Why is Medicaid a state program?

We repeatedly hear that this state or that state is cutting back on Medicaid eligibility and benefits. For most progressives, it’s insulting. For anyone who is poor it’s like a dagger in the heart.

Medicaid was created by the Social Security Amendments of 1965, which added Title XIX to the Social Security Act. Medicaid was created as an entitlement program to help states provide medical coverage for low-income families and other categorically related individuals who meet eligibility requirements. Candidates include the blind, aged, disabled and pregnant women. In essence, Medicaid serves as the nation’s primary source of health insurance coverage for low-income populations. Each state administers its own Medicaid program, establishes their own eligibility standards, determines the scope and types of services they will cover, and sets the rate of payment. Benefits vary from state to state, and because someone qualifies for Medicaid in one state, it does not mean they will qualify in another.[6] The federal Centers for Medicare and Medicaid Services (CMS) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards.

It’s key to remember that Medicaid was authorized by Congress at President Lyndon Johnson’s request in 1965. It was that same year that he energetically moved forward with his Great Society programs. These programs expanded the federal government’s role relating to a number of domestic issues. The Civil Rights Act of 1964 gave the federal government an expanded role in regulations regarding interstate commerce. A key component  dealt with public accommodations, banning racial discrimination in restaurants, hotels, and a host of other venues where people congregate. The Great Society also brought us new cabinet offices, including the Department of Education, Department of Transportation, and the Department of Housing and Urban Development. The War on Poverty brought the creation of the Office of Economic Opportunity. It coordinated grassroots efforts to address poverty, including extending empowerment to the people who lived in impoverished areas. And let us not forget that Medicare was established in 1965 at the height of the Great Society.

The Great Society, including the establishment of Medicare, moved power from the states to the federal government. All of this lead to the states squawking over being left out of the areas of social change. Indeed ,the balance of power in our system of federalism was shifting dramatically toward the federal government.

The political viability of many members of Congress depended on support from those at home in their state governments. Many members of Congress previously served in state legislatures. Our elected officials in Medicaid-02-a Washington were hearing loud and clear from those serving at the state level that they wanted a piece of this Great Society action.

Congress and President Johnson responded. They established a series of block grants, in which federal monies were transferred directly to the state governments for administration. While there are currently over 700 types of block grants from the federal government to the states, none is as important as the administration of Medicaid. The states wanted increased involvement in health care and the federal government responded in a way in which it did not with Medicare. It sent most of the money for Medicaid to the states and left it up to them to determine eligibility and allocation. Thus we have our current situation in which most states work to weaken Medicaid, even when extra money is provided by the federal government. With health care, as with many other programs, the states prefer to keep taxes low at the expense of providing needed public services for their citizenry.

When money started being transferred from the federal government to the states in large quantities, including with Medicaid, the intent may have been to be fairer to the states and maintain the established and historic balance we had in federalism. However, as domestic needs increased in the last third of the previous century and now into the 21st Century, we clearly see that states are not up to the job of dealing with basic issues, such as income inequality. The federal government can do this if it wants. A good place to start would be in cutting off the Medicaid block grants to the states and instead running Medicaid itself.