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What is the History of Medicaid?

By Carol Francois
Updated May 23, 2024
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The history of Medicaid is a testament to the efforts by the US government to provide heath care to people with low income. Medicaid is a government program that is managed by each state to meet the needs of their poorer communities. Eligibility is determined based on a set of financial and employment related criteria that varies by state, and is focused on children, seniors, people with disabilities and low income parents.

In 1965, Medicaid was created through the Social Security Act. Federal centers for Medicare and Medicaid services are responsible for monitoring how each state runs their individual programs. They are also responsible for defining and measuring the quality of service, method of delivery, level of funding and the eligibility criteria that is established by each state. In 1967 the early and periodic screening, diagnostic, and treatment (EPSDT) comprehensive plan was developed for all children under the age of 21.

Freedom of choice, home, and community based care waivers were created in 1981. These waivers increased the flexibility of participants to select their own care provider. That same year, all states were required to pay hospitals that were providing health care services to a larger share of low income patients with additional funding to support their services. This change was designed to reduce the financial incentive for hospitals to limit the number of low income patients being treated. Adjustments like this ensured that the intent of the program was maintained throughout the history of Medicaid.

Although it was formed in 1965, Medicaid was not available in every state until 1982. The history of Medicaid shows a conflict within each state on the role of government and health care. In the United States, health care is a commodity purchased and paid for at the individual or employer level. The amount of government involvement in the Medicaid program varies by state. Some states administer the entire program, with a short list of approve doctors, health care providers and other states have outsourced the management of the entire program to private firms.

Dental services were added to Medicaid in 1989, when the United States Congress determined that all states must provide all Medicaid services to children less than 21 years of age. The types of dental services covered by Medicaid vary by state, but all are required to provide a minimal of pain relief, teeth restoration and to ensure the maintenance of dental health standards. There are several programs are designed to provide a method for early diagnosis and treatment of standard medical conditions. An important benefit of Medicaid is the provision that the state is responsible for providing treatment for any disease identified during oral screening. This is true even if that illness is not covered under the patient’s current Medicaid plan.

On 1 January 1991, the Medicaid Drug Rebate Program was launched. The Omnibus Reconciliation Act of 1990 initially created the program. The purpose of program is to create a mechanism for managing the cost of prescription drugs. The program allows states to manage a master list of the drugs covered, generic substitutes, and alternative treatment options. The focus on maintaining a standard level of care for low income citizens remains consistent throughout the history of Medicaid.

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Discussion Comments
By Animandel — On Mar 14, 2014

Contrary to what a lot of people seem to believe, having a low income doesn't automatically qualify a person for Medicaid. The program is designed to help particular segments of the population. Children and elderly people are often times the most vulnerable segments of the population, and Medicaid is designed to protect children and senior citizens.

If you look at the history of the Medicaid program and the many changes the program has experienced, what you will see is that the underlying theme of protecting the vulnerable citizens has remained consistent.

By Drentel — On Mar 14, 2014

With the current extent of Medicaid, and the numbers of people covered under this program, wouldn't it have been better for the United States to add to the people covered under this program and not try to institute a universal health coverage system?

Most people who want health insurance can get it one way or another. An expanded Medicare system would cover more people and many people are already covered through their jobs and under retirement plans.

Many of the people who don't have health care coverage don't have it because they don't want coverage, or choose to go without coverage because they want to spend their money on something else.

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