Federally Administered Means-Tested Programs - Medicaid

Medicaid, authorized under Title XIX of the Social Security Act, is a federal-state program that provides medical assistance for low-income people who are aged, blind, disabled, or members of families with dependent children and for certain other pregnant women and children. Within federal guidelines, each state designs and administers its own program. For this reason, there may be considerable differences from state to state as to who is covered, what type of coverage is provided, and how much is paid for medical services. States receive federal matching payments based on their Medicaid expenditures and the state's per capita income. The federal match ranges from 50 to 80 percent of Medicaid expenditures. Table 8.12 shows the number of recipients, the amount of payments, and the average payment per recipient for each state or territory.

Who Gets Medicaid?

Although Medicaid eligibility had been linked to receipt of, or eligibility to receive, benefits under Aid to Families with Dependent Children (AFDC) or SSI, legislation gradually extended coverage in the 1980s and 1990s. Beginning in 1986, benefits were extended to low-income children and pregnant women not on welfare. States must

TABLE 8.10
National school breakfast program: Participation and meals served, 1969–2003
(Data as of December 19, 2003)

	Total participation1
	Free	Reduced price	Paid	Total	Meals served	Free/Reduced price of total meals
Fiscal years	Millions					Percent
1969	—	—	—	0.22	39.7	71.0
1970	—	—	—	0.45	71.8	71.5
1971	0.60	2	0.20	0.80	125.5	76.3
1972	0.81	2	0.23	1.04	169.3	78.5
1973	0.99	2	0.20	1.19	194.1	83.4
1974	1.14	2	0.24	1.37	226.7	82.8
1975	1.45	0.04	0.33	1.82	294.7	82.1
1976	1.76	0.06	0.37	2.20	353.6	84.2
1977	2.02	0.11	0.36	2.49	434.3	85.7
1978	2.23	0.16	0.42	2.80	478.8	85.3
1979	2.56	0.21	0.54	3.32	565.6	84.1
1980	2.79	0.25	0.56	3.60	619.9	85.2
1981	3.05	0.25	0.51	3.81	644.2	86.9
1982	2.80	0.16	0.36	3.32	567.4	89.3
1983	2.87	0.15	0.34	3.36	580.7	90.3
1984	2.91	0.15	0.37	3.43	589.2	89.7
1985	2.88	0.16	0.40	3.44	594.9	88.6
1986	2.93	0.16	0.41	3.50	610.6	88.7
1987	3.01	0.17	0.43	3.61	621.5	88.4
1988	3.03	0.18	0.47	3.68	642.5	87.5
1989	3.11	0.20	0.51	3.81	658.4	86.8
1990	3.30	0.22	0.55	4.07	707.5	86.7
1991	3.61	0.25	0.57	4.44	772.1	87.3
1992	4.05	0.26	0.60	4.92	852.6	88.0
1993	4.41	0.28	0.66	5.36	923.6	87.9
1994	4.76	0.32	0.75	5.83	1,001.6	87.4
1995	5.10	0.37	0.85	6.32	1,078.9	86.8
1996	5.27	0.41	0.91	6.58	1,125.7	86.5
1997	5.52	0.45	0.95	6.92	1,191.2	86.5
1998	5.64	0.50	1.01	7.14	1,221.0	86.1
1999	5.71	0.56	1.10	7.37	1,267.6	85.4
2000	5.73	0.61	1.21	7.55	1,303.4	84.2
2001	5.80	0.67	1.32	7.79	1,334.5	83.2
2002	6.03	0.70	1.41	8.14	1,404.8	82.9
2003	6.21	0.74	1.47	8.42	1,447.4	82.8
FY 2003 data are preliminary; all data are subject to revision.
1Nine month average: October–May plus September.
2Included with free participation.
SOURCE: "National School Breakfast Program Participation and Meals Served, as of December 19, 2003," United States Department of Agriculture, Food and Nutrition Service, December 22, 2003 [Online] http://www.fns.usda.gov/pd/sbsummar.htm [accessed January 29, 2004]

cover children less than six years of age and pregnant women with family incomes below 133 percent of the federal poverty level. Pregnant women are only covered for medical services related to their pregnancies, while children receive full Medicaid coverage. The states may cover infants under one year old and pregnant women with incomes more than 133 percent, but not more than 185 percent, of the poverty level. As of January 1, 1991, Medicaid also began to cover aged and disabled persons receiving Medicare whose income was below 100 percent of the poverty level.

Medicaid coverage is not guaranteed for recipients of TANF as it was for recipients of AFDC. However, the welfare-reform law of 1996 requires states to continue benefits to those who would have been eligible under the AFDC requirements each state had in place on July 16, 1996. As with pre-reform law, Medicaid coverage must be continued for one year for those families that have increased their earnings to the point where they are no longer eligible for cash aid and for four months to those who lose eligibility because of child or spousal support.

States may deny Medicaid benefits to adults who lose TANF benefits because they refuse to work. However, the law exempts poor pregnant women and children from this provision, requiring their continued Medicaid eligibility. In addition, the welfare law requires state plans to ensure Medicaid for children receiving foster care or adoption assistance.

The process to determine eligibility can take months. The Balanced Budget Act of 1997 (PL 105-33) gave states the option to grant interim coverage to children who appear to be eligible for Medicaid, based on age and family income. This "presumptive eligibility" option allows children and pregnant women to receive care immediately while waiting for Medicaid approval.

TABLE 8.11
Women Infants Children (WIC) program participation and costs, 1974–2003

		Program costs
	Total participation*	Food	NSA	Total1	Average monthy food cost per person
Fiscal year	(thousands)	(millions of dollars)	(dollars)
1974	88	8.2	2.2	10.4	15.68
1975	344	76.7	12.6	89.3	18.58
1976	520	122.3	20.3	142.6	19.60
1977	848	211.7	44.2	255.9	20.80
1978	1,181	311.5	68.1	379.6	21.99
1979	1,483	428.6	96.8	525.4	24.09
1980	1,914	584.1	140.5	727.7	25.43
1981	2,119	708.0	160.6	871.6	27.84
1982	2,189	757.6	190.5	948.8	28.83
1983	2,537	901.8	221.3	1,126.0	29.62
1984	3,045	1,117.3	268.8	1,388.1	30.58
1985	3,138	1,193.2	294.4	1,489.3	31.69
1986	3,312	1,264.4	316.4	1,582.9	31.82
1987	3,429	1,344.7	333.1	1,679.6	32.68
1988	3,593	1,434.8	360.6	1,797.5	33.28
1989	4,118	1,489.4	416.5	1,910.7	30.14
1990	4,517	1,636.9	478.7	2,122.1	30.20
1991	4,893	1,752.0	544.0	2,301.0	29.84
1992	5,403	1,958.6	632.7	2,596.6	30.21
1993	5,921	2,115.1	705.6	2,828.9	29.77
1994	6,477	2,325.2	834.4	3,169.5	29.92
1995	6,894	2,511.6	904.6	3,437.9	30.36
1996	7,191	2,694.0	969.2	3,685.5	31.22
1997	7,407	2,815.3	1,008.2	3,846.3	31.67
1998	7,367	2,807.8	1,061.4	3,898.6	31.76
1999	7,311	2,852.8	1,064.1	3,942.6	32.52
2000	7,192	2,852.2	1,102.6	3,983.2	33.05
2001	7,306	3,007.9	1,110.7	4,157.5	34.31
2002	7,491	3,130.5	1,182.0	4,342.6	34.83
2003	7,631	3,225.6	1,288.4	4,516.7	35.23
*Participation data are annual averages (6 months in fiscal year 1974; 12 months all subsequent years).
NSA = Nutrition Services and Administrative costs. Nutrition Services includes nutrition education, preventative and coordination services (such as health care), and promotion of breastfeeding and immunization.
Fiscal year 2003 data are preliminary; all data are subject to revision.
1In addition to food and NSA costs, total expenditures includes funds for program evaluation, Farmers' Market Nutrition Program (FY 1989 onward), special projects and infrastructure. Farmers' Market costs are not included for fiscal year 2003; they will not be available until March 2004.
SOURCE: "WIC Program Participation and Costs, as of December 19, 2003," United States Department of Agriculture, Food and Nutrition Service, December 22, 2003 [Online] http://www.fns.usda.gov/pd/wisummar.htm [accessed January 29, 2004]

Many states, in an effort to reach the large number of uninsured children (by Census Bureau estimates, over one-third of Medicaid-eligible children), are simplifying the Medicaid application process. In addition, the 1996 welfare law gives states the option to use Medicaid to provide health-care coverage to low-income working parents. About half (46 percent) of poor (below 100 percent poverty level) adults without children, 43 percent of all parents, and 25 percent of poor children were uninsured in 2002. (See Figure 8.2.) Although the income of these households is below the federal poverty line, working poor parents have been ineligible for publicly funded health insurance. In addition, low-wage jobs often do not offer affordable employer-sponsored coverage. The number of uninsured working poor parents is likely to grow as welfare recipients move into the work force, as required under the welfare-reform law, unless states expand Medicaid to cover this group.

Medicaid may also cover "medically needy" persons, those with income levels higher than the regular Medicaid levels. Each state may establish a higher income or resource level for the medically needy than the standards the states set for those who qualify for other social welfare benefits. They may also limit the categories of the medically needy who will receive Medicaid. As of January 2004, all fifty states and the District of Columbia provided Medicaid to medically needy recipients.

MEDICAID RECIPIENTS. In 2004 approximately 42.9 million people were enrolled in Medicaid. Most were dependent children under twenty-one years of age (19.7 million) and adults in families with dependent children (10.8 million). The remainder of Medicaid recipients were blind or disabled persons (eight million) and the elderly (4.4 million). The number receiving Medicaid coverage had doubled since the mid-1970s when approximately twenty million people were enrolled.

TABLE 8.12
Number of Medicare recipients, amount of payments, and average amount per recipient, by state or other area, fiscal year 1998

State or area	Recipients	Amount (millions of dollars)	Average amount (dollars)
All areas	40,649,482	142,318	3,501
Alabama	527,078	1,902	3,609
Alaska	74,508	330	4,434
Arizona	507,668	1,644	3,238
Arkansas	424,727	1,376	3,239
California	7,082,175	14,237	2,010
Colorado	344,916	1,439	4,173
Connecticut	381,208	2,421	6,350
Delaware	101,436	420	4,138
District of Columbia	166,146	731	4,402
Florida	1,904,591	5,687	2,986
Georgia	1,221,978	3,012	2,466
Hawaii	184,614	507	2,749
Idaho	123,176	425	3,446
Illinois	1,363,856	6,173	4,526
Indiana	607,293	2,564	4,222
Iowa	314,936	1,289	4,092
Kansas	241,933	916	3,788
Kentucky	644,482	2,425	3,763
Louisiana	720,615	2,384	3,308
Maine	170,456	747	4,383
Maryland	561,085	2,489	4,437
Massachusetts	908,238	4,609	5,075
Michigan	1,362,890	4,345	3,188
Minnesota	538,413	2,924	5,432
Mississippi	485,767	1,442	2,969
Missouri	734,015	2,570	3,501
Montana	100,760	361	3,585
Nebraska	211,188	753	3,566
Nevada	128,144	462	3,606
New Hampshire	93,970	606	6,449
New Jersey	813,251	4,219	5,188
New Mexico	329,418	862	2,617
New York	3,073,241	24,299	7,907
North Carolina	1,167,988	4,014	3,437
North Dakota	62,280	341	5,476
Ohio	1,290,776	6,121	4,742
Oklahoma	342,475	1,178	3,439
Oregon	511,171	1,378	2,695
Pennsylvania	1,523,120	6,080	3,992
Rhode Island	153,130	919	6,004
South Carolina	594,962	2,019	3,393
South Dakota	89,537	356	3,974
Tennessee	1,843,661	3,167	1,718
Texas	2,324,810	7,140	3,071
Utah	215,801	619	2,867
Vermont	123,992	351	2,834
Virginia	653,236	2,118	3,243
Washington	1,413,208	2,044	1,447
West Virginia	342,668	1,243	3,628
Wisconsin	518,595	2,206	4,255
Wyoming	46,121	192	4,163
Outlying areas
Puerto Rico	964,015	250	259
Virgin Islands	19,764	10	511
SOURCE: "Table 8.H1. Number of Medicare Recipients, Amount of Payments, and Average Amount Per Recipient, by State or Other Area, Fiscal Year 1998," in Annual Statistical Supplement, 2002, Social Security Administration, December 2002 [Online] http://www.ssa.gov/policy/docs/statcomps/supplement/2002/supp02.pdf [accessed January 13, 2004]

Medicaid accounted for about 11.6 percent of all health coverage in 2002. (See Figure 8.3.) Poor households were most likely to be covered by Medicaid. Some 27.8 percent of poor persons were covered in 2002. States are required to provide Medicaid coverage for pregnant women and children under age six. One of every five children in the United States is covered under Medicaid. It is the single largest source of health insurance coverage for all children from families earning below 200 percent of the poverty line. African-American and Hispanic children were far more likely to have Medicaid coverage than were white or Asian and Pacific Islander children. In 2002, 41.3 percent of African-American children and 37.3 percent of Hispanic children were covered by Medicaid, compared to 15.5 percent of non-Hispanic white and 18.1 percent of Asian children. (See Figure 8.4.)

Medicaid provides health-care services, such as long-term care, for many elderly people not covered by Medicare. Medicaid pays for about half of all nursing home expenditures, which accounts for a large percentage of Medicaid expenditures. This proportion of spending on the elderly is expected to increase as more people live longer and those from the baby boom generation age.

Growth in Medicaid Costs

The rapid growth in spending for Medicaid has contributed to the concern over the rising cost of health care. FIGURE 8.3
Type of health insurance and coverage status, 2001 and 2002
(In percent) Not accounting for inflation, spending skyrocketed from $6.3 billion in 1972 to $37.5 billion in 1985 to $142.3 billion in 1998. Of the $142.3 billion spent on Medicaid payments in 1998, most went for the disabled (42.4 percent) and the elderly (28.5 percent). In addition, considerable amounts were spent on dependent children under age twenty-one (16 percent) and adults in families with dependent children (10.4 percent). On average, the Medicaid program spent $10,242 on every elderly recipient, $1,203 on each dependent child under twenty-one, and $9,095 on each disabled person in the program. (See Table 8.13.)

Transitional Medical Assistance

Families who leave welfare for work are at risk of losing the health-care benefits that they received under Medicaid. Families with children who had previously been covered by Medicaid but are no longer eligible because of earnings from employment may be eligible for Transitional FIGURE 8.4
Children covered by Medicaid, by race and ethnicity, 2002
(In percent) Medical Assistance (TMA) for up to an additional twelve months, as long as periodic legislative extensions continue to preserve funding for the TMA program, which originally expired in July 2002.