What is Medicaid? How It Works


According to many healthcare critics, Medicaid is the safety net for a larger volume of populations who are not considered eligible for private health insurance. If we talk about America, most of its growing population live an unhealthy life and it puts them at a higher risk of falling sick. In fact, many of them are afflicted with contagious and life-threatening diseases at least once in their lifetime. A solid health care program is a must-require for those who fall outside the sprawling net of Medicare.

What is Medicaid?

It was created way back in 1965. The concept is based on a Social Security Act amendment. Over the last six decades, it has undergone several changes by multiple amendments. People and families with low to mid-range incomes usually go with it to receive comprehensive health insurance coverage. The individual states have supreme power to administer the program. The state administrators and legislatures set up eligibility criteria for those willing to enroll for Medicaid. In addition, they also decide which types of services will be made available, and how much the providers will receive for their service within the strict guidelines chalked out the Federal Government.

How does it work?

Whereas employer and employees’ taxes are the lifeline of Medicare and Social Security, Medicaid is funded by each individual state’s general tax revenues as well as the Federal Government. In fact, the lion’s share of the fund comes from the Federal Government to run the program. Due to lack of a concrete revenue source, the conservative critics often target the program on the ground of it’s not providing enough of coverage to the needy beneficiaries and high expenses.

Medicaid, unlike other entitlement programs, reimburses the service providing practitioners directly. These practitioners include physicians, doctors, nursing homes, pharmacies, and hospitals. No beneficiary receives direct payment. Therefore, any incidence of abuse and fraud happens only on a provider level, as the funds are not accessible to the recipients.

The individuals, whose income falls below a particular level, are entitled to receive Medicaid benefits. According to the eligibility criteria as set up by the individual states, elderly people, blind and disabled, children, foster care children, and BCCA women are a part of the designated group eligible for the Medicaid program.

Some young adults can also qualify for the program if they fulfill the eligibility criteria such as follows:

  • Low-income parents who need to support their children
  • Adults infected with HIV
  • Pregnant women

However, the adults must have the yearly income lower than the pre-set line in order to be eligible for Medicaid.

The disabled and elderly individuals accounted for nearly 64% of Medicaid expenses in 2011 though they were not more than 24% of the enrolled candidates. That is why the critics often call the program ‘a bliss for the middle class”. They think that the expenses should be axed to lessen the Federal deficits and rising national debt. If practical measures are not taken in time, the program may leave the country bankrupt or push the tax level to an insanely high level.

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