Understanding Medicaid in the United States

What is Medicaid?

Medicaid is a joint federal-and-state health coverage program in the U.S. designed to help low-income individuals and families access medical care. According to the federal government’s official site, “Medicaid provides health coverage to millions of Americans, including eligible low‐income adults, children, pregnant women, elderly adults and people with disabilities.” It was established in 1965 as part of the same legislation that created Medicare.

Why Medicaid matters

It covers tens of millions of Americans. In 2023 / 2024 the program served approximately 80 million people (children, adults, seniors, people with disabilities).
It represents a large portion of U.S. health care spending—in FY2023 Medicaid and related programs accounted for about 18% of national health care spending.
It fills a gap for individuals who cannot afford private-insurance and do not qualify for Medicare (because they are under age 65 or not disabled) and for many who have special medical needs like long-term care services.

What makes Medicaid different

Unlike typical commercial health insurance, Medicaid often covers services and populations that private insurance may not, such as long-term services and supports (LTSS) for seniors or persons with disabilities, and early and periodic screening, diagnostic, and treatment (EPSDT) services for children. Additionally, states run their Medicaid programs within a framework of federal rules, but with considerable flexibility—meaning eligibility, benefits, co-payments, and provider networks can vary significantly from state to state.

Who is eligible & how it works

Eligibility

Eligibility for Medicaid is means‐tested, meaning based primarily on income and resources, and also on membership in certain groups (children, pregnant women, parents/caretakers, disabled individuals, seniors). HHS Each state sets the specific rules (within federal constraints), so eligibility thresholds differ significantly across states. GovFacts There is also something called the Medicaid “coverage gap” in states that have not expanded eligibility under the Affordable Care Act (ACA): some adults may have incomes too high for traditional Medicaid and too low to qualify for marketplace subsidies.

Enrollment & benefits

When you apply and are found eligible, Medicaid pays health care providers directly for covered services rather than sending a cash payment to the beneficiary. HHS Covered benefits typically include things like hospital services, physician visits, lab and x-ray, nursing home care (in many cases), home health services, and for children, the full EPSDT services. Congress.gov Some states may also add extra benefits beyond federal minimums. States may also move enrollees into managed care plans rather than a pure fee-for-service setup.

Funding & state flexibility

Medicaid is funded jointly by the federal government and the states. Each state runs its own program (subject to federal rules) and determines the exact benefit set, provider payment rates, cost‐sharing, and eligibility thresholds (within minimum federal requirements). Federal matching funds (known as FMAP) vary by state depending on per-capita income and other factors.

Key trends and issues in 2025

Enrollment size and spending

Medicaid continues to be a major insurer in the U.S. In FY2023, an overview by the Congressional Research Service (CRS) reported that Medicaid covered about 96 million people at a cost of roughly $894 billion (federal + state) in that fiscal year. Congress.gov Another source reports “about 80 million” people in 2025 coverage figures. KFF

State variation & coverage gaps

Because states have flexibility, eligibility thresholds and benefits vary widely. Some states have expanded Medicaid under the ACA to cover adults up to about 138% of the federal poverty level (FPL); others have not. This creates a “coverage gap” in states that did not expand eligibility: adults earn too much to qualify under the traditional Medicaid rules yet too little to qualify for marketplace subsidies.

Ongoing challenges: long-term care, provider payments, equity

Many of the highest costs in Medicaid relate to long-term services and supports (LTSS)—nursing homes, home care for seniors or disabled individuals—which tend to consume a large portion of spending though serving fewer enrollees. Congress.gov
Because Medicaid payment rates tend to be lower than private insurance and sometimes lower than Medicare, provider participation can be a challenge, and access issues may arise.
Racial and geographic disparities exist—since the Medicaid population overlaps heavily with historically underserved communities, equalizing access and outcomes remains a policy priority.

How to apply and maintain coverage

If you or a family member believe you may qualify for Medicaid, here’s a general roadmap:

Check your state’s rules: Each state has its Medicaid plan with eligibility criteria (income limits, resource limits for certain groups) and benefit details. Your state’s Medicaid agency website will have details.
Gather required information: This typically includes proof of identity, residency, income (pay stubs, tax returns), household size, and for some groups, disability status or pregnancy verification.
Submit application: Many states allow online applications or phone/mail. Some also allow enrollment through your state’s health insurance marketplace.
Upon approval: You may receive a Medicaid card, information about covered services/benefits, and how to access providers. Choose a Medicaid-participating provider.
Follow renewal rules: Staying eligible may require periodic verification of income, household status, etc. Missed renewals or changes can lead to disenrollment or coverage interruption.
Understand cost‐sharing and benefit rules: Many enrollees have minimal or no premiums and low copayments, but that depends on the state and category of eligibility.

Important tips for applicants and beneficiaries

Don’t assume everyone with low income qualifies—eligibility depends on state rules and your specific category (child, pregnant woman, parent, adult without children, disabled, senior).
Check whether your state expanded Medicaid under the ACA—if not, adults without dependent children often face the coverage gap.
Keep documentation updated—changes in income or household size should be reported promptly.
Be aware of differences in provider networks and benefits—some states limit provider choices or place new enrollees into managed care.
Look into associated programs—Many states have “Medicaid waiver” programs or “home & community-based services” (HCBS) for seniors/disabled individuals who prefer home care over institutional care; these can be part of Medicaid but have their own rules.

Policy considerations and future outlook

Medicaid is under frequent policy debate because of its large size, its role in state budgets, and the need to balance access, cost, and quality. Some of the key issues include:

Work requirements & eligibility verification: Some states have tried to impose work or community engagement requirements for able-bodied adults enrolled in Medicaid. These raise concerns about administrative burdens and coverage losses.
Long-term care financing: As America’s population ages, Medicaid’s role in financing long term care becomes even more important—and more costly.
State budget pressures & provider payments: Since Medicaid is a large portion of state health spending (and sometimes the largest), states continually search for efficiencies, cost controls, and higher reimbursement rates in some provider categories.
Access and equity concerns: Ensuring Medicaid beneficiaries have timely access to care, especially specialists or in rural areas, remains a challenge. Efforts to expand telehealth access for Medicaid recipients are growing.
Coverage gaps in non-expansion states: The fact that some states have not expanded Medicaid means millions of low-income adults remain uninsured or under-insured.

The bottom line

Medicaid is a cornerstone of the U.S. health insurance system for low-income populations, children, pregnant women, seniors, and individuals with disabilities. It is jointly run by federal and state governments and offers a wide range of benefits, including acute health care, preventive services, and in many cases long-term care. Because of the flexibility states have, the rules—eligibility, benefits, networks—vary widely. If you or someone you know may qualify, it’s well worth checking your state’s Medicaid program to see how to apply and maintain coverage.

Understanding Medicaid is also important for anyone working in health care, social services, retirement planning, or policy—all because this program touches so many lives, and involves complex inter-agency, state/federal, and budget dynamics.

If you like, I can pull up state-by-state eligibility tables for 2025, or a summary of what services are required to be covered vs. optional under federal Medicaid rules. Would you like that?