Medicaid is a joint federal-state welfare program developed originally by President Lyndon B. Johnson, in coordination with the Great Society. The Medicaid Program pays for medical care for poor people without insurance. In 2009, Medicaid covered about 60 million Americans, mostly low-income families and pregnant women, though some states have expanded eligibility to include childless adults under 65. It has become a bloated bureaucracy that soaks up one-fifth or more of most state budgets.
In 2009 Medicaid coverage varied widely. Arkansas, for example, extends Medicaid to working parents who earn up to 17% of the federal poverty level, and Alabama offers coverage for those making up to 24% of that level. Minnesota covers working parents making up to 215% of the federal poverty level, and New York, up to 150%.
Medicaid initially covered mainly poor people on welfare, as defined by the states. Gradually, eligibility broadened. Now, children ages 6 to 18 in households under the poverty line ($22,050 for a family of four) are eligible. Congress also set higher limits (133% of the poverty line) for pregnant women and children under 6. In 1997, Congress created the State Children's Health Insurance Program (SCHIP) to expand coverage further.
In 2009 Democrats in Congress passed different bills in the House and Senate to expand coverage. The House bill would take effect in 2013 and expand Medicaid to cover Americans earning up to 150% of the federal poverty level, currently about $29,300 for a family of four and $14,400 for an individual. The Senate bill would begin in 2014 and extend Medicaid to Americans making up to 133% of the federal poverty level. States without expanded coverage would be paid back 95% of their costs, while those that have already expanded coverage would be reimbursed between 80% and 95 percent. Medicaid reimbursement rates are based on per capita income; wealthier states have smaller shares of their costs paid back. Twenty states (including California, New Jersey and New York) have already expanded coverage. They have generally broadened eligibility to include parents with relatively higher income levels and a greater number of childless adults. They would be penalized by the health care reform bill passed by the Senate in December 2009, as $30 billion of their federal tax dollars get shifted to benefit the other 30 states over the next 10 years.
Medicaid is entirely separate from Medicare, which provides federal funding of health care for people over 65 and those with disabilities.
- Medicare, program for people over 65 and those with disabilities