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Monday, April 18

Evolution of Medicaid

Medicaid has faced many obstacles since its 1965 enactment. As a program that was originally viewed as a “lousy program for poor people,” it has managed to not only survive for over 4 decades, but it has become an instrumental part of Obama’s Patient Protection and Affordable Care Act in providing coverage for the uninsured. The program’s resilience lays in the way it is financed and the way it is implemented.

While Medicaid costs $350 billion a year, the financial burden is divided among the states and the federal government. Each state has a special agreement with the federal government on what percentage of the Medicaid bill each pays. The federal government pays from 50% to 80%, depending on the state. The poorer a state is, the more the federal government contributes. This severely lessens the financial burden states face when making Medicaid decisions. This also allows for states and the federal government to spend more when the economy is good, and to cut back when the economy slows down.

Medicaid is administered by the states. This allows for various Medicaid programs across the United States that are tailored to a state’s idiosyncrasies. This flexibility has allowed for structural creativity on a state level, thus avoiding many of the hurdles faced with federal run programs. Its beneficiaries have grown beyond the nation’s poor due to the ambiguous eligibility boundaries set by the federal government. Each state has an autonomy that allows it to turn Medicaid into whatever the state’s population needs.

While the first two decades of Medicaid proved tumultuous, with various disagreements on eligibility caps, during the mid 80’s and 90’s it experienced a rapid growth thus moving it from a program for poor people into a program for low wage and low middle class people. This was mostly due to various state mandates to increase eligibility caps. Also, Medicaid started expanding its coverage of pregnant woman in an effort to deal with the rising problems of infant mortality and high risk pregnancies. This gave Medicaid great political capital, thus making it hard for republicans to legislatively act out on their oppositions to the program’s expansion.

Clinton’s presidency also greatly advanced Medicaid through the enactment of the SCHIP programs. These programs were meant to provide insurance to children and gave states $40 billion to spend in 10 years. Clinton gave the states the option of creating new plans or expanding through Medicaid. This gave Medicaid even more leverage, thus adding to its resilience. By the end of the 1990’s, Medicaid and SCHIP spending accounted for 16% of the nation’s healthcare bill.

Another reason Medicaid has done so well is that it has had a more seamless transition into managed care than Medicare did. This is greatly attributed to the fact that Medicaid is an amalgamation of federal rules and state specific policies, thus allowing for states to more efficiently negotiate with managed care plans.

Medicaid is now facing pressure to lower costs and increase eligibility criteria. It can deal with these pressures by raising eligibility to cover most children through family coverage. It can also raise eligibility while lowering costs by allowing uninsured individuals to buy into Medicaid. If their income disqualifies them from automatic enrollment, they could pay a premium in order to receive its benefits. This would increase eligibility without adding on extra costs, and could potentially generate enough revenue to make Medicaid as a whole more affordable.
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