Medicaid Basics

Medicaid Basics

Medicaid Vs. Medicare

Many people confuse Medicaid and Medicare. Medicaid is a means-tested program, meaning it is available to those who, regardless of age, meet their state's medical and financial eligibility requirements. The federal and state governments finance Medicaid jointly, and the states administer it. The program pays medical costs when individuals cannot.

Medicare, on the other hand, is a federally funded health care insurance program. The federal government runs the program through the Centers for Medicare and Medicaid Services (CMS).

Medicaid's Beneficiaries And Costs

According to the Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, Medicaid Primer 2009 (January 2009), in 2005, Medicaid covered 59 million people, including one0quarter of U.S. children. In the absence of Medicaid, the vast majority of its beneficiaries would join the ranks of nearly 46 million uninsured. Medicaid is a major source of health care financing as well as coverage. It funds almost one-sixth of total national spending on personal health care. It is the main source of financing for long-term care, paying 40 percent of the national bill for both nursing home care and long term care overall. It is also the largest source of public funding for mental health care. Hospitals and health centers that care for the uninsured and many in the low-income population depend heavily on Medicaid revenues.

Many states are struggling with decreased revenues, budge deficits, and spiraling health care costs. Their financial woes often push them to cut their Medicaid budges, which results in a loss of federal matching funds. Nearly 10 million Americans, including 6 million elderly and about 4 million children and working-age adults, need long-term care. Medicaid covers more than 6 of every 10 nursing home residents and finances 40 percent of all long-term care spending in the nation, including 43 percent of nursing home spending. More than half of Medicaid long-term care spending is for institutional care, but an increasing share is attributable to home and community-based services (Kaiser, 2009).

The federal Deficit Reduction Act of 2005 (DRA) was passed to help reduce the growth of Medicaid expenditures over several years. It tightens eligibility rules in regard to assets of applicants. DRA also allows the state more flexibility in providing Medicaid services.

Medicaid Services

States are continually designing and launching Medicaid health care reform programs. All states cover a minimum set of services, including hospital, physician, and nursing home services. States have the option of covering 31 additional services, including prescription drugs, hospice care, and personal care services.

Ultimately, state and federal Medicaid dollars come from the same taxpayer's pocket. Between 2007 and 2017 our total health care bill will double, from $2.2 trillion to an estimated $ 4.3 trillion. By 2017 we'll be spending almost $ 1 of every $ 5 our gross domestic product on health care. If we aren't able to control health spending, it will eat into important priorities at every level [remarks to the National Conference of State Legislatures Spring Forum, April 24-25, 2008, according to Kerry Weems, Acting Administrator for the Centers of Medicare and Medicaid Services (www.cms.gov)].

DRA will also allow states to offer alternative, reduced Medicaid benefits packages to certain individuals, primarily adults who are not disabled or pregnant and who's incomes exceed specific limits. The restricted package still must meed minimum benefit standards.

Medicaid is the largest source of funding for long-term care among all American, including the middle class. Although two-thirds of Medicaid spending is for institutional care, Medicaid has made great strides in shifting the delivery of services from institutional settings to home and community settings.

Seniors, Medicaid, And Medicare

Virtually all seniors who receive Medicaid also receive Medicare. However, they may not receive full Medicaid benefits. For seniors who are enrolled in both programs, Medicare is the primary source of payment for those services that it insures.

The information above is reprinted from Working with Seniors: Health, Financial and Social Issues with permission from Society of Certified Senior Advisors® . Copyright © 2009. All rights reserved. www.csa.us