Abstract

During the past decade, Medicaid has experienced extraordinary growth, in both number of beneficiaries and total expenditures. Between 1988 and 1993, the number of Medicaid beneficiaries grew from 22 million to 32 million. While the number of Medicaid beneficiaries increased by 45 percent, expenditures increased by 145 percent, from 51 billion to 125 billion. Expressed in terms of its percentage of state budgets, Medicaid doubled from 10 percent to 20 percent over the same time period, to the point that it is currently the second largest budget item for most states.Faced with unsustainable rates of program budget growth and serious concerns about the level of access and the continuity of care afforded by the Medicaid program, states have turned to managed care. Almost every state has introduced some form of managed care for a subset of their Medicaid beneficiary population. Twenty-three states have gone farther, and implemented, proposed, or are developing section 1115 waivers to overhaul their Medicaid programs. These waivers allow states to develop and introduce nonstandard approaches to benefits, eligibility, service delivery, and financing for the Medicaid beneficiary population.