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some exceptions specified in federal law such as providing medically necessary care forMedicaid-eligible children and services for medically needy people whose income wouldotherwise disqualify them). 3) Freedom of choice: beneficiaries must be allowed to have aninformed choice of Medicaid health care providers who meet program standards. 4) Amount,duration, and scope: services must be offered in an amount, duration, and scope that isreasonably sufficient to achieve the purpose of the benefits. States may impose some limits onservices for beneficiaries over 21 (such as limiting the number of hospital days covered), aslong as the limits follow this guideline and do not discriminate among beneficiaries based onmedical diagnosis or condition. 1 Federal law also specifies that each state designate a singlestate agency to administer that state’s Medicaid program.Medicaid pays for basic health services such as inpatient and outpatient hospital care, physicianvisits, pharmacy, laboratory, X-ray services, and long-term care for elderly and disabledbeneficiaries. The people eligible for these services are mainly low-income families, children,related caretakers, pregnant women, the elderly and people with disabilities. Medicaid wasoriginally available only to people receiving cash assistance from the government (TANF —Temporary Aid to Needy Families, or SSI — Supplemental Security Income), but during the late1980s and early 1990s, Congress expanded the program to include more people such as theaged, disabled, children and pregnant women. People receiving cash assistance are stillautomatically eligible for Medicaid, but as a result of federal changes, Medicaid was de-linkedfrom cash assistance and there are many people who are on Medicaid but not on cashassistance programs. 2Congress passed the Ticket to Work and Work Incentives Improvement Act in 1999 to expandMedicaid to certain disabled people whose incomes make them ineligible for SSI. Manydisabled people can work but by doing so will earn too much income to qualify for Medicaid, andif they cannot obtain insurance through their employers or if the coverage is inadequate for theirneeds, they may still be able to get Medicaid through this provision. Simplification of enrollmentprocedures since 1998 has also helped to enroll more people in Medicaid. However, due tohistorical rules, Medicaid cannot cover low-income adults who do not have children in the homeand are not disabled or elderly, except under a Medicaid waiver. 3Medicaid had just 4 million enrollees in 1966. 4 The total number of people on Medicaid wentfrom 33.2 million in June 1996 to 42.7 million in June 2003 (with slight dips in 1997-1999 whenthe economy was better and as a result of welfare reform). 5 Medicaid now covers one-fifth ofthe children in the U.S. and pays for one-third of all childbirths, two-fifths of all long-term carecosts, one-sixth of all pharmacy costs, and half of states’ mental health services. Though thedisabled and elderly make up less than one-third of the Medicaid population (compared tochildren and nonelderly adults), two-thirds of Medicaid expenditures is spent on these groups. 6The portion of the Medicaid population enrolled in managed care programs climbed steadilyfrom 40.1 percent in June 1996 to 59.1 percent in June 2003. 7 State interest in applyingmanaged care methods to Medicaid began in the 1980s when rising costs and a recession putpressure on states to control spending, and managed care greatly increased in the 1990s. Lessthan 10 percent of Medicaid beneficiaries were enrolled in managed care in 1991. 8 ThoughMedicaid managed care has not been without its problems, it has stabilized in the last few yearsand is generally working better than managed care in Medicare and the private sector.Managed care penetration and types of managed care models vary among states, but moststates agree that managed care has generally helped with cost control and providing a medicalhome to clients, and they do not want to get rid of it and go back to an all fee-for-service model,though they continue to refine their managed care programs. 9B-3