**By Renuka Rayasam and Sam Whitehead**
In January, during a congressional hearing on his way to becoming secretary of the Department of Health and Human Services, Robert F. Kennedy Jr. made several inaccuracies regarding Medicaid – a program he is now responsible for. He stated that Medicaid is fully funded by the federal government (which it is not) and that many enrollees are dissatisfied with high out-of-pocket costs (most enrollees pay limited or no out-of-pocket costs).
Medicaid is a complex program. The $880 billion-a-year state-federal initiative provides health coverage to millions of disabled and low-income Americans. It covers various services for different individuals across different regions, and many enrollees may interact with private insurance companies without the term “Medicaid” in their names, leaving some unaware that they are enrolled in the program at all.
Previously, President Donald Trump claimed he would “love and cherish” Medicaid; however, Republicans in Congress recently introduced federal budget proposals that could significantly limit the program. As this discussion unfolds, here’s what you should understand about Medicaid.
### What is Medicaid, and how is it different from Medicare?
Medicaid and Medicare were established by the same legislation—an amendment to the Social Security Act signed into law by President Lyndon B. Johnson in 1965. Medicaid serves as a government health insurance program for those with low incomes, including adults and children with disabilities. Conversely, Medicare primarily covers individuals aged 65 and older.
For older Americans with low incomes, Medicaid assists in covering out-of-pocket costs for Medicare. These individuals are commonly referred to as “dual eligibles” due to their qualification for both programs.
### Who is on Medicaid?
Over 79 million people benefit from Medicaid or the closely associated Children’s Health Insurance Program (CHIP), representing about 20% of the total U.S. population. Most enrollees qualify due to their low incomes. Notably, approximately 40% of all children in the nation are covered by Medicaid or CHIP, which was established in 1997. Both programs finance services such as routine checkups, vaccinations, and hospital stays. Additionally, Medicaid extends coverage to pregnant individuals before and after childbirth, accounting for over 40% of all births in the U.S.
Medicaid also supports individuals with disabilities or complex medical needs, helping them access services that allow them to live independently within community settings rather than in institutions like nursing homes or state-run hospitals. The program caters to a diverse demographic: about 40% of individuals under 65 using Medicaid are white, 30% are Hispanic, 19% are Black, and 1% are Indigenous.
It is important to note that federal Medicaid funds cannot be used for immigrants who are in the U.S. without legal permission, although some states and Washington, D.C., have utilized their own funding to extend Medicaid coverage to these individuals. California was the first state to do so.
### What are the income qualifications?
Eligibility is generally based on income level, with states defining “low income” differently. For a household of four adults without dependent children, the current national median coverage level is $44,367. The Affordable Care Act (ACA), often known as Obamacare, which passed in 2010, allowed additional individuals to qualify for Medicaid based on income—a process termed “Medicaid expansion.” The ACA provided states with a significant financial incentive to expand coverage, offering increased federal funding per enrollee.
The intent behind the expansion was to bridge gaps in health insurance for millions of Americans lacking employer-based coverage. Medicaid would cover those with very low incomes, and as incomes increased, individuals could transition to subsidized health plans through ACA exchanges.
In 2012, the U.S. Supreme Court ruled that the decision to expand Medicaid would be left to individual states. Currently, 40 states and the District of Columbia—governed by both Democrats and Republicans—have opted to expand. In the 10 states that have not expanded Medicaid for low-income adults, the median earnings qualification level is $5,947 a year for a single-person household by 2025, meaning anyone earning more is ineligible.
Adults in these states who earn too much for Medicaid may also be too low in income to afford coverage through ACA exchanges, resulting in an estimated 1.5 million individuals falling into this coverage gap.
### Where does the funding come from?
The federal government covers a significant portion of Medicaid expenses by matching state spending. Currently, at least 50% of state spending is matched by federal funds, with additional financial support for specific services and enrollees, such as children and pregnant women. States with lower wealth—determined by per capita income—receive a higher match, resulting in greater federal contributions. For example, in Mississippi, the federal government covers 77% of Medicaid costs.
In states that have expanded Medicaid under the ACA, the federal government provides a 90% match for enrolled individuals. There is no cap on state spending for the program, leading to hundreds of billions in federal funding flowing into states annually. In 2023, states allocated about 15% of their budgets to Medicaid.
### What services does Medicaid cover?
Federal law mandates that all state Medicaid programs provide specific services, including emergency medical transportation, X-rays and lab work, family planning, and medication-assisted treatment for opioid use disorder. Medicaid also funds many nursing and home health services, though benefits may be partially reclaimed post-enrollee death.
States have the flexibility to choose additional services for their Medicaid programs. All states provide prescription drug coverage, and most include eyeglasses, some dental care, and physical therapy. Medicaid covers more mental health and long-term care services than any other insurance type, public or private.
### What is Medicaid called in my state?
Medicaid may go by various names across different states, often due to the fact that most states employ private insurance companies to administer the programs. This can lead to confusion among consumers who might not realize they are enrolled in Medicaid.
For instance, in New York, Medicaid plans are available through major companies like Anthem Blue Cross Blue Shield and UnitedHealthcare, alongside lesser-known entities such as Amida Care and MetroPlusHealth. In Wisconsin, residents may use BadgerCare Plus, while those in Connecticut refer to it as Husky Health. In Texas, it is labeled STAR, and in California, it is known as Medi-Cal.
### How does Medicaid impact hospitals and doctors in my state?
Medicaid typically reimburses healthcare providers, including doctors and hospitals, at lower rates than Medicare or private insurance. Nevertheless, it often compensates better than caring for uninsured patients. Without Medicaid, the number of uninsured Americans would likely surge.
Providers and hospitals have become reliant on Medicaid funding, expressing concerns that even gradual reductions could necessitate significant adjustments.
### What’s next for Medicaid?
The future of Medicaid remains uncertain. Republicans in Washington are advocating for extensive changes, potentially involving cuts to federal funding, which could affect eligibility, available services, or both. A similar attempt to repeal and replace Obamacare during Trump’s first term in 2017 was unsuccessful.
One of the significant hurdles in amending Medicaid is its widespread popularity: 77% of Americans, including majorities of Democrats, independents, and Republicans, view the program favorably.
Central to the ongoing dialogue are critical questions regarding the role of government in healthcare: How extensive should the U.S. medical insurance safety net be? Who merits government assistance? And how would enrollees, states, providers, and the larger healthcare system navigate significant alterations to Medicaid, even if those changes were implemented gradually?
This article was produced by KFF Health News, a national newsroom specializing in in-depth journalism on health issues and one of the primary operations at KFF, an independent source for health policy research, polling, and journalism. Learn more about KFF.
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