Medicaid: 50 Years of Helping States Achieve Health and Economic Gains
July 30 marks 50 years since President Johnson signed the Social Security Amendments of 1965 into law. Along with Medicare, the law created Medicaid, the joint state and federal health insurance program for low-income people. In the past 50 years, Medicaid has not only helped countless Americans get the health care they need, it has also served as a reliable source of financial support for states.
From helping to lower the infant mortality rate to providing long-term care, Medicaid is integral to our health care system
Medicaid has helped improve the lives of people in every state. The program’s coverage of pregnant women and children has been a major factor in reducing the country’s infant mortality rate—from 26 of every 1,000 births in 1960 to 6.1 in 2010. In addition to improving children’s health, Medicaid is linked to helping children do better financially later in life. People who were supported by Medicaid as children have been shown to earn higher incomes (and contribute more in taxes that help support the program for future generations) than people who were uninsured as children.
Medicaid also allows more seniors and people with disabilities to get the long-term care they need. And for many, it has given them the chance to keep living in their community instead of moving to a nursing home. Medicaid has become an integral part of our health care system.
The Affordable Care Act gives states the opportunity to extend Medicaid to more low-income parents and adults, with more generous federal funding than in the traditional Medicaid program.
States have counted on Medicaid for stable funding for 50 years
The program has also been a reliable financial partner for states ever since its inception. States could not have seen the same health and economic gains over the past 50 years without Medicaid’s reliable federal funding.
Let’s take a look at what the reliable federal funding in the traditional Medicaid program has meant for states over these 50 years.
Since 1965, Medicaid has been a consistent source of financial support for states. The federal government pays for at least half of the costs and matches each state’s spending at least dollar for dollar. In many states, the federal share is even higher. The federal share of the costs, or “matching rate,” is based on a formula that considers state economic conditions. In 2012, the federal government paid for 57 percent of total Medicaid costs, and in some states, more than 70 percent.
For 50 years, the formula used to determine the “match rate” in the traditional Medicaid program has remained essentially unchanged. Because federal support is linked to state costs, states can be sure of increased support if their residents’ health needs change—like during a flu epidemic or a natural disaster. In the few times there have been changes, they were explicitly temporary and typically increased federal support to help states during times of economic crisis. For example, all states received a temporary increase in federal Medicaid matching funds during the last recession.
Medicaid’s reliable funding helps states provide higher quality of life, more affordable and accessible health care for more of their residents
If states had not been able to rely on the federal government to share in Medicaid funding, we might not have seen the same health advances that have taken place across the states in the past 50 years. Since 1965, every state has seen reductions in infant mortality, increases in life expectancy, and improved health insurance rates for children.
Certainly, medical advances have contributed to the improvements in population health. But advances only matter to the extent that people can afford to access them. Medicaid has made it possible for every state to extend health coverage to more of its residents, which gives more people the opportunity to benefit from advances in medical care.
Medicaid’s reliable federal funding has allowed states to do more for their residents than they could have done alone.
Medicaid expansion now offers opportunity for states to extend health coverage further
And now, at 50, Medicaid is giving states new opportunities to even better address their residents’ health needs.
States now have the option to extend Medicaid to all low-income adults, while the federal government covers almost all of the cost using a new matching formula for care provided to newly eligible adults. Expanding Medicaid is narrowing a big gap in health coverage in many states—many low-income adults who couldn’t afford health insurance before are now able to do so.
States that have already taken advantage of this opportunity have been able to extend health coverage to more working adults and families. These states have seen larger reductions in rates of uninsured residents than states that haven’t.
The Affordable Care Act also gives states new opportunities to explore innovative ways to coordinate care and change health care payment and delivery. This ensures that Medicaid and all sources of health insurance in a particular state work better.
For 50 years, Medicaid has been a reliable program for states—an essential source of health care that’s helped them to improve the lives of countless children, pregnant women, seniors, and people with disabilities. And now it is offering states the opportunity to do more. Moving forward, states can continue to count on the Medicaid program for the support they need to improve their residents’ health and wellbeing.
Happy birthday, Medicaid!