Medicaid – Free Health Insurance For
Low-Income Families
Did you know that Medicaid can provide free health insurance to low-income children and
adults? In some states, Medicaid can also cover up to ninety days of medical bills that are
unpaid. Medicaid eligibility is based on household size, and includes people under the age of
one, those aged one to eighteen, pregnant women, and caregivers. Also eligible are seniors
and people with disabilities. Read on to learn more about Medicaid and how you can apply for
health coverage.
Medicaid is a government-sponsored health insurance
program for low-income people
Medicaid is a government-sponsored health insurance plan for low-income individuals and
families. It was first created in 1965 as a means to provide low-income people with affordable
health insurance. Today, nearly 72 million people are enrolled in Medicaid, making it the
largest source of health insurance for the poorest Americans. Children and the elderly make
up more than half of all Medicaid enrollees, and nearly half of the program’s total spending.
The federal government pays for Medicaid by matching a certain percentage of the state’s
costs. The federal government pays approximately 73 percent of the cost of Medicaid services,
with the states receiving more money. In 2014-2016, the federal match rate for newly eligible
adults was 100%. It will decrease to 90 percent or 93% by 2019 and 93 percent in 2020.
Medicaid has become an important tool for states to respond to demographic and economic
shifts, changing coverage needs, and public health emergencies.
Recent legislation has made Medicaid a major source of federal funding and serves as a
primary source of health insurance coverage for millions of Americans. Despite its large role in
the federal budget, Medicaid is facing several challenges. While efforts to repeal and replace
the Affordable Care Act (ACA) failed, many fundamental reforms were included in the bill. In
2018, the focus on Medicaid expansion and the continued shift toward changing the program
through demonstration waiver activities are among the most important issues to watch. Other
important issues to watch include the expansion of the Medicaid network and work
requirements for enrollees.
In the United States, Medicaid is one of the largest public health insurance programs in the
country, covering nearly 75 million low-income individuals and children. It also provides
coverage for the elderly and people with disabilities. Medicaid beneficiaries have special
health needs and socioeconomic factors that make it necessary for them to receive financial
assistance. Medicaid provides coverage for medical services not provided by other insurance
plans. For more than 12 million individuals, Medicaid pays for Medicare premiums and cost-
sharing.
It finances nearly a fifth of all personal health care spending
in the U.S.
In fiscal year 2015, the U.S. spent nearly $228 billion on Medicaid. State and local
governments have varying percentages of Medicaid spending. In fiscal year 2016, state and
local health spending increased by 5.1 percent and 12.7 percent, respectively. Medicaid funds
nearly half of personal health care spending in the U.S., and it accounts for nearly one-fifth of
the state budget.
The federal government’s share of Medicaid funding remained fairly stable. In 2015, Medicaid
financed just over a fifth of personal health care spending. However, states’ share of Medicaid
spending increased slightly from the year before thanks to federal economic stimulus dollars.
In 2017, Medicaid funding represented 37 percent of state and local government spending on
health care. Among the states with the largest share of Medicaid spending, 31 states began to
pick up 5 percent of the cost of 12.2 million extra recipients.
While Medicaid is a critical component of health care financing, it does not cover everything.
Almost a fifth of U.S. personal health care spending is financed through Medicaid. Its share is
growing, and states are beginning to realize the potential of a universal, high-quality health
care system. The need for such care continues to grow. With Medicaid, people with limited
resources can now afford quality care.
The federal government and state governments combined financed almost 16 percent of all
personal health care spending in 2016. Private insurance and Medicare covered just 20
percent. In 2016 the U.S. spent an estimated $740 billion on health care. Despite these
numbers, private health insurance and Medicaid payments were still the largest contributors to
personal health care spending. However, both of these sources of health care spending
increased more slowly than the national average.
It helps Medicare beneficiaries pay for premiums and cost-
sharing
In order to receive health coverage, Medicare beneficiaries must meet high out-of-pocket
expenses. Medicare cost-sharing consists of deductibles, coinsurance, and premiums. Those
with incomes below 135% FPL are exempt from most out-of-pocket costs, but high-income
enrollees must pay all of their Part B premiums. Other Medicaid recipients must pay the full or
a portion of their Part B premiums, and institutionalized people are not eligible for higher cost-
sharing.
In addition to paying for premiums and cost-sharing, Medicaid helps Medicare beneficiaries
who have limited assets. Moreover, Medicaid enables low-income beneficiaries to have health
coverage, even if they do not qualify for it through traditional means. The program is a major
contributor to the US economy, but it also subsidizes private insurance premiums. This
program was designed to meet the unique needs of low-income individuals.
The federal government has a number of programs to help low-income Medicare beneficiaries
pay their premiums. One program, the Qualified Medicare Beneficiary (QMB), offers assistance
for Part B premiums. However, funding for these programs is limited. A few other programs
exist that help low-income individuals pay part A premium. In addition, the Specified Low-
Income Medicare Beneficiaries program covers the cost-sharing costs associated with
Medicare Part B coverage.
In 2019, nearly 12.3 million Medicare beneficiaries received assistance through Medicaid and
Medicare Savings Programs. Of these, 1.6 million received help with their Part B premiums
and cost-sharing. The remaining half of Medicare beneficiaries did not qualify for either
program. Those receiving Medicaid help were those with lower incomes than the rest of the
population. However, the Medicare Savings Programs have a significant effect on these
populations.
It expands coverage to “optional” populations
When determining eligibility for Medicaid, states may choose to cover “optional” populations,
such as the poor and medically needy. Medicaid has certain mandatory services that must be
covered, such as health insurance, prescription drugs, and certain services provided by
FQHCs and rural health clinics. Other optional services include prescription drugs, physical
therapy, and dental care. However, a large percentage of states don’t cover all of these
services, and these options are not necessarily included in the Medicaid program.
In a recent study, the Mercatus Center at George Mason University analyzed the various
factors that influence the state’s decision regarding Medicaid expansion. The authors
concluded that different states will make different choices and may defer making decisions
until the federal fiscal picture has been clarified. You can read the full study here. To learn
more about the debate over Medicaid expansion, read the Mercatus Center’s full report.
Originally, the Affordable Care Act (ACA) required states to expand Medicaid to cover adults
18-64 with incomes up to 138% of the Federal Poverty Level. However, the Supreme Court
decided in June 2012 that the mandatory Medicaid expansion was unconstitutionally coercive,
and the ACA is now a federal mandate. As a result, 26 states have expanded Medicaid,
covering an estimated five million adults.
It expands coverage to adults with disabilities
Many Americans with disabilities need reliable health insurance to remain in the labor market,
and expanding Medicaid to cover the needs of this group could help reduce this problem.
Without Medicaid coverage, many individuals with disabilities may not even consider applying
for disability benefits. This expansion will give them the freedom to pursue employment
despite their disabling health conditions. However, if these people cannot afford to buy private
health insurance, Medicaid will remain their only option.
The Affordable Care Act expanded Medicaid eligibility in order to ensure that more low-income
adults with disabilities could obtain health insurance. Under the original law, Medicaid
coverage was only available to people under 65 with minor children. The Affordable Care Act
made Medicaid expansion optional, so not every state decided to expand the program.
However, 33 states have chosen to expand their programs, and at least three more will follow
suit by the end of 2019.
In 2014, the first wave of Medicaid expansion included only 26 states and the District of
Columbia. But since then, the number of states has steadily increased. As of this writing,
Missouri and Oklahoma have joined the ranks. The numbers continue to rise, and the COVID
pandemic drove enrollment numbers even higher. In total, more than forty million people
enrolled in Medicaid/CHIP programs between 2013 and 2019 – and this includes states that
rejected federal funding – have increased 44 percent.
Medicaid also provides a range of long-term care and preventive health care benefits. In
addition to basic coverage for primary and acute care, Medicaid also offers special benefits for
people with disabilities. Many people with disabilities receive health coverage through the
Medicaid program because it pays for HCB long-term care services and institutional supports,
which complement medical care and help beneficiaries maintain their independence. A study
released recently showed a connection between Medicaid coverage for the disabled and
employment.
