Medicaid Health Care Assistance How does the organization fund its programs?

Medicaid was developed for the sole purpose of providing health care services to low income individuals and families. For those people that cannot afford to pay for these services, the program makes it possible for you to get the treatment you need when obtaining them is challenging (based upon financial considerations). To qualify for this entitlement program there are a number of different factors that will be taken into account to include: the age of a person, nationality, disability (if any), income and property owned. ("Overview," 2011)

The program is funded by the states / federal governments and it is managed by each state individually. The federal government pays an average of 57% of Medicaid's expenses. While the state, designs their own program within specific federal requirements. In general, state participation in the program is voluntary. The way that this basic formula works, is that each state will set their own budget. The federal government provides what is known as matching funds. This is when they are giving equal amounts of financing to the state's individual Medicaid program. As, the federal government will match the exact amount that each state is spending on: this portion of their budget. Under the formula that it used, the federal government will distribute these funds to the states, based upon their overall levels of personal income. As, those states that have higher annual incomes will receive a greater percentage of Medicaid assistance (based upon the fact that they have lower amounts of people using the program). While, those states that have larger numbers of lower income families will receive less matching funds from the federal government. This is important, because it shows how Medicaid financing...

(Villareal, 2006)
How reliable are the organization's funding sources?

In the past, the funding for Medicaid has remained fairly stable. This is because the federal government would provide increased amounts of assistance, during times when the states were facing challenges with the program. A good example of this can be seen with the additional funds that the states received from the American Recovery and Investment Act. This was passed in 2009, to help provide the states with financial assistance from the increasing costs they were facing from their Medicaid programs. As the difficult economy and the increasing number of people who were qualifying, began to place strain on the budgets of many states. This is important, because it shows how the federal government has always provided assistance when the states were facing challenges with their programs in the past. (Luhbi, 2011)

However, due to the tremendous of amounts of budgetary issues, the federal government has been dramatically reducing the amount of matching funds that they are providing to the states. A good example of this can be seen by looking at the below table for the average federal matching funds the states are receiving between 2010 and July 2011.

Average Medicare Matching Funds that are paid to the States by the Federal Government

Average Federal Matching Funds

2010

$2.68

January 2011

$2.31

April 2011

$2.10

July 2011

$1.60

(Luhbi, 2011)

This is significant, because it shows how the overall amounts of funding for Medicaid are becoming unstable in the future. The…