Medicaid is not an easy system to understand. Both federal and state governments fund the program jointly. In addition to the funding, federal and state governments work jointly to organize Medicaid programs. However, individual states are responsible for the functionality of Medicaid programs. With the newly incorporated Patient Protection and Affordable Care Act, Medicaid programs will see some changes. These changes are likely to result in a greater number of insured Americans without an unreasonable additional strain on Medicaid programs themselves.
How Medicaid is Financed
Medicaid helps allow access to health care for people with certain disabilities and families with low incomes. Both federal and state governments finance Medicaid (Kaiser Commission on Medicaid and the Uninsured, 2011) unlike Medicare, which is funded exclusively by the federal government. Even though Medicaid is a jointly funded program, state governments operate, organize and administer the Medicaid program. Nevertheless, states must create a Medicaid program that complies with federal regulations and standards in order to receive federal funding for the program (Kaiser Commission on Medicaid and the Uninsured, 2011).
How much a state receives depends on the states' per capita income (Centers for Medicare & Medicaid Services - Financing & Reimbursement, n.d.). Wealthier states receive a 1:1 matching (50%) from the federal government while poorer states receive a higher matching from the federal government (up to 82%) with the average federal funding match being approximately 57% (Centers for Medicare & Medicaid Services - Financing & Reimbursement, n.d.). Therefore, for every $1 the more affluent states contribute, the federal government will contribute $1 and for every $1 less prosperous states contribute, the federal government will contribute more (maybe $2).
Together, state governments and the federal government spent about $347 billion on Medicaid services in fiscal year 2009 (Kaiser Commission on Medicaid and the Uninsured, 2010). State policies have a large impact on the amount the federal government spends on Medicaid. This is because states are assured federal matching funds for Medicaid costs of covered services delivered to eligible individuals and because states have flexibility in determining who is eligible, what services they will cover, and what they will pay for covered services.
For the most part Medicaid covered services are similar between states. They cover medically necessary care (routine, preventive and acute), mental health, immunizations, dental, long-term care and family planning among other services (Centers for Medicare & Medicaid Services - Medicaid Benefits, n.d.). Eligibility requirements are also similar between states as they use federal guidelines to determine restrictions. Beginning in 2014, state Medicaid programs are federally mandated to increase the income eligibility threshold from 133% of the FPL to 138% of...