Medicaid finances low-income and high-need populations, including health and long-term care services for children, pregnant women, adults in low-income working families, the elderly, and the disabled. Currently, low-income children can qualify for Medicaid or the Children’s Health Insurance Program; however eligibility for low-income parents is more limited and varies by state.
According to The Medicaid Program at a Glance, Kaiser Family Foundation (2013), Medicaid covers over 62 million low-income individuals with many states having expanded Medicaid beyond what federal law requires, mostly for children. As of January 2013, 19 states covered children up to at least 150% of the federal poverty level (FPL) – $29,295 for a family of three in 2013 – including 11 states with eligibility thresholds between 200% and 300% FPL. For adults, in 33 states, the income eligibility threshold for working parents is now set below 100% FPL; in 17 of these states, the threshold is lower than 50% FPL.
Currently, to qualify for Medicaid, a person must meet financial criteria and belong to a group that is categorically eligible for the program. These mandatory groups are:
Under health reform, beginning in 2014, changes will result in who is covered. States are required to determine Medicaid eligibility based solely on income, meaning categorical criteria are eliminated, and to expand eligibility to most nonelderly individuals with income up to 138% FPL. Millions of uninsured adults who were previously excluded from Medicaid will gain coverage.
States may expand Medicaid eligibility to cover additional optional groups. These groups are:
Immigrants who have entered the U.S. illegally cannot qualify for basic Medicaid benefits, although they are eligible for Medicaid coverage for emergency medical care (if they meet all other financial and non-financial requirements). Most categories of immigrants who are legally residing in the U.S. and who meet all other financial and non-financial requirements are eligible for Medicaid coverage for emergency care, but, depending on the year in which they entered the country, they may or may not be eligible for the full range of Medicaid services.
State Medicaid programs provide a range of mandatory services, but can also provide an array of “optional” services. Children are entitled to all medically necessary Medicaid benefits, whether mandatory or optional under federal law also known as Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services. States are not able to vary benefits by geographic area or by eligibility category without a Federally-approved waiver.
According to Medicaid: A Primer, Kaiser Family Foundation (2013), state Medicaid programs are generally required to cover:
Commonly covered optional services:
As with Medicare, the demographics of rural America explain much of the significance of the Medicaid program for rural residents and providers. According to Medicaid and Its Importance to Rural Health, Rural Policy Research Institute (2006), rural populations experience higher rates of poverty than their urban counterparts, are less likely to have health insurance, have a greater proportion of elderly residents, and are more likely to have children in the household. Any changes in Medicaid benefits or eligibility that target children, elderly, or the disabled will therefore significantly affect rural communities.
In addition to Medicaid’s importance to rural residents in terms of providing access to care, the program plays a major role in the financial viability of rural providers. As with Medicare, some rural provider types, such as small independent pharmacies, are more dependent on Medicaid reimbursement than their urban counterparts. Because rural health care is heavily dependent on Medicaid, any change in Medicaid payments to providers (because of a change in eligibility, covered services or provider payment reductions) could have a disproportionate impact on the financial stability of rural providers. Rural safety-net providers such as small rural hospitals, Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs), and Critical Access Hospitals (CAHs) tend to operate on small financial margins and are therefore extremely susceptible to changes in reimbursement.
According to The Patient Protection and Affordable Care Act of 2010: Impacts on Rural People, Places, and Providers: A First Look, RUPRI, (2010), provisions in the ACA will have an impact on rural areas. Changes in health insurance coverage, Medicare and Medicaid payment, Public Health, Healthcare Workforce, Long-Term Care, and changes in delivery systems should occur.
In 2010, some changes that were implemented were: including eligibility for coverage for children as dependents in family plans up to age 26, creation of high-risk pools for persons with pre-existing health conditions, and extension of tax credits and subsidies to small businesses and their employees.
Rural primary care physicians will benefit from Geographic Practice Cost Indices (GPCIs) adjustments that will reduce geographic practice expense disparities. Rural hospitals should have less charity care and fewer bad debts due to the decline in the uninsured. The establishment of a Community Health Centers (CHC) fund to expand the sustain federal investments by appropriating an additional $700 million in FY 2011 that increases to $2.9 billion in FY 2015. New payment systems are expected, along with the establishment of the Independent Payment Advisory Board (IPAB).
According to Medicaid: A Primer, Kaiser Family Foundation, (2013), under the new law, starting in 2014, most individuals will be required to obtain health coverage. Access to affordable health coverage will be improved. Medicaid eligibility for people under age 65 will be based solely on income. Categorical restrictions will be abolished and coverage will be extended to millions more low-income people. Enrollment will be simplified, and improvements will be made to access of care.
16 million more people are expected to gain Medicaid or CHIP coverage by 2019 due to the expansion of Medicaid eligibility and increased participation. The Congressional Budget Office estimates that the federal government will finance about 96% of the coverage increases associated with health care reform between 2010 and 2019 ($434 billion), and states will contribute 4% ($20 billion).
With the passage of the Deficit Reduction Act of 2005 (DRA), Medicaid spending is expected to decline. The DRA gives states new flexibility to limit benefits and impose premiums and cost sharing. This new law provides options focused on expanding community based long-term care, requires states to make changes to the asset transfer rules that affect eligibility for Medicaid nursing home services, and requires states to obtain proof of citizenship for Medicaid enrollees. Beyond this, some states are pursuing major and fundamental program reforms through Medicaid waivers.
The aging of the population can also be expected to increase demands on Medicaid, since the health care needs and costs for the elderly and people with disabilities are the most costly. Moreover, Medicaid covers long-term care for low-income Medicare beneficiaries, and is the single largest source of financing for long-term care. As demand increases, long-term care costs can be expected to rise.
Effective January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) expands Medicaid to nearly all individuals between the ages of 19 up to 65 (children, pregnant women, parents, and adults without dependent children). However, the reach of the program will depend on both federal and state actions to implement the new law. For further information see:
Last Reviewed: 6/12/2013