Medicaid & HIV/AIDS Fact Sheet

The Medicaid Program

Medicaid is the second largest publicly-financed health care program, providing health care and long-term care services to about 36.8 million Americans in 1996. Authorized under Title XIX of the Social Security Act, Medicaid is an entitlement program providing low-income Americans access to health care. Medicaid is one of the most important programs for people living with HIV/AIDS, providing access to health care for over 53% of all adults with HIV disease and over 90% of all children living with HIV/AIDS.

What Is the Medicaid Entitlement?

The Medicaid entitlement acts as a "safety net" for eligible individuals in need.

Medicaid spending is not limited to a fixed amount of funds nor are the benefits limited to a fixed number of beneficiaries. The Medicaid rolls often fluctuate in response to factors such as economic recessions and natural disasters. The Medicaid entitlement guarantees that eligible individuals have access to a minimum level of benefits regardless of the state in which they live.

Who Is Eligible for the Medicaid Program?

Medicaid covers three main groups of low-income Americans: the elderly, disabled and women and children.

Just being poor does not guarantee access to Medicaid. In order to be eligible, individuals must not only meet state income and resources criteria, but also fall within covered eligibility categories such as senior, disabled, and women and children. Many poor uninsured individuals are not eligible for Medicaid. In fact, Medicaid covers only 62% of poor Americans. In 1996, Congress took several actions to weaken the Medicaid safety net by eliminating or restricting Medicaid coverage for legal immigrants, children with disabilities, and individuals with substance use and alcoholism treatment needs.

Financing of the Medicaid Program

Medicaid is the single largest source of federal funds to the states, representing 40% of all federal grants-in-aid to states.

The Medicaid program is jointly funded by the federal and state governments. By law, the federal payment cannot be lower than 50% nor greater than 83%. States with lower per capita incomes will receive a higher federal "match." The federal share of Medicaid funding varies by state -- poorer states receive a higher federal share.

Unlike federal discretionary programs like the Ryan White Care Act, federal Medicaid spending is not set by Congressional appropriations committees in advance.

Instead, federal matching payments are made to the states on a quarterly basis based on the allowable expenditures that the states incur in operating their Medicaid programs and submit to the federal government for matching payments.

Medicaid expenditures have recently slowed to record low rates of growth. The growth rate from 1995 to 1996 was only 3%, well below all projections. Even with rises in Medicaid enrollment and the increase in the rate of health care inflation, the Medicaid growth rate has slowed down.

The disproportionate share hospital (DSH) program was established to support hospitals and institutions that shoulder a disproportionate burden of providing uncompensated care. Many states have abused the DSH program to increase the federal Medicaid payment they receive. The DSH program is essential to the health care access of people living with HIV and AIDS, supporting safety net providers at the front lines of the HIV epidemic, including outpatient HIV clinics at public hospitals and children's hospitals across the nation.

Facts About Medicaid Costs, People Living With HIV/AIDS, and Other Beneficiaries

  • In 1996, 36.8 million people were enrolled in Medicaid.

  • In FY 1997, federal Medicaid costs for people with AIDS are estimated to be $1.8 billion with approximately 104,000 people living with HIV and AIDS receiving benefits through this program.

  • The breakdown of Medicaid beneficiaries by enrollment group is the following:

    • 11% elderly
    • 16% blind & disabled
    • 22% adults (non-disabled)
    • 51% children (non-disabled)
  • The greatest proportion of Medicaid beneficiaries are children. Medicaid pays for the health care of one in four children.

  • Although the elderly represent only 11.2% of Medicaid beneficiaries, they incur 33.1% of Medicaid costs.

  • Long term care represents 35.8% (about $45 billion) of Medicaid expenditures.

What Benefits and Services Does Medicaid Provide?

Federal guidelines set the mandatory and optional eligibility categories and the benefits of the Medicaid program. States will only receive the federal payment if they comply with the federal guidelines.

Eligible individuals can qualify through either mandatory or optional eligibility categories. Over half of all Medicaid spending is used for populations and benefits that are not mandatory.

Mandatory Populations:

States must provide eligibility for certain populations such as low-income children and pregnant women and individuals receiving federal cash assistance. Individuals who meet AID For Dependent Children (AFDC) eligibility criteria (even though the program has been replaced with the new Temporary Assistance to Needy Families TANF program, as defined in July 1996 as a result of the welfare reform law) and individuals who receive Social Security Income (SSI) payments examples of individuals who are automatically eligible for Medicaid.

Optional Populations:

States have the option of providing Medicaid eligibility for other groups (for which they will receive federal matching funds). These optional groups share characteristics of the mandatory groups, but the eligibility criteria are somewhat more liberally defined.

Examples of optional groups include:

  • certain elderly, blind, or disabled adults who have incomes above those requiring mandatory coverage.

  • institutionalized individuals with income and resources below specified limits

  • infants up to age one and pregnant women not covered under the mandatory populations rules whose family income is between 133% and 185% of the poverty level (the percentage to be set by each state)

  • The optional eligibility category that is most important for people living with HIV and AIDS is the "medically needy" program. States have the option of offering a "medically needy" program which allows states to extend Medicaid eligibility to additional qualified persons who may have too much income to qualify. This medically needy option allows these individuals to "spend down" to Medicaid income levels by incurring medical and/or remedial care expenses to offset their excess income. These individuals literally become impoverished as a result of their health conditions and therefore become eligible for Medicaid. Each state that offers the medically needy option defines the particular income requirement for the state. Thirty-four states currently offer the medically needy option as a way to qualify for Medicaid.

Medicaid Benefits and Services

States must provide the following basic services to mandatory populations:

  • Inpatient and outpatient hospital services
  • Laboratory and X-ray services
  • Nursing facility services for people aged 21 or older
  • Home health care for those eligible for nursing facility services
  • Prenatal care
  • Early and Periodic Screening, Diagnosis, and Treatment Services (EPSDT) for children under age 21
  • Family planning services and supplies
  • Services provided by Rural Health Clinics/Federally Qualified Health Centers
  • Services provided by a physician, nurse-midwife, and certified pediatric or family nurse practitioner
  • Any necessary transportation

States are not required to provide these mandatory benefits and services to the medically needy population although most states that offer a "medically needy" option do. This could be problematic for people living with HIV/AIDS because many become eligible for Medicaid through the medically needy option. States are only required to provide the following services to the medically needy: (1) prenatal care and delivery services for pregnant women, (2) ambulatory services to individuals under age 18 and individuals entitled to institutional services, (3) home health services to individuals entitled to nursing facility services, and (4) specific services provided at institutions for mental diseases or in intermediate care facilities for the mentally retarded.

Optional Benefits and Services:

States have the option to provide additional optional services to beneficiaries and still receive federal state matching funds. Federal law defines 31 optional services from which states may choose to offer. The most common optional services include: clinic services, prescription drugs, case management services, dental services, hospice services, intermediate care facilities, optometry and eyeglasses, and tuberculosis related services.

Medicaid Managed Care

In response to rising health care costs, states are increasingly seeking new health care financing and delivery mechanisms for their state Medicaid populations. One way to accomplish this is through federal Medicaid waivers granted by the Health Care Financing Administration (HCFA, the federal Medicaid authority). The waivers allow states to forgo certain provisions of federal Medicaid law. As states move more aggressively to control the costs incurred in their Medicaid programs, an increasing number are using the waiver process to require their Medicaid populations to enroll in managed care programs.

Only 3% of Medicaid beneficiaries were enrolled in Medicaid managed care in 1983. By 1995, about one-third of Medicaid beneficiaries were under managed care. Most current state-wide waivers have some of the following goals: to require enrollment in prepaid managed care plans, to modify income or eligibility requirements, and to increase access to health services for some currently uninsured populations. Many state waivers call for delaying the mandatory enrollment of disabled Medicaid beneficiaries, including people living with HIV/AIDS, into managed care plans. Other states have set up special needs plans to serve HIV/AIDS populations in specialized managed care plans. While in theory managed care can offer the coordinated care needed by people living with HIV/AIDS, it has a very poor track record dealing with disabled and chronically ill people. Managed care has traditionally provided care for healthy, employed populations. The mandatory enrollment of disabled Medicaid beneficiaries living with HIV/AIDS into managed care plans has increased the challenges faced by people living with HIV/AIDS in obtaining high quality, comprehensive health care under the Medicaid program.

Medicaid, the health care program for the poor, does not provide access to the health care and drugs that prevent full-blown AIDS until one develops full-blown AIDS.

If the automobile industry followed Washington's health care model, they'd only be installing air bags in cars that have already crashed.