Medicaid

• Author: Jeffrey Lehman, Shirelle Phelps

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A joint federal-state program that provides HEALTH CARE insurance to low-income persons.

Medicaid was enacted in 1965 as an amendment to the Social Security Act of 1935 (title XIX, 42 U.S.C.A. § 1396), entitling low-income persons to medical care. The program is a joint federal-state endeavor, with the federal government providing money to the states, which provide additional financing and administer medical programs for the poor that satisfy federal standards. Medicaid has become a major social WELFARE program. By 1995, 34 million people were covered by Medicaid, including 17 million children.

Before 1965, a patchwork of programs financed by state and local governments, along with charities and community hospitals, provided indigent persons with limited health care. Most of these programs provided emergency health care services. President LYNDON B. JOHNSON supported Medicaid as well as MEDICARE legislation for retired persons in 1965. The enactment of Medicaid meant that persons who met federal financial eligibility requirements were entitled to health care.

Medicaid furnishes at least five general categories of treatment: inpatient hospital services, outpatient hospital services, laboratory and X-ray services, skilled nursing home services, and physicians' services. Generally, each of these services is available to treat conditions that cause acute suffering, endanger life, result in illness or infirmity, interfere with the capacity for normal activity, or present a significant handicap. In addition, all states provide eye and dental care and prescription drugs. Almost all states provide physical therapy, hospice care, and rehabilitative services.

Medicaid is a "vendor" plan because payment is made directly to the vendor (the person or entity that provides the services) rather than to the patient. Only approved nursing homes, physicians, and other providers of medical care are entitled to receive Medicaid payments for their services. Since the early 1970s, rising medical costs have placed financial pressures on the

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Medicaid program. Consequently, health care providers are not fully reimbursed for the services they provide to Medicaid patients. Because of lower reimbursement payments, one-third of physicians limit the number of Medicaid patients they see, and one-quarter of them refuse to accept any Medicaid patients.

The federal...