We explore and unpack a few broad questions to understand the role of Medicaid, how it’s structured, and more.
TLDR: This article is the first part of a multi-part series on Medicaid, which aims to serve as a 101-level introduction into the topic of Medicaid. As with many, if not all topics in healthcare, Medicaid is complicated. We hope this article (in combination with future articles), helps put the pieces together for folks on how the program is structured, financed, and care is delivered.
In the first half, we explore a few broad questions to understand the role of Medicaid, how it’s structured, and more. In the second part, we dig into the specific subgroups/programs to figure out the demographic makeup of and how folks qualify for each.
Medicaid is a public health insurance program in the United States. It is a federal-state partnership program, meaning it is administered by states, according to requirements set by the federal government. It is important to note that while it is a federal-state program, Medicaid very much operates on a state by state basis (more on this later).
Acting as an assistance program, Medicaid typically provides health coverage to the most underserved populations – including low-income adults, children, pregnant women, elderly adults, and people with disabilities. Medicaid members often have complex, high-cost care condition profiles, among them are substance use disorder, childbirth, anxiety, hypertension, and depression. More pointedly, Medicaid is an “entitlement” program and thus, anyone who meets the eligibility rules (which we will dig into below) has a right to enroll in Medicaid coverage.
As of July 2022, nearly 82.8 million Americans were enrolled in Medicaid, making it the single largest insurance program in the US. Following a period of enrollment declines from 2017 to 2019, the Covid-19 pandemic accelerated Medicaid enrollment, which was up 29.5% from February 2020 to July 2022. The recent increase in enrollment was driven by economic changes (increased unemployment), Medicaid expansion initiatives, and the temporary continuous enrollment requirement (aka Families First Coronavirus Response Act) – which blocked states from disenrolling Medicaid members during the emergency period. It is important to note that the emergency order is set to end January 2023, which has several implications that will impact this population. You can read more about those in this KFF article here.
Now that you have the elevator pitch on Medicaid, the next few sections will dig into broad questions to help provide understanding for the scope and structure of the program, with a few notes on how it operates.
According to the US Census Bureau, in 2021 about 66% of people were covered by private insurance, compared to just 36% that were in public programs (Note: The estimates by type of coverage are not mutually exclusive; people can be covered by more than one type of health insurance during the year – hence why these do not equal 100%). Looking at those numbers, you can quickly see how in the US - unlike many other countries - private insurance provides coverage for the majority of the population. Yet public programs remain quite important in the U.S., both for the 36% that receive coverage via public programs, and also because the role government rates play in setting commercial rates.
Zooming into the 36% on the public insurance side, Medicaid accounts for nearly 19% of the total US population. Despite being a smaller part of the broader US insurance landscape, Medicaid plays a crucial role as the safety net responsible for covering those who cannot afford private insurance. Some of the underserved groups covered by this safety net include low-income adults and children, people with disabilities, low-income Medicare beneficiaries (aka “dual eligible”), long-term care assistance, and more.
Source: US Census Bureau
We will explore who is covered in each of these subgroups and how they qualify for Medicaid in more detail later in the article.
Earlier on in the article we talked about how states are subject to various federal requirements in order to participate in Medicaid – one of those requirements comes into play when we talk about eligibility. In fact, there is a list of mandatory eligibility groups – such as individuals on Supplemental Security Income (SSI), pregnant women and children, low income families, and more. Beyond covering these groups, states have the option to cover several other groups, including individuals receiving home and community-based services (HCBS), children in foster care, among others.
While there are many different group pathways for an individual to pursue, in general, there are two main buckets of criteria that individuals must satisfy in order to be eligible for Medicaid: 1) financial and 2) categorical.
Seeing that Medicaid is an insurance program for low-income individuals, the primary criteria to qualify for Medicaid is based on, you guessed it - income levels. However, there are other various categorical pathways that individuals can follow in order to be eligible.
The chart below shows a high-level overview of Medicaid’s role in filling coverage gaps – looking at the major eligibility groups across MAGI and non-MAGI pathways.
Let’s explore what these specific criteria look like across a few of the major eligibility groups.
In the sections below, we will look at specific criteria across several major eligibility groups (both MAGI and non-MAGI pathways).
While often mentioned and discussed together, it is important to note the differences between Medicaid and Children’s Health Insurance Program (CHIP). At first glance, it might seem like CHIP is essentially Medicaid for children, but that’s not entirely true. In fact, while CHIP is another program targeted at low-income individuals, CHIP specifically provides low-cost health coverage to children of families that earn too much money to qualify for Medicaid, but too little to afford private insurance. In some (6) states – including Colorado, Missouri, and New Jersey – CHIP also covers pregnant women.
As of July 2022, approximately 7.1 million individuals were enrolled in CHIP - this was up 5.6% from February 2020. Similar to the Medicaid program, CHIP is administered by states, according to federal requirements and is jointly funded by states and the federal government.
In order to be eligible for CHIP, a child must be:
You can also read more on the eligibility requirements for targeted low-income pregnant women here.
Dual-eligible beneficiaries are individuals who qualify for traditional Medicare and are also eligible for some level of assistance from their state Medicaid program - and thus are enrolled in both Medicare and Medicaid simultaneously.
As of March 2021, about 11.6 million individuals are considered dual-eligible.
Under the dual umbrella, individuals can fall into one of several eligibility categories:
If you’re interested in digging deeper into what each of these categories mean, we recommend this detailed overview from CMS.
Medicaid serves as the primary payor in the US for long-term care services. While most people aged 65 and older (and many under 65 with disabilities) have Medicare, many of these long-term services are actually covered by Medicaid. Millions of Americans – including children, adults, and seniors – require access to these services to treat various disabilities and chronic conditions.
These long-term services help individuals live more independently by providing assistance with personal and healthcare needs – such as eating, bathing, medication management, walking, getting dressed, and more.
Under the LTSS umbrella, there are two main models for the delivery of services. The type of service/care is typically quite similar between the two - what differs is how the care is delivered and where the patient lives:
In 2020, approximately 5.8 million people used paid long-term services and supports (LTSS) delivered in home and community settings and 1.9 million used LTSS delivered in institutional settings.
One HCBS program that has gained popularity in recent years is the Program for All-Inclusive Care for the Elderly (PACE). While PACE is permanently available to individuals under Medicare, the program is only provided to Medicaid beneficiaries if the individual state chooses to provide it as a Medicaid benefit.
In order to be eligible for LTSS under Medicaid, individuals must meet state-specific eligibility requirements regarding a combination of their income levels and functional limitations.
States can offer one or more of the pathways listed below to provide eligibility to people in need of LTSS. Each pathway below considers a different combination of financial and functional criteria to qualify LTSS users:
If you’re interested in digging deeper into each of the pathways, we recommend this detailed overview from MACPAC.
Now that we have a sense for Medicaid’s broader role and who is in the program, let’s review how the program itself is structured.
As detailed above, Medicaid is set up as a federal-state partnership program, meaning it is administered by states, according to requirements set by the federal government. One component of this partnership dynamic is that Medicaid is jointly funded by states and the federal government. The federal share costs are determined by the Federal Medical Assistance Percentage (FMAP) calculation, which we will dig into in more detail in an upcoming article on the financing of Medicaid.
Each state has a single agency that administers Medicaid. Part of the deal when receiving federal funding for Medicaid is that states must meet a set of requirements as mandated by federal law. Beyond these basic requirements, each state program is actually quite flexible in how it operates, resulting in very unique and highly complex differences between each of the 50 state programs.
Every state must create a Medicaid State Plan that describes the structure and scope of its program in detail, which is then reviewed and approved by the Department of Health & Human Services (HHS). It acts as a formal written agreement between a state and the federal government to ensure a few things: 1) the state will follow the federal rules in order to claim federal funding 2) indicates which optional groups, services, or programs the state will cover 3) describe the state-specific standards to determine eligibility, how providers are reimbursed for services, and processes to administer the program
Source: New York Medicaid State Plan
To get a bit more tangible, let’s briefly zoom into the ‘Services: General Provisions’ section of the State Plan. In this section, the document outlines details related to the services covered under Medicaid in that state – such as the amount, duration, and scope of services.
As mentioned earlier, the structure of Medicaid allows states the flexibility to make desired changes and updates to their existing Medicaid State Plans. It can get a bit confusing to understand how HHS allows states to change their Medicaid programs, so let’s review the a few general mechanisms to make such changes:
To give you a brief sense for what these entail, below are a couple of examples of instances where State Plan Amendments versus Section 1115 Waivers are used.
The state of Minnesota offers a decently navigable webpage where individuals can view the current draft (open for public comment) and approved state plan amendments here. Below is an approved state plan amendment from January 2022 detailing changes for medication therapy management services under the Minnesota Medicaid program.
On the other hand, let’s look at how Section 1115 Waivers exist in the real world.
We recently saw some news about CMS approving groundbreaking Medicaid Section 1115 demonstration initiatives in Massachusetts and Oregon. The waiver will allow Oregon to keep children enrolled in Medicaid up to age six, which is a big step to improving coverage and access for the population.
If you’re interested in digging further into the announcement, we recently had HTN friend and Medicaid nerd, Dr. Lindsey Leininger, to help us make sense of it all. We explore several key questions:
As we mentioned up top, that was a lot to cover. Let’s quickly recap a few of the biggest takeaways:
By now, you’re probably putting together that each of these factors probably makes the financing and delivery of care under Medicaid very complicated. And you would certainly be correct. We’ll unpack and explore what this looks like in our next two upcoming articles. Stay tuned!
We know there’s lots more to learn about Medicaid than we could cover in one article. Below are the 10 places we found were the best place to learn about Medicaid: