Section D: Medicaid

Medicaid is the largest publicly financed health insurance program for people with low incomes in the U.S. It is a means-tested program, meaning eligibility is based on income and assets. It was enacted in 1965 as a national social insurance program to help low-income families and individuals obtain and pay for medical care. It is funded jointly by the federal government and states, but the states manage it. 

In 2024, Medicaid programs served over 82 million beneficiaries. Medicaid enrollees can obtain covered medical services from providers who meet state Medicaid requirements and agree to participate in the program. These include physicians, hospitals, nursing facilities, home- and community-based service providers, behavioral health, and dental and vision providers, among others.

The federal government sets minimum requirements for Medicaid program benefits that states must meet. However, states do have flexibility in administering the program. For example, they can set eligibility requirements and provide benefit packages that exceed the federal minimum.

Over 12 million beneficiaries qualify for and are enrolled in both Medicare and Medicaid. For these “dually eligible” beneficiaries, Medicaid pays for cost-sharing and benefits not covered by Medicare.

States have increasingly employed managed care in Medicaid programs. As of 2024, 46 states (including the District of Columbia) offer some form of managed care option. And 90 percent of Medicaid beneficiaries are enrolled in some type of managed care.

Medicaid enrollment has generally grown steadily over time but often sees bigger increases or decreases depending on the state of the economy. As people lose jobs, more qualify for Medicaid based on income and vice versa. The program saw a sharp increase from February 2020 to March 2023 due to the COVID-19 public health emergency. Much of this increase was because the federal government required states to pause disenrollments. Disenrollment is the process of terminating coverage for individuals who are no longer eligible or who did not complete the paperwork for renewal. Enrollment saw a drop once disenrollments began again in March 2023. The first year of disenrollments after the Public Health Emergency pause saw high rates of disenrollments for procedural reasons— the enrollee did not complete the process by the deadline—rather than based on actual eligibility determinations. It exposed gaps in the administration of the system. But it also pushed states toward the use of data to assess eligibility redeterminations (i.e., use of ex parte renewals). Review of the eligibility process is likely to continue based on this experience.

Medicaid is a critical part of the safety net that serves people from many diverse communities. Despite all states having to meet minimum federal standards, outcomes are not the same for all beneficiaries. Researchers have found that individuals from groups that have been discriminated against overall have worse outcomes than white beneficiaries.