Renuka Rayasam and Sam Whitehead
In January, during a congressional hearing on his way to becoming Secretary of the Department of Health and Human Services (HHS), Robert F. Kennedy Jr. provided inaccurate information about basic Medicaid issues, a program he now oversees.
At that time, he claimed that Medicaid is fully funded by the federal government (which is not the case) and that many beneficiaries are dissatisfied with high out-of-pocket expenses (beneficiaries pay little or nothing).
Medicaid is a complex program. This state-federal program that costs $880 billion annually provides health coverage to millions of low-income Americans or those with disabilities. It covers different services for different people in many parts of the country, and beneficiaries may interact with private insurance companies that do not have the word “Medicaid” in their names, making some unaware that they are in the program.
Although President Donald Trump promised to “love and cherish” Medicaid, Republicans in Congress recently introduced federal budget proposals that could significantly cut the program. As the debate begins, here’s what you need to know about Medicaid.
What is Medicaid and how does it differ from Medicare?
Medicaid and Medicare were created by the same legislation—an amendment to the Social Security Act—enacted by President Lyndon B. Johnson in 1965.
Medicaid is a government health insurance program for low-income individuals, and for adults and children with disabilities.
Medicare, on the other hand, generally covers individuals aged 65 and older.
For low-income elderly Americans, Medicaid covers Medicare’s out-of-pocket expenses. These individuals are often referred to as “dual eligibles” because they qualify for both programs.
Who is on Medicaid?
More than 79 million people receive Medicaid or related services from the Children’s Health Insurance Program (CHIP). This represents approximately 20% of the total U.S. population. Most beneficiaries qualify due to their low incomes.
Approximately 40% of all children in the United States are Medicaid or CHIP beneficiaries, which was created in 1997.
Both programs pay for services such as routine check-ups, vaccinations, and hospitalizations. Medicaid also covers pregnant women before and after childbirth: it funds over 40% of all births in the country.
Medicaid also serves individuals with disabilities or complex medical needs and helps them pay for services that allow them to live independently, integrated into the community, outside of institutions such as nursing homes or state hospitals.
The program serves a diverse population. Approximately 40% of individuals under 65 who use Medicaid are non-Hispanic whites, 30% are Hispanic, 19% are non-Hispanic blacks, and 1% are Native Americans.
Federal Medicaid funds cannot be used to cover undocumented immigrants, although some states and Washington D.C. have used their own funds to extend coverage to members of this group. California was the first state to do so.
What are the income requirements?
Eligibility generally depends on whether a person has low income, and states have different ways of defining this. For a household of four adults with no dependent children, the average coverage level nationally is $44,367.
The Affordable Care Act (ACA), known as Obamacare, passed in 2010, allowed more people to qualify for Medicaid based on their incomes. This is known as “Medicaid expansion.”
The law offered significant financial incentives to states to expand the program, reaching more people. The federal government would provide more money per enrollee to help include them in coverage.
The expansion’s intention was to close the gap in health insurance for the millions of Americans who do not have coverage through an employer. Medicaid would cover individuals with extremely low incomes, and as their incomes increased, they could transition to subsidized plans sold in the ACA insurance markets.
In 2012, the U.S. Supreme Court ruled that the decision to expand Medicaid would be up to each state. Currently, 40 states and Washington D.C. have chosen to do so, with support from both Democrats and Republicans.
In 2025, in the 10 states that have not expanded Medicaid, the income limit to qualify is $5,947 per year for a single individual. Those who earn more are not eligible.
However, adults in those states who earn too much for Medicaid may also not earn enough to receive assistance to purchase plans in the ACA markets.
This situation leaves some without coverage. An estimated 1.5 million people fall into this gap.
Where does the money to fund Medicaid come from?
The federal government covers most of the cost of Medicaid, matching the state’s spending percentage.
Currently, the federal government contributes at least 50% of the state’s spending and provides more money for certain services and enrollees, such as children and pregnant women.
Less affluent states receive a higher percentage of federal funds. In Mississippi, for example, the federal government covers 77% of the cost of Medicaid.
For eligible beneficiaries under the ACA expansion, the federal government pays 90% of the costs.
There is no limit to how much states can spend on the program, and hundreds of billions of federal dollars flow to them each year. In 2023, states allocated approximately 15% of their budgets to Medicaid.
How is that money spent?
Federal law requires all state Medicaid programs to cover certain services such as emergency medical transportation, laboratory tests, x-rays, family planning, and medication-assisted treatment for opioid use disorder.
The program also covers many nursing and home care services, although the law allows the government to recover those benefits after the enrollee’s death.
Beyond these requirements, states have flexibility to decide on other services their Medicaid programs can offer.
All states cover prescription drugs, and most cover dental care, physical therapy, and eyeglasses. Medicaid covers more mental health services and long-term care than any other type of insurance, public or private.
What is Medicaid called in my state?
Medicaid programs can have many different names, even within the same state, in part because most states use private insurers to manage them. This can be confusing for consumers, who may not realize they are enrolled in Medicaid.
In New York, for example, Medicaid plans are offered by large companies like Anthem Blue Cross Blue Shield and UnitedHealthcare. But also by some you may not have heard of, such as Amida Care and MetroPlusHealth.
In Wisconsin, enrollees may be in BadgerCare Plus; in Connecticut, in Husky Health; in Texas, in STAR; and in California, in Medi-Cal.
How does Medicaid affect hospitals and doctors in my state?
Medicaid generally pays healthcare providers less money than Medicare or private insurance. However, it is more than they would receive for treating uninsured individuals. Without Medicaid, many more people would be uninsured.
Both states and hospitals and doctors rely on these funds and have expressed concern because, even if cuts are implemented gradually, they would require significant adjustments.
What will happen to Medicaid?
It is not clear. Republicans in Washington are once again pushing for significant changes, which could include cuts in federal funding. This could reduce the number of eligible individuals, available services, or both.
A similar attempt to repeal and replace Obamacare in 2017, during Trump’s first term, failed.
One of the biggest obstacles to changing Medicaid is its popularity: 77% of Americans, including majorities of Democrats, independents, and Republicans, have a favorable opinion of the program.
Ultimately, the discussion boils down to several key questions about the government’s role in healthcare. Some of them: How extensive should the healthcare safety net be? Who deserves government assistance? How will major changes in Medicaid affect enrollees, states, providers, and the healthcare system as a whole, even if implemented gradually?
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
USE OUR CONTENT
This story can be republished for free (details).
