The Financial Professional's Guide to Healthcare Reform

Chapter 5

Medicaid Expansion

Introduction and Overview

Medicaid is a Great Society program established in 1965 to provide medical coverage to certain low-income and elderly individuals, including children, families on welfare, low-income Medicare beneficiaries (where Medicaid covers the co-insurance otherwise borne by the beneficiary), and pregnant woman and mothers. The cost is shared between the federal and state governments, and the determination of who pays what is based in part on a statutory formula known as the federal financial participation (FFP) pegged to the state's per capita income. The federal government's share, also known as the FMAP, for federal medical assistance percentage, is at least 50 percent and can be no more than 83 percent.

Prior to the reform legislation, there were significant differences in the eligibility requirements and the level of benefits provided from state to state. The federal legislation requires certain minimum benefits and states are then free to add additional benefits, which the federal government picks up a portion of the cost for. The minimum benefits follow.

Basic Medicaid Benefits before Reform

1. Inpatient and outpatient hospitalization.

2. Physician services.

3. Rural health clinic and federally qualified health centers.

4. Laboratory and x-ray services.

5. Nursing facility services for individuals 21 and over, except for certain mental health populations.

6. Comprehensive, preventive medicine for individuals under 21.