Medicaid for State Policymakers



Over its 50-year history, Medicaid has represented a critical and evolving issue for state policymakers, who care about Medicaid for many reasons.

  • Medicaid provides health insurance for low-income people who have complex needs and require expensive care.  Approximately 70 million—or one in five Americans— received health and long-term care coverage through Medicaid in 2015, making it the largest source of coverage for low-income individuals, including pregnant women, children, adults and people with disabilities and low-income seniors who are also covered by Medicare.
  • The program is a federal-state partnership, and both the federal government and the states play important roles in ensuring that Medicaid is fiscally sustainable over time and effective in meeting the needs of the populations it serves.
  • In 2016, Medicaid accounted for 21.5 percent of total expenditures from state general funds. Across the nation, state spending on Medicaid totaled $509 billion in 2015, of which 62 percent was financed by the federal government and 38 percent by states.

Figure 1: Types of Enacted Medicaid Innovations in the States, 2017

Pie chart of Medicaid innovations in the states, 2017

Laboratories of Innovation. States can leverage their market power as large purchasers of health care services to create new payment models that may simultaneously contain costs and improve care. Indeed, states have adopted a wide range of innovative strategies to improve the value of their Medicaid programs, from aligning incentives and provider payments with their desired patient outcomes to adopting new delivery systems that coordinate and streamline services for individuals who are eligible for both Medicaid and Medicare.

According to NCSL’s health innovations database,  states enacted over a hundred Medicaid laws in 2017 aimed at reducing costs and improving outcomes through a wide range of delivery and payment reforms, eligibility expansions and Medicaid waivers (Figure 1). For more detail on state actions, visit NCSL’s health innovations webpage.  

Changing Policy Landscape. The new Congress and the Trump administration have promised substantial changes to the Medicaid program, which could give states both new responsibilities and flexibility. On January 11 2018, the Centers for Medicare & Medicaid Services (CMS) announced new policy guidance allowing states to require certain able-bodied, working-age Medicaid beneficiaries to participate in employment or other community engagement as a condition for Medicaid eligibility. The policy excludes adults with a disability, pregnant women, and elderly Medicaid enrollees. States will have flexibility to identify community service, caregiving, education, job training, substance use disorder treatment, or other activities that meet the states’ eligibility requirements.

State Community Engagement Actions. In January 2018, CMS approved Kentucky’s Section 1115 waiver request which contained a community engagement requirement for certain adult beneficiaries ages 19 to 64, with exemptions for several groups, including former foster care youth, pregnant women, primary caregivers of a dependent, full-time students, individuals considered medically frail, and those diagnosed with an acute medical condition.

By June of 2018, CMS had approved four states for work requirements and community engagement provisions: AR, KY, IN and NH. Additional information on Section 1115 waivers is available in NCSL’s recent publication, Understanding Medicaid Section 1115 Waivers: A Primer for State Legislators.

States are considering how changes could affect enhanced federal financing for expansion populations, conditions for eligibility, as well as enrollment and renewal procedures.

Key Medicaid Policy Resources

For current information about Medicaid policy issues, the definitive source is the federal government. The Department of Health and Human Services through the Centers for Medicare and Medicaid Services maintains up-to-date information about recent policy issues on this webpage. Additional NCSL and CMS tools and resources pertaining to key Medicaid topics are listed below.

Medicaid Waivers

Medicaid Expansion by State

Medicaid Eligibility by State

Medicaid Fraud and Abuse

Medicaid and Prescription Drugs

Medicaid Reform, Innovations and Waivers

Containing Costs and Improving Efficiencies

Taxes, Assessments and Fees

Long Term Services and Supports (**Note: this is only available to members**)

External Medicaid Policy Resources