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August 1, 2014


Medicaid is the state run – not so little sister – of the federally run Medicare program. Complex and expensive, Medicaid operates like an insurance program for poor people. Benefit packages are established, providers are recruited and bills are paid in the name of Medicaid. The funding for Medicaid is a combination of state and federal money with the federal government paying for half of the funds to administer the program and between 50 and 80 percent of the actual costs of services given to patients.

Medicaid was created in the 1960′s to be a medical companion to food stamps (food) and welfare (cash). The program has seen explosive growth in the past two decades. Growth rates have propelled the costs of the program to exceed the amount of money spent by all other state run programs including law enforcement, prisons, and education. Large states such as Texas routinely spend more than $25 billion per year on Medicaid.

More recently, states have begun to experiment with technology and consulting solutions designed to nibble away at these large budgets. Provider rate cuts/increases and service changes are frequently discussed and implemented. State administrators walk a fine line between fiscal integrity and access to care. Because Medicaid is an entitlement program, all eligible recipients are entitled to the services. Additional complexity is added by a variety of stakeholders such as providers, vendors, suppliers, legislators, associations, governors, advocates, federal administrators and the Congress of the United States.