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Guide to Medicaid for Advocates

What is Medicaid?

Medicaid is the nation’s publicly financed health and long-term care coverage program for low-income people. Enacted in 1965 under Title XIX of the Social Security Act, Medicaid is an entitlement program that was initially established to provide medical assistance to individuals and families receiving cash assistance. Over the years, Congress has incrementally expanded Medicaid eligibility to reach more Americans living below or near poverty, regardless of their welfare eligibility. Today, Medicaid covers a broad low-income population, including parents and children in both working and jobless families, individuals with diverse physical and mental conditions and disabilities, and seniors. Medicaid’s beneficiaries include many of the poorest and sickest people in the nation. Medicaid is the largest public health insurance program in the United States.


State Medicaid programs are required to provide:

In addition, many states offer “optional”* services such as:

Inpatient and outpatient hospital services

Prescription drugs

Physician, midwife, and nurse practitioner services

Dental Care

Laboratory and x-ray services

Durable medical equipment (e.g. hospital beds, wheelchairs)

Nursing facility and home health care for individuals age 21+

Personal care services

Early and periodic screening, diagnosis, and treatment for children

Case management services

Family planning services and supplies

Transportation to medical appointments

Rural health clinic/federally qualified health center services

Respite care

*If a state opts-in to provide these services, it generally must provide these services to all enrollees statewide.

Who does Medicaid help and what is the impact?

Roughly two-thirds of Medicaid spending is attributable to elderly and disabled beneficiaries although they make up just a quarter of all Medicaid enrollees, and Medicaid is the single largest source of coverage for nursing home and community-based long-term supports and services.
How is Medicaid funded?

The cost of Medicaid is shared by the federal government and the states. The federal share is called the Federal Medical Assistance Percentage (FMAP) and is based on a formula which takes into account the state’s poverty level. The minimum FMAP is 50%, but goes higher in poorer states. Overall, the federal government funds about 57% of overall Medicaid costs.

Threats to funding/trends for reform

Medicaid is particularly vulnerable right now because most states have repeatedly cut Medicaid spending as a way to deal with their state budgets over time. States have reduced services to beneficiaries, cut provider rates, and are not in a position to find further savings without significantly jeopardizing quality services for people that rely on Medicaid – including people with disabilities.

In the current political climate where long-term debt/deficit reduction, health care reform, and tax reform are at the forefront of conversations, Medicaid is at risk of losing federal funding

Because of the system of matching funds, a $1 reduction in federal funding contribution will likely result in a $2 reduction in state spending, as most states are not likely to be able to make up that shortfall.

What’s being proposed

Some ideas that have been discussed as possible ways to reduce federal Medicaid spending include:

  • Converting the program to a block grant system, wherein states would get a fixed (lower) amount of money rather than receiving matching federal funds;

  • Implementing per-capita caps, which would provide states a set amount of funding per Medicaid enrollee;

  • Reducing the rate of, or eliminating, provider taxes, which states use to fill in gaps in their Medicaid programs with federal dollars.

ANCOR’s position on all these is that we oppose any cuts to Medicaid that

  • result in cost shifting to states,

  • threaten quality long term supports and services for people with disabilities,

  • limit accessibility to comprehensive health care, and/or

  • challenge workforce sustainability.

What you can do to help

Visit ANCOR’s Action Center to contact your Congressional representative and Senators and tell them:

  • To preserve Medicaid funding for home and community-based services and supports for people with disabilities, and to reject any actions that shift costs to states.

  • People with significant disabilities rely on Medicaid-funded community supports and services to avoid expensive, segregated institutional placements. These services limit institutional costs and help states moderate the growth of Medicaid spending. On average, four persons can receive home and community based services for the annual cost of one institutional placement.

  • Unlike most of the other long-term care services, Medicaid provides virtually all of the funding for community based services - there is no private insurance. These services are critical to enable people to live and work with dignity in their own communities, and our local economy needs the jobs that Medicaid directly supports.


1 in 5 Americans are covered by

Medicaid is the primary payer for long-term care services

Medicaid Enrollees and Expenditures, FY 2009

Timeline of Medicaid legislation and funding

1935:  President Franklin Roosevelt signs the original Social Security Act (SSA) into law

1965:  Title XIX of the SSA creates Medicare and Medicaid

1982:  Arizona becomes the 50th state to use Medicaid

1990:  The Omnibus Reconciliation Act adds the Medicaid Drug Rebate Program to assist with the rising costs of outpatient drugs

1997:  The Balanced Budget Act reduces Medicaid payments to providers (some are later restored by the 1999 Balanced Budget Refinement Act and the 2000 Budget Improvement and Protection Act)

1997:  SCHIP (State Children’s Health Insurance Program) is signed into law

2005:  The Deficit Reduction Act (DRA) reduces federal funds to Medicaid and Medicare, but gives states more flexibility regarding enrollment requirements and plan details

2008:  A federal rule is passed allowing states to charge premiums and higher co-pays to Medicaid recipients

2010:  The Affordable Care Act (ACA) is signed into law, which provides for a major expansion of Medicaid eligibility

2011:  The Budget Control Act (BCA) is enacted, imposing mandatory across-the board cuts in federal funding

States Relied Heavily on Spending Cuts and Federal Aid to Close Budget Gaps (FY08 to FY12)