Medicaid Issues for the 109th Congress

Publication Date: January 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

Medicaid is jointly financed by the federal and state governments, but each state designs and administers its own state program under broad federal guidelines. Accordingly, state variation in eligibility, covered services, and the delivery of, and reimbursement for, services is the rule rather than the exception.

President Bush's establishment of a Medicaid Commission in the spring of 2005, called on its members to advise the Secretary of the Department of Health and Human Services (DHHS) on ways to modernize the Medicaid program so that it can provide high-quality health care to its beneficiaries in financially sustainable ways. The Commission was created in part in response to reconciliation instructions from the budget committees of the House of Representatives and the Senate recommending reductions in Medicaid spending. The House and the Senate have since conferenced on an omnibus budget bill and each chamber has passed versions of S. 1932, the Deficit Reduction Act of 2005, although the Senate passed a version that must return to the House for a final vote. The bill, if passed by the House and signed by the President, would reduce program spending and, at the same time, introduce significant new flexibilities for the state run programs.

During the past few years, the nation's Governors have asked Congress to provide them with relief from the increasing costs of Medicaid programs and, through the National Governors Association (NGA), have developed their own Medicaid reform plan. Other health and advocacy organizations propose expanding Medicaid to take on a greater role in providing access to medical care for the ever increasing number of individuals without health insurance.

The different perspectives of Medicaid's major stakeholders generate seemingly opposing proposals to modify the program, and reflect what each group considers the program's major weaknesses. Those weaknesses, depending on the stakeholder's perspective, include overall high costs, the unpredictability of Medicaid's budget, its reliance on state funding, and its inability to do more for the uninsured. All of these perceived weaknesses are likely to become exacerbated by the long-term demographic outlook of the U.S. population. As more baby boomers retire and more long-term care services are needed by an ever-growing population of elderly individuals, Medicaid's role and cost are likely to become even more scrutinized.

How is Congress to respond to the numerous proposals to move Medicaid forward into the near and long term? This document lays out some of these issues, explains the factors underlying them, and provides links to CRS products that can help Members of Congress and their staff prepare to discuss Medicaid's role today and into the future. This report will be updated as legislative action occurs.