Medicaid Programs Financing and Governmental Role

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Introduction

Medicaid is a public health policy that provides quality and widespread health care to low income earning families. It is a policy that has been endorsed by both the state and the federal governments. Medicaid varies from one state to another due to the different state rules and priorities. Even though many people have benefited from Medicaid, children are the biggest beneficiaries of this policy. The policy focused on the children of the poor in an attempt to help curb the low infant mortality rate that was common in the late ’60s (Wachino, Schneider & Rousseau, 2004). Others who have benefited from this policy include the elderly and the disabled. Medicaid is very different from Medicare, which does not target the low income earning families but people who are over the age of 65 (Mitchell, 2012). Medicaid does not give the patients the funds that they need to get treated directly. It, however, pays hospitals and other health facilities such that those who have qualified for the aid do not have to pay anything when they visit such facilities. This paper will look into the different ways in which Medicaid is financed and the role of both the state and the federal governments in ensuring the success of this policy.

How Medicaid is financed

Medicaid is funded by both the state and the federal governments. According to Mitchell (2012), both the state and the federal governments used approximately 400 million dollars in Medicaid in 2011. This policy was established in such a way that the state has full control of the Medicaid program, including how the finances are used.

FMAP is the term used to refer to the fixed amount of money that the federal government pays the states in its efforts to fund the Medicaid project. The federal government does not, however, give equal amounts of money to all the states. The less prosperous states get a larger FMAP share than the prosperous states. In the same breath, the federal government pays approximately 75% of all the Medicaid finances in the less prosperous states. The rest of the money is provided by the state itself. In the ‘richer’ states, the state pays up to 57% of the finances. Recently, however, the federal government agreed to let the states charge the beneficiaries of the project a considerable premium. This is attributed to the fact that the program has been suffering heavy losses financially (Wachino, Schneider & Rousseau, 2004).

Even though some states have not officially started charging premiums on the beneficiaries of the project, they do charge a minimal amount of money for medical services. This is mainly the case with lower income earning families. All these contribute to how the Medicaid program is funded. In the past, the program experienced a lot of losses and got into huge debts. In more recent years, however, the program has been able to run more smoothly (Iritani, 2009).

The role of the federal and state governments in the operation and design of Medicaid

As mentioned earlier, both the federal and state governments have a role to play in the design and operation of Medicaid. The federal government is mainly involved in providing funds for the project. It is the federal government that gives the most amount of financial support for the project. The federal government has no jurisdiction whatsoever over which health departments the money that it gives is used in (Wachino, Schneider & Rousseau, 2004).

The state has more responsibilities compared to the federal government in terms of controlling Medicaid. It is up to the state to determine those who are eligible for the policy once the state gets the cash from the federal government. As mentioned, different states have different ways of determining those who are eligible for the policy (Smith & Moor 2011). The state is also responsible for the number of premiums that the beneficiaries of the policy have to pay. In some states, the beneficiaries of the policy do not pay anything because the policy caters for all their medical needs. However, there are states where the beneficiaries are required to pay some amount of money.

The state also determines the punishment for people who misuse Medicaid funds. This includes people who became eligible for aid through illegal means and those who use the funds for other benefits. According to Iritani (2009), there have been cases of people using the policy to purchase medical drugs, which they then sell to make profits. This type of criminal activity is punishable by the state.

The impact of the Patient Protection and Affordable Care Act on the eligibility and coverage of Medicaid

The Patient Protection and Affordable Care Act, which is commonly known as Obamacare, is a health policy that targets both the low income earning and well-earning citizens. The health policy was introduced to improve the general quality of the health care services that are provided in all states. The policy does not offer free medical services to low income earning families. Instead, it offers lower, but insurance policies with wider coverage for everyone (CCH Incorporated Law, 2010).

The Obamacare Act uses lower premiums and wide insurance coverage as a way of controlling the amount of money that people pay for insurance. The Act also requires the insurance firms not to use past insurance premiums and other insurance risk factors to determine the insurance rates of their clients. Insurance risk factors have been used to raise or reduce insurance premiums. For example, elderly people get low premiums for car insurance, but very high premiums for health insurance (Iritani, 2009). This is the opposite of what young people get. This is attributed to the fact that the elderly drive more carefully, but they get sick easily. The young adults, on the other hand, drive recklessly and fall sick less frequently than the elderly.

Even though Obamacare has its advantages, it has negative impacts on Medicaid. One of the ways in which it has negatively affected Medicaid is that it has made it harder to determine those who need Medicaid. Previously, Medicaid was given to lower-income families, but lower-income earning families might be able to afford health insurance with the reduction of the premiums. The Act has also been highly supported by well-off citizens because they also get reduced premiums (CCH Incorporated Law, 2010). This means that the state will have difficulties creating revenue, yet it is from this revenue that the state and the federal governments fund Medicaid.

Conclusion

In conclusion, Medicaid is one of the health policies that were put in place in an attempt to help the less fortunate get access to quality health services. The program is funded by both the state and the federal governments. The federal government funds up to 75% of all the Medicaid services in the poor states. The introduction of Obamacare has a negative impact on the Medicaid program because it has reduced the level of funding that the project gets. It has also made it harder to determine the people who need Medicaid the most.

References

CCH Incorporated Law (2010). Explanation and analysis of the Patient Protection and Affordable Care Act. Chicago, IL: Aspen Publishers

Iritani, K. M. (2009). Medicaid: Ongoing federal oversight of payments to offset uncompensated hospital care costs is warranted. GAO, pp 34 – 41

Mitchell, A. (2012). Medicaid financing and expenditures. Congressional Research Service. Web.

Smith, D. G., & Moor D. J. (2011). Medicaid politics and policy. Piscataway, NJ: Transaction Books

Wachino, V., Schneider, A., & Rousseau, D. (2004). Financing the Medicaid Program: The many roles of federal and state matching funds. Kaiser Family Foundation. Web.

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