Medicaid and the Children’s Health Insurance Program (CHIP) are sources of health care coverage for more than 71 million individuals, including:

  • Children
  • Pregnant women
  • Low-wage workers and their families
  • Persons with physical and mental disabilities
  • Other low-income individuals

The populations served by Medicaid are diverse, with many beneficiaries facing complex and chronic health needs. For most, Medicaid is the sole health coverage option, and the gateway to accessing providers and services to address their medical needs, long-term services and supports, and other related services. As noted by the Medicaid and CHIP Payment and Access Commission (MACPAC), “Medicaid is the foundation of the nation’s health care safety net.”

The COVID-19 pandemic highlights how important the Medicaid and CHIP safety net really are, with Medicaid and CHIP enrollment increasing from just over 71.5 million people in March 2020 to nearly 78 million enrolled by September 2020, as millions of Americans lost their jobs and livelihoods due to economic shutdowns.

A robust safety net is critical to ensuring these vulnerable populations have meaningful access to care. Medicaid and CHIP are central components of financing this safety net for hospitals and other providers. These programs are jointly administered and financed by the federal government and the states; as such, the payment and policy decisions made about Medicaid and CHIP at both the federal and state level have a direct impact on enrollees and the providers that serve them. 

Unfortunately, Medicaid payments to providers fall well below the cost of care, which creates an unsustainable financial structure for the health care safety net. Further threats to Medicaid and CHIP include efforts to reduce federal funding for Medicaid through ‘per capita caps’ or block grants, as well as state budget cuts. Any policy to reduce or substantially alter Medicaid funding, whether through cuts to provider payment rates or changes in the federal funding for Medicaid, are untenable and threaten access to health care of America’s most vulnerable individuals. It is imperative that federal funding for Medicaid remain stable so that states can focus on expanding coverage and ensuring provider payments are “consistent with efficiency, economy, quality and access”*, as ensuring access to care is inextricably intertwined with ensuring that efficient providers are paid adequately for the costs they incur when serving Medicaid enrollees.

*Section 1902(a)(30)(A) of the Social Security Act