Many federal laws permit the states considerable latitude in determining the important characteristics of programs created under them. Yet, frequently, this aspect is overlooked in the analyses of differences in state-level programs. The purpose of this paper is to present a measure to aid in the analysis of one such program, Medicaid, and to illustrate some of the ways it can be useful.

The Medicaid Program Index (MPI) differentiates among state Medicaid programs according to four important characteristics: inclusion of the medically indigent, the optional services covered, limitations on the provision of the basic services, and arrangements for paying providers. Data are presented to show that, in fact, the states do vary considerably on these factors, which can be analyzed in the aggregate (i.e., as the MPI) or separately. In addition, several uses for the MPI are discussed. They include: (1) identifying variations in state programs; (2) accounting for those differences by comparing them to promising explanatory variables; (3) identifying trends in program characteristics over time; and (4) developing hypotheses to account for those trends. Finally, it was suggested that similar measures can be developed to facilitate analyses of other federal/state programs.

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