Medicaid

Congress has begun reexamining the $131 billion Medicaid program--one of the fastest growing components of both federal and state budgets. In 1993, Medicaid cost nearly $100 billion more and served about 10 million more low-income residents than it did a decade ago. To contain exploding costs and enrollment, many states are seeking greater flexibility in implementing statewide Medicaid managed-care programs. Currently, this flexibility is available only through the waiver authority established by section 1115 of the Social Security Act. Although many states have expressed interest in waivers, only four states have waivers in place. Two additional states have received federal approval, but their plans still must be ratified by state legislatures. States face significant challenges as they move from traditional fee-for-service systems into managed care. Specifically, the emphasis that states put on program implementation and oversight may affect whether states' managed-care programs successfully contain costs while increasing access to quality health care.