What is a State Medicaid Program

State Medicaid program refers to a health initiative managed by a state government that works in conjunction with the federal Medicaid program, which began in 1965 under President Lyndon B. Johnson. Together, the federal and state Medicaid programs help qualified low-income individuals and families pay for doctor visits, hospital stays, long-term medical expenses, custodial care and other health care services.

State Medicaid programs use federal funding along with funding from the respective state to provide needed health services for eligible individuals. Eligibility depends on numerous factors, including income, assets, age, disability and citizenship.

Medicaid is a voluntary program in which states receive partial federal reimbursement. To qualify for state Medicaid plans, individuals usually must be residents of the state in which they apply for benefits and be in need of health care insurance. In almost all circumstances, applicants earn low income or very low income.

As of February 2018, about 67.6 million in the U.S. had Medicaid coverage, or roughly one in five people in the U.S.

BREAKING DOWN State Medicaid Program

State Medicaid programs vary. Some pay for covered services directly. Others offer those who qualify a managed-care program. A few states, such as Hawaii, offer low-income residents both types of plans. For example, Hawaii’s direct-payment plan covers individuals 65 and over, as well as the blind and disabled. All others in Hawaii who qualify for Medicaid receive a managed-care plan, which involves a network of designated health care providers.

Once eligible for Medicaid, covered individuals receive health care services for free from any medical provider that accepts the program. Applicants for Medicaid often need to fill out an online application, or apply directly via a state Medicaid program. Of note, each state has significant leeway in determining who is eligible for coverage.

State Medicaid programs are one of the largest recipients of federal spending that flows directly to states. Some voters consider Medicaid an instrumental social safety net, while others see it as a mismanaged and flawed system.

The Cloudy State of State Medicaid Programs

As of 2018, state Medicaid is at a crossroads. Many states expanded their Medicaid programs beginning in 2014 under the Affordable Care Act. This law granted U.S citizens and legal residents with incomes up to 133% of the poverty line health care coverage, provided they live in states that accepted so-called expanded Medicare. As of mid-2018, however, 17 states rejected Medicaid expansion.  

For both expanded and conventional Medicare, pressures exist to cut the cost of the program at both the state and federal level. For example, some U.S. lawmakers propose offering states block grants for their Medicaid programs, in an effort to control federal costs.