What Is Medicaid, and Why Does It Matter?

Medicaid is one of the most vital public health programs in the United States, providing healthcare coverage to millions of low-income individuals, children, pregnant women, older adults, and people with disabilities. It serves as a safety net for those who would otherwise be unable to afford medical care. Despite its critical role in American healthcare, Medicaid often faces budget cuts and policy changes that threaten access to essential services. It’s crucial to the quality of life of millions of Americans that people understand how Medicaid is structured, the services it provides, and the people who rely on it.

I’m going to explain this as detailed as I can. The American healthcare system can be difficult to understand, so stay with me. Medicaid is a joint federal and state program designed to provide healthcare coverage to eligible individuals. Unlike Medicare, which is primarily for older adults and people with certain disabilities, Medicaid focuses on low-income populations. Each state administers its own Medicaid program within broad federal guidelines, meaning that benefits and eligibility requirements can vary depending on where a person lives. For example, I may be approved for a service in New Jersey that someone with the same disability as me, Muscular Dystrophy, in Texas may be denied. This state-level control means that Medicaid coverage can look very different from one state to another, impacting eligibility requirements, available services, and cost-sharing measures.

Medicaid is funded through a combination of federal and state funds. The federal government provides a percentage of the funding, known as the Federal Medical Assistance Percentage (FMAP), which varies by state based on economic factors. States with lower average incomes receive higher federal matching rates and so their FMAPs are higher. This structure allows Medicaid to be flexible in meeting the needs of different populations across the country.

In addition to FMAP, states receive funding through other federal initiatives, such as the Medicaid expansion program under the Affordable Care Act (ACA), which allows states who opt-in to extend coverage to low-income adults. Some states also implement Medicaid waivers, which permit them to modify program rules and offer specialized services, such as home and community-based care for individuals with disabilities. These waivers give states the ability to tailor Medicaid programs to address unique healthcare challenges in their populations.

States are responsible for covering a portion of Medicaid costs, typically ranging from 25% to 50% of the total expenditure, depending on the FMAP rate. They also have flexibility in setting provider reimbursement rates and determining optional benefits beyond federally mandated services.

Medicaid is a lifeline for so many people because it completely financially covers a plethora of critical services beyond what is covered by the majority of private insurance plans. These include doctor visits, preventative care, emergency room and hospital stays, prescription drugs, mental health and substance abuse treatment, maternity and infant care, durable medical equipment, dental and vision care, long-term care, and home and community-based services.

Home and community-based services are the difference between life and death for countless people with disabilities. Medicaid is the only type of American health insurance that covers personal care assistance services, which many disabled people rely on for everything from feeding and bathing to going to doctor appointments and doing laundry. Without this, people with disabilities may no longer have the freedom to live in their own homes and will be forced to move into nursing homes. 

You may be wondering why people can’t pay for the care they need out of their own pockets. In order to be eligible for Medicaid, you cannot have more than $2,000 in assets at any time. Unfortunately, people are often forced to turn down high-paying jobs that would make them ineligible for Medicaid, but still not be able to afford private health insurance. This also means that people on Medicaid cannot get married without jeopardizing their services because a joint income with their spouse would put them over the income eligibility requirement.

Remember when I said  that every state Medicaid program is different? These state differences also apply to employment limitations. Some states have programs that allow disabled people who receive Medicaid to work, make well over the income and asset limit, and keep their Medicaid services. Since most private insurance companies do not cover daily in-home care, especially nursing care, Medicaid is still vital to the independence and well-being of working individuals.

For people like me, Medicaid is the only option for healthcare and survival. Disabled people make up the world’s largest minority and it is the only community that anyone can become a member of at any time. If you live long enough, you will become disabled. I talked to Tim Faust, speaker, author of Health Justice Now, about this: 

“We usually think about government infrastructure as things like bridges and roads. Medicaid is a form of social infrastructure — a form of government spending that shapes the way we live and how people interact with the world around them. And our world is made richer when the people we love are able to get the healthcare they need; when they can live in their homes and lead the lives they want. I think about my friends with disabilities, or my friends with parents that can't live without assistance: without Medicaid, as meager as it is, they'd be shut up in nursing homes—warehouses—kept alive-without-life; a state of existence denied joy and companionship, but nonetheless prolonged … This hollowing-out of society makes the world worse for all of us, and Medicaid spending is the bulwark keeping it at bay.”

Medicaid is a program that provides necessary services so people can live in their communities among friends and family, receiving the support they need to stay safe and healthy. Medicaid protects the health, dignity, and lives of millions of Americans.

By Steve Way