Medicaid Overview
Medicaid is a joint federal-state program that provides health coverage to low-income individuals and families. It is the largest source of health coverage in the United States, covering approximately 90 million people — including children, pregnant women, elderly individuals, and people with disabilities.
Administration
- Federal oversight: CMS establishes minimum standards, approves state plans, and provides federal matching funds
- State administration: Each state designs and operates its own Medicaid program within federal guidelines
- Federal matching: The federal government pays a percentage of each state's Medicaid costs (FMAP), ranging from 50% to ~77% depending on state per-capita income. For expansion populations, the federal match is 90%.
Eligibility
Mandatory Eligibility Groups
States must cover these populations to receive federal Medicaid funding:
- Children under 19 in families up to 138% FPL (in expansion states)
- Pregnant women up to 138% FPL
- Parents/caretakers meeting income thresholds
- Aged (65+) and disabled individuals meeting SSI criteria
- Former foster care youth under 26
Optional Eligibility Groups
States may choose to cover:
- Adults under 65 up to 138% FPL (ACA Medicaid expansion — adopted by 40 states + DC)
- Medically needy individuals
- Working disabled individuals
- Breast and cervical cancer patients
Modified Adjusted Gross Income (MAGI)
The ACA standardized Medicaid eligibility determination using MAGI-based income counting for most non-elderly, non-disabled populations.
Benefits
Mandatory Benefits
States must cover: inpatient and outpatient hospital services, physician services, lab and X-ray, nursing facility services (21+), home health, family planning, nurse-midwife services, Early and Periodic Screening (EPSDT) for children.
Optional Benefits
States may add: prescription drugs, dental, vision, physical therapy, hospice, personal care services, case management.
Managed Care in Medicaid
Over 80% of Medicaid beneficiaries are enrolled in managed care plans:
- Managed Care Organizations (MCOs) — Full-risk capitated plans that receive a fixed PMPM payment from the state and manage all covered services
- Prepaid Inpatient Health Plans (PIHPs) — Manage specific service categories (e.g., behavioral health)
- Primary Care Case Management (PCCM) — Fee-for-service with a PCP who manages referrals
Major Medicaid MCOs include Centene, Molina Healthcare, UnitedHealthcare Community & State, Elevance (Anthem), Humana, and Aetna Better Health.
CMS Oversight Mechanisms
- State Plan Amendments (SPAs) — States must submit SPAs to CMS for approval when changing their Medicaid program (benefits, eligibility, payment rates)
- Section 1115 Waivers — Allow states to test experimental approaches outside standard Medicaid rules
- Section 1915 Waivers — Home and community-based services (HCBS) waivers
- Managed care regulations — CMS rules at 42 CFR Part 438 govern Medicaid managed care contracts, quality, network adequacy, and access
