Medicaid is the companion program to Medicare, providing for poor people what Medicare provides for the elderly. It is run out of the same federal office—the Centers for Medicare and Medicaid Services (CMS). In 2008 Medicaid’s total expenditures were $204 billion, approximately 10 percent of the total healthcare costs for the United States.
Despite that high cost, Medicaid payment schedules are not particularly generous and vary from state to state, since states have a say in fees schedules. The states administer the Medicaid programs and the federal government monitors the programs, establishing standards for benefits and eligibility. States pay about 43 percent of the costs, but that varies because federal matching funds offer more support for poorer states.
Medicaid has become the program for all sorts of special needs, HIV/AIDS treatment, nursing home care for qualified poor, treatment of disabled or poor children, and obstetrics (37 percent of all deliveries) and pediatrics for low-income mothers, even dental coverage for those under age 21.
Budget expansions of the Medicaid program, particularly when including the State Children’s Insurance Program (SCHIP), do not begin to compare to the projected increases in beneficiaries. Eligibility is based on disabilities and annual income of less than 133 percent of the federally designated poverty level—roughly $29,000 for family of 4 and $14,400 for singles—which allows for a massive number of Medicaid users.
Enormous Financial Challenges
According to a recent study by Ed Haislmaier of the Heritage Foundation, the rolls of beneficiaries and the costs of Medicaid continue to rise, bringing state budgets to the point of crisis. Thanks to Obamacare, this process has been accelerated.
Under Obamacare, Medicare and Medicaid can be expected to add 35-40 million enrollees in the next ten years, with cost projections amounting to a 35 percent increase of the current state burden of $190 billion. States will face massive cost-sharing increases, with a disproportionate increase in the Mountain States.
When Nevada announced it would join a lawsuit by various state attorneys general to challenge the legality of President Obama’s bill, state officials calculated its increased Medicaid costs under Obamacare at $1 billion a year—and keep in mind, that estimate does not even begin to account for the likely increase in utilization that comes from the illusion of “free” healthcare.
