Medicaid Financing


Established in 1965, Medicaid is simultaneously the nation’s health care safety net, as well as its largest health insurance program. Jointly financed by states and the federal government, Medicaid spent more than $420 billion and covered more than 62 million individuals in 2011. The federal government sets minimum and maximum standards in many areas, giving states some latitude to operate within those parameters. Because each of the 56 Medicaid programs operates differently, considerable complexity in many areas, including financing arrangements has developed. At the same time, over the years, states’ Medicaid programs have grown and evolved to encompass a disproportionate percentage of state budgets. More recently,  budget challenges stemming from the Great Recession as well as changes in the Affordable Care Act of 2010 have focused considerable attention on “bending the cost curve” in health care, and Medicaid is a major part of the equation. Increasingly, Medicaid Directors are looking to be more active purchasers, focusing on increasing the value of health care services for members rather than just paying claims.

NAMD’s Position: Medicaid Directors are committed to improving the Medicaid program to improve the quality of the care provided, while being responsible stewards of taxpayer dollars. These positive results can be achieved by allowing states greater flexibility in the areas of managed care, management of multiple, complex conditions, including individuals dually eligible for Medicare and Medicaid,  and establishing appropriate incentives to drive quality outcomes among providers and enrollees in all types of delivery systems. States need greater authority without obtaining waivers from CMS to implement outcomes-driven programs which appropriately align incentives for providers and help enrollees make informed decisions about the services they receive.

© 2012 National Association of Medicaid Directors
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