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Medicaid

The nation’s greatest insurance program that covers populations with low income known as Medicaid is the biggest source of the U.S. health coverage. Every fifth person is using its benefits and it is administered by the federal requirement of the states. Thereafter, the objective of the following paper is to discuss certain key points that are related to Medicaid.

The financial side is very important for any initiative or program with the country, which is why it is relevant to mention that both the federal government and the states are responsible for funding the Medicaid. Thus, its expenses are quite high and as of 2012, the total cost was more than $400 billion with 5% of administrative costs that were absorbed by total actual spending. The acute care reached around two third of the expenses, while long-term care was around 30%.

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As mentioned before, the cost is shared between the federal government and the states, which makes this program financed publically. The government is responsible for allocation of the Medicaid funds and defines the rate for every state. Thus, the rate may vary from state to state and might reach 50% and higher in those that are poorer. The rate is calculated by a formula provided in a medical statute and known as the Federal Medical Assistance Percentage. Due to its countercyclical nature, Medicaid depends on the economic condition of the state considerably. According to the data obtained in 2014, Mississippi was the poorest state and the rate there was 73.6%. The federal government covered around 60% of Medicaid financing in 2012 (Kaiser Commission on Medicaid and the Uninsured, 2010). If the expansion of the Medicaid program had been implemented in all states within the country, the federal government would have covered 93% (Kaiser Family Foundation, 2012). 

Nevertheless, the state and federal budgets play a very important role in the design and operation of the Medicaid program. Due to the high amount of expenses, the federal government looked into certain reductions of its budget in relation to Medicaid, but it is still exempt from the Budget Control Act of 2011. The Act has established another regulating body known as the Joint Select Committee that has the authority to alter the existing system of Medicaid and make changes to its budget. Actually, the federal government has the full authority to shape the operations and design of Medicaid, as it can change its structure and financing process completely. Moreover, it was decided in 2012 that Medicaid would be still closely linked to the economies of the states; however, the budget proposal given by the President’s Administration in 2013 suggested that the Medicaid budget be reduced by around $60 billion in the upcoming years. However, the federal government has been supportive and has turned down numerous proposals to alter the size of payments provided under Medicaid.  

Unfortunately, the downturn in economies has had a negative impact on Medicaid and its costs have significantly increased. Thus, the spending decline is the most contributing factor to budget gaps of a state level, but not Medicaid. Moreover, the healthcare program serves as the largest source of revenue to the states as it provides jobs, supports the economy and ensures affordable healthcare for all citizens. Thereafter, the state has a significant impact on the Medicaid ‘portability’ only because of the economic condition in general; it does not shape its organization and design, but still enforces certain programs that improve the management of healthcare under Medicaid (Kaiser Commission on Medicaid and the Uninsured, 2011).

It is also importannt to mention the impact of the Patient Protection and Affordable Care Act (PPACA) on Medicaid. President Obama signed the two mentioned documents in 2010; they have significantly affected the evolution of Medicaid. The main objective of the PPACA was to help the healthcare program to cover much more people with low income in 2014. It referred mostly to uninsured adults and those with the lowest income. The Act also aimed to improve the public-private healthcare system coverage. Strengthening of the programs was another objective of the ACA.

The primary goal of the Act was to expand Medicaid to the whole country, providing the healthcare coverage program to all individuals with an income that is below the federal poverty level (138& as of 2011). The set goal was to be reached on January 1, 2014. It had a time span of the next three years in order to cover 90% of the states.

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However, the signing of the PPACA has provoked certain states to question the constitutionality of enforcing the Medicaid program everywhere and the states have the possibility to choose whether they would opt for that. The Supreme Court has ruled the Act to be constitutional, but the states can choose whether to expand Medicaid (Kaiser Family Foundation, 2012). 

In conclusion, it is important to mention that many states remain reluctant to expand the Medicaid programs, and the main reason for that is the budget deficit of certain states. On the other hand, some states consider Medicaid expansion a big advantage as it can offer significant net savings and offsets as well as increase state revenue, jobs and income. Moreover, those states that refuse to expand Medicaid would continue suffering increased costs as there are many individuals who turn to the services of the national healthcare program (Kaiser Commission on Medicaid and the Uninsured, 2010).

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