Medicaid is the federal health insurance program for the poor and disabled. The Medicaid program is administered by the states within broad statutory and regulatory parameters established by the federal government. It is jointly financed by the federal and state governments, with the federal share ranging from 50 percent to 74 percent depending on a formula grounded in state per capita income. Medicaid currently constitutes 7 percent of the federal budget and 23.7 percent of total state expenditures (Kaiser Commission on Medicaid and the Uninsured 2013). It is the largest domestic program next to Medicare and Social Security and the single largest item in state budgets, outpacing elementary and secondary education, higher education, transportation, and other line items. More than $400 billion is spent annually on services provided to more than 60 million enrollees.

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Two processes — one programmatic, the other...

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