn in the economy and rising health care costs, many states now face record deficits and shortfalls in their Medicaid budgets.The ability of states to continue to expand their Medicaid programs, or simply to maintain existing eligibility and benefits levels, is questionable. In fact, many states are implementing program changes to slow Medicaid spending growth, including reducing eligibility, The Commonwealth Fund is a private foundation supporting independent research on health and social issues.The views presented here are those of the authors and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.