Medicaid is among the most successful health insurance programs in the United States (U.S.). The establishment of the program can be traced back to 1935 when President Roosevelt signed the original Social Security Act (SSA), which was mainly intended to provide income security to some specific low-income earners, the disabled, and their dependants. Although the original SSA placed less emphasis on health care, it contained provisions, which allowed for research on the health insurance topic. Such research informed the creation of the Medicaid program in 1965 under Title XIX of the SSA. Medicaid specifically targeted the low-income needs, and was an important part of President Johnson’s “Great Society” reform plan.1 By 1982, state agencies had taken the lead in administering the program’s resources under various names, for example, “Medi-Cal” in California and “MassHealth” in Massachusetts. In 1990, the Medicaid Drug Rebate program was added to Medicaid through enactment of the Omnibus Reconciliation Act (OBRA 90), to provide assistance in managing the rising cost of outpatient drugs. Medicaid’s payments to providers were reduced in 1997 after the enactment of the Balanced Budget Act. However, some of the payments were restored when the Act was refined in the years 1999 and 2000 respectively. In 2001, it was estimated that approximately 46 million people had enrolled in Medicaid. The 2005 Deficit Reduction Act considerably changed specific components of the Medicaid program, mainly by reducing funds. The same year, states were granted more authority to determine the enrollment requirements and plan details. In 2009, Medicaid was at the center of President Obama’s health care reform plan. The signing of the Patient Protection Act in 2010 by President Obama extended the program’s coverage.
The services covered by Medicaid include nursing home services for every eligible individual aged 21 and above. The program also provides home and community-based services to persons that need to be in a nursing home, in case they failed to receive home care services.2 It also provides services such as personal care services and case management that can help those enrolled remain at home. Generally, those eligible for the program include those with low income and assets, and the disabled. The signing of the Affordable Care Act of 2010 by President Obama increased the program’s coverage to almost all Americans under age 65.3 Medicaid’s 2013 annual budget was estimated to be approximately $265.4 billion.4 Medicaid is funded by both the federal government and the states, with the federal contribution varying across states depending on their respective per capita incomes.
Medicaid is an entitlement program that seeks to improve the well being of the American people by increasing their health insurance coverage. The federal budget process for appropriating the program’s funds is usually undertaken by the Congress. It begins with the President submitting a budget to Congress in each fiscal year. By the time the president submits the budget, the Congressional budget Office usually publishes its estimates for the country’s economic and budget outlook to assess the sustainability of the proposed budget. Congress then passes the budget resolution, and eventually passes appropriation and revenues laws for the program. The House and Senate committees having jurisdiction over Medicaid program include the House Ways and Means Committee, and the Senate Finance Committee respectively.5
The federal government pays more than half of all the Medicaid spending in the states. The funding varies across states depending on their respective per capita incomes. Conversely, the states determine how much they can spend in line the federal rules. While the federal government funds similar Medicaid services across the states, the states have the authority to provide additional or optional services to its people. Medicaid program is largely supported by faith groups, the disabled and disability rights groups, low-income earners, and the elderly. Wealthier groups have largely opposed the program claiming that it is imposing burden on those earning higher incomes. The federal government mainly ensures the states use the allocated funds entirely on stipulated Medicaid programs, while the states establish the provider standards. Finally, local governments ensure providers have delivered quality services to the people.
The program’s future has both challenges and opportunities. The challenges mainly stem from the increasing cost of funding the program, considering that the passing of the Affordable Care Act increased the program’s coverage to nearly all Americans aged 65 and below. This would compel the federal government to seek alternative ways of raising funds to support the program in the future. For example, the federal Medicaid cost is projected to reach $478 billion annually by 2021, which in combination with state funding would translate to a total of $795 billion.6 The government may be compelled to increase its taxation regime in order to adequately and sustainably fund the Medicaid program. However, the flexibility of the states in administering Medicaid services offers more opportunities for the program. For instance, the states have the authority to expand the program’s coverage beyond the federal minimum levels. This would result to increased coverage and provision of high quality services. The provision of community-based services would ensure those enrolled realize maximum befits from the program as the services will be readily available.
- Sreenivasan J. Poverty and the government in America: A historical encyclopedia. Santa Barbara, Calif: ABC-CLIO; 2009: 40.
- Mason DJ, Leavitt JK, Chaffee MW. Policy & politics in nursing and health care. St. Louis, Missouri: Elsevier/Saunder; 2014: 210.
- Kandziolka C. Personal Wealth Management and Retirement. Raleigh, NC: Lulu; 2012: 75-76.
- Executive Order of the President. Budget of the United States government, analytical perspective. Washington DC: US Govt Printing Office; 2014: 244.
- Novick LF, Morrow CB, Mays GP. Public health administration: Principles for population-based management. Sudbury, Mass: Jones and Bartlett; 2007: 169.
- Fichtner JJ, Mercatus Center. The economics of Medicaid: Assessing the costs and consequences. Arlington, VA: Mercatus Center at George Mason University; 2014: 85-86.