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Medicaid Works: A Critical and Evolving Pillar of U.S. Health Care

Medicaid is in the news, with Louisiana this month becoming the latest state to implement health reform’s Medicaid expansion even as, in Washington, House Republican leaders propose radical structural changes that would likely mean deep Medicaid cuts.  Our “Medicaid Works” blog series, for which this is the first post, aims to inform the debate over Medicaid’s future by providing the latest facts and figures on this essential and popular part of the nation’s health care system.

Medicaid, which provided quality health care services for 97 million low-income Americans at some point during 2015, has bridged gaps in health care access for five decades and has assumed an even greater role under health reform.

Medicaid’s impact was swift.  Before President Johnson signed Medicaid into law in 1965, poor families mostly depended on charity care and many went without treatment.  Medicaid brought a rapid change for these families, prompting dramatic drops in infant mortality and infectious diseases like influenza and pneumonia.  From 1963 to 1970, the share of low-income people seeing a doctor rose from 56 to 65 percent and the share of poor pregnant women receiving care in their first trimester rose from 58 to 71 percent. 

It has filled in gaps in health care access.  Originally, Medicaid was almost exclusively for cash welfare recipients, seniors, and people with disabilities.  Eligibility expansions in the 1980s and 1990s enabled many more low-income children, parents, and pregnant women in working families to qualify.  Today, Medicaid covers nearly half of all pregnant women, ensuring that their babies have a healthy start, and more than a third of children.

It has transformed care for people with disabilities and seniors.  Medicaid gives states the option to cover working people with disabilities, which allows people to work without fear of losing their health care — and to get the long-term services and supports they need to work in the first place.  States have also used Medicaid’s flexibility to shift care for people with disabilities and seniors away from nursing homes and other institutions to the community.  By 2011, 80 percent of non-elderly beneficiaries with disabilities and half of seniors received home and community-based services rather than institutional care.  In any given month, Medicaid benefits more than 10 million people with disabilities and 6 million seniors. 

Medicaid has long-lasting benefits.  Children eligible for Medicaid due to eligibility expansions in the 1980s and 1990s were likelier to complete high school and college, a National Bureau of Economic Research study found.  Children eligible for Medicaid pay more taxes in adulthood (due partly to their higher earnings) and have fewer emergency room visits and hospitalizations as adults, other studies show. 

Medicaid is key to the future of U.S. health care.  Thus far, 31 states and the District of Columbia have adopted health reform’s Medicaid expansion to cover non-elderly adults without children in the home.  Expansion states have seen large drops in the number of uninsured and reaped budget savings, partly through lower payments to hospitals for uncompensated care.  States have also used Medicaid’s flexibility to implement initiatives that reduce unnecessary emergency room use, improve care for people with chronic conditions by better coordinating the multiple services they receive, and help people with mental illness return to work and get stable housing.  By 2020, an estimated 13 million adults will have enrolled in Medicaid and gained access to affordable health coverage due to health reform.