Medicaid is a government health insurance program that provides medical coverage to low-income Americans. It was signed into law in 1965 alongside Medicare, authorized by Title XIX of the Social Security Act, and now covers roughly 68 million people. Its core purpose is straightforward: ensure that people who cannot afford private health insurance still have access to medical care.
But Medicaid does far more than most people realize. It is the single largest payer for childbirth in the country, the primary funder of nursing home care for older adults, and a lifeline for people with disabilities. Understanding how the program works, who it covers, and what it pays for reveals why it touches nearly every corner of the American healthcare system.
Who Qualifies for Medicaid
Eligibility is based on income, measured against the Federal Poverty Level (FPL). The thresholds vary depending on who you are and where you live, because each state runs its own Medicaid program within federal guidelines. Children generally qualify at higher income levels than adults. As of late 2023, states cover children through Medicaid and the related Children’s Health Insurance Program (CHIP) at income levels ranging from 133% to over 300% of the FPL. Pregnant women qualify at levels between 133% and 375% of the FPL, depending on the state.
For adults, the picture is more complicated. States that expanded Medicaid under the Affordable Care Act generally cover adults earning up to 133% of the FPL. In states that did not expand, eligibility for parents and caretakers can drop below 20% of the FPL, and childless adults often have no pathway to coverage at all. That gap means two people with identical incomes can have very different access to Medicaid depending on which state they live in.
What Medicaid Covers
Federal law requires every state Medicaid program to cover a baseline set of services. These mandatory benefits include inpatient and outpatient hospital care, physician visits, lab work and X-rays, nursing facility services, home health services, family planning, and transportation to medical appointments. For children, the program requires a comprehensive package called Early and Periodic Screening, Diagnostic, and Treatment services, which covers virtually any medically necessary care a child needs, including vision, dental, and mental health services that adults may not receive.
Beyond those requirements, states can choose from a long menu of optional benefits. Prescription drugs, dental care, eyeglasses, physical therapy, occupational therapy, speech therapy, and mental health services in certain settings are all technically optional under federal law, though most states do cover prescription drugs and at least some of these other services. The result is that what Medicaid pays for can look quite different from one state to the next.
Medicaid’s Role in Childbirth and Maternal Health
Medicaid pays for more births in the United States than any other insurer. In 2021, more than two out of five mothers (41%) had Medicaid as the principal source of payment for their delivery. That share makes the program a major force in maternal and infant health outcomes across the country. Mandatory benefits include nurse midwife services, freestanding birth center services, and tobacco cessation counseling for pregnant women.
Long-Term Care and Nursing Home Coverage
One of Medicaid’s most significant, and least understood, purposes is paying for long-term care. Medicare, the insurance program for people 65 and older, covers hospital stays and doctor visits but offers very limited nursing home coverage. Medicaid fills that gap. It is the primary payer for nursing facility care in the United States, covering stays in state-licensed and certified nursing homes when a person meets the state’s level-of-care criteria and has no other way to pay.
States must provide nursing facility services without waiting lists to anyone who qualifies. That guarantee does not extend to home and community-based alternatives, which states may offer but can subject to waiting lists. For people with serious mental illness or intellectual disabilities, states conduct additional screening to determine whether nursing home placement is appropriate or whether community-based care would be a better fit.
How Medicaid Works With Medicare
About 12 million Americans qualify for both Medicaid and Medicare simultaneously. These “dual-eligible” individuals are typically low-income seniors or people with disabilities. For them, the two programs layer together: Medicare pays first for covered services, and Medicaid picks up remaining costs that Medicare does not cover.
In practice, this means Medicaid pays the Medicare Part B monthly premium so the person does not have to. Depending on the level of Medicaid someone qualifies for, the state may also cover Medicare deductibles, coinsurance, and copayments. Prescription drugs shift to Medicare’s drug plan, but if Medicare does not cover a particular medication, Medicaid may still pay for it. Some states also allow people whose income is slightly above the Medicaid limit to “spend down” by paying medical expenses until their remaining income drops low enough to qualify.
How the Program Is Funded
Medicaid is jointly funded by the federal government and each state. The federal share, called the Federal Medical Assistance Percentage (FMAP), is calculated using a formula that compares a state’s per capita income to the national average. Poorer states receive a higher federal match. The FMAP has a floor of 50% and a ceiling of 83%, meaning the federal government always pays at least half and can pay as much as five-sixths of a state’s Medicaid costs. Services provided through Indian Health Service facilities receive 100% federal funding.
A few exceptions exist outside the formula. The District of Columbia’s FMAP is set by law at 70%, and U.S. territories receive 55%. For administrative costs like running the state Medicaid agency, the federal government pays a flat 50% regardless of the state’s income level.
Does Medicaid Actually Improve Health?
A large national study published in The Lancet Public Health examined mortality data from 2010 to 2018 across all 50 states. States that expanded Medicaid saw a reduction of roughly 12 deaths per 100,000 adults compared to states that did not expand. The benefits were not uniform: Delaware saw the largest reduction, at nearly 64 fewer deaths per 100,000, while a few states showed no clear improvement. States with higher proportions of women and Black residents tended to see greater mortality reductions, likely because those populations had higher uninsured rates before expansion gave them access to coverage.
The mechanism is not mysterious. People with insurance are more likely to manage chronic conditions like diabetes and high blood pressure before they become emergencies. They fill prescriptions, attend follow-up appointments, and catch cancers at earlier, more treatable stages. Medicaid’s purpose, at its simplest, is to make that possible for people who could not otherwise afford it.