Established in 1965 by Title XIX of the Social Security Act (SSA), Medicaid is a jointly funded federal-state entitlement program that provides benefits for medical and health-related services to America’s poorest people. Medicaid covers three main groups of low-income Americans: parents and children, the disabled, and the elderly. In fiscal year (FY) 1998, 41.4 million people were enrolled in the Medicaid program and 40.6 million beneficiaries accessed services, including 18.9 million children (47%), 7.9 million adults (19%), 6.6 million individuals who were blind or disabled (16%), and 3.9 million elderly (10%).¹ As such, Medicaid covered more Americans than Medicare or any other health insurer and one fifth of all children in the United States. More recently, Congress created the State Children’s Health Insurance Program (SCHIP) as Title XXI of the SSA in 1997 to provide coverage for children in low- to moderate-income families who do not qualify for Medicaid.

Although roughly half of all Medicaid beneficiaries are children, only 17% of expenditures go for children’s services. The vast majority of all Medicaid spending is associated with services for the elderly (30%) and disabled (42%). Medicaid spending from federal and state sources totaled $161.2 billion in 1997 (compared with $214.6 billion for Medicare, the primary federal health care program for the elderly and disabled). The federal government pays at least 50% of the cost of Medicaid in every state and up to 78% in some states (national average = 57%).²

Although large in scope, Medicaid benefits are subject to specific eligibility regulations set by both state and federal governments. As originally enacted, Medicaid was limited to persons eligible for Aid to Families with Dependent Children (AFDC), now referred to as Temporary Assistance for Needy Families (TANF). Over the last three decades, eligibility rules have been amended and Medicaid coverage has been broadened to include additional populations. As a result, beneficiary regulations have become considerably more complex.

Medicaid rules are further complicated by the fact that states have discretion, within broad national guidelines set by the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA). Accordingly, states can establish their own eligibility standards; determine the type, amount, duration, and scope of Medicaid services; set payment rates for services; and administer their individual programs. Given this relative autonomy over key implementation measures, Medicaid programs can vary considerably from state to state.

Considerable attention has been focused on Medicaid dental services in recent years, in part because of greater recognition that individuals covered by Medicaid are disproportionately affected by dental diseases and in part because of widespread concerns about the level of access afforded by Medicaid dental programs. For example, children covered by Medicaid are three to five times as likely to have untreated dental disease than their more affluent counterparts.³ Growing awareness of these issues has led to a series of federal initiatives and prompted several states to implement policies and operational changes aimed at increasing provider participation, access to services, and overall Medicaid program performance.