Medicaid Reform

Many states want greater flexibility, and there is pressure to limit federal spending. Critics fear serious damage to the social safety net.

Medicaid is the nation’s largest public health insurance program for low-income Americans and is financed jointly by the federal and state governments.

The expansion of coverage under the Affordable Care Act (ACA) is expected to add 8.5 million to 22.4 million Medicaid beneficiaries. The Congressional Budget Office estimates that the federal portion of Medicaid spending will grow from $275 billion in 2011 to nearly $560 billion in 2021.

The majority of Medicaid spending goes to the elderly and disabled, and the weak economy has boosted enrollment among low-income families with children. In addition to providing health insurance coverage to nearly 20 percent of the U.S. population, Medicaid accounts for about one-sixth of total spending on personal health care and covers 40 percent of births. Recent concerns about ballooning federal budget deficits, the pressure on states to balance their budgets, and the growth of entitlement spending have fueled new interest in revamping Medicaid. Some proposals would end Medicaid as an entitlement program and turn it into a system of federal block grants to states. Other proposals would preserve Medicaid’s basic mission and structure but change the way that states can make innovations, organize care, or pay providers.

This Health Policy Brief explores some of the major ideas for restructuring Medicaid currently being discussed by leaders of both political parties, and was published online on January 12, 2012 in Health Affairs.