Medicaid Reform: Key Considerations for Children's Health Care

Eileen K. Fry-Bowers, PhD, JD, RN, CPNP; Karen G. Duderstadt, PhD, RN, CPNP, FAAN


J Pediatr Health Care. 2017;31(4):517-519. 

In This Article

Medicaid Financing

Currently, states have significant flexibility to design their state Medicaid programs to meet the specific needs and priorities of their residents and can seek additional flexibility under Section 1115 waiver authority.2 Thus, although the federal government sets minimum standards, states can expand eligibility, offer optional benefits, require premiums and cost-sharing, and determine how to provide care and pay providers (Artiga, 2017). As an "entitlement" program, anyone who meets eligibility requirements has a legal right to enroll in Medicaid, and states are then guaranteed federal financial support for their Medicaid programs based on the predetermined FMAP.

Total Medicaid spending was $552 billion in fiscal year 2015 (Kaiser Family Foundation, 2017b). On average, states spend about 17 cents of every general revenue dollar on Medicaid, which makes it the second largest state expenditure after education for kindergarten through 12th grade (Cassidy, 2013). Medicaid covers nearly 1 out of every 4 children under 6 years who live in poverty (Georgetown University Health Policy Institute, 2016). In fact, children represent about 43% of Medicaid enrollees but account for less than 20% of Medicaid spending (American Academy of Pediatrics, 2017). Medicaid accounts for approximately $1 of every $6 spent on health care in this country. Notably, two thirds of Medicaid spending is for care of the elderly or persons with disabilities (Rudowitz, 2016).

2Section 1115 of the Social Security Act gives the Secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that promote the objectives of the Medicaid and Children's Health Insurance Program programs.