Medicaid provides health coverage for many low-income Americans, including children and their parents, pregnant women and people living with disabilities. Medicaid is jointly funded by states and the federal government; under the Affordable Care Act, states have the option to expand Medicaid to all low-income adults. Medicaid is also the primary source of funding for long-term care services and provides additional benefits to the lowest income Medicare beneficiaries.
Each state administers its own Medicaid program within broad federal guidelines. Some states administer pharmacy benefits directly, while beneficiaries in other states receive pharmacy benefits from Medicaid managed care plans. Federal law requires manufacturers to pay rebates on many medicines sold to Medicaid beneficiaries, and often states negotiate for additional discounts.
Across the country, Medicaid spending on prescription medicines remains low; in 2015, Medicaid programs spent on average just 4.5 percent on prescription drugs Policies meant to reduce utilization of medicines in Medicaid often result in barriers to access for patients, and have been shown to be associated with poor health outcomes for beneficiaries.