Medicaid is the largest source of funding for medical and health-related services for people with limited income. Among the groups of people served by Medicaid are eligible low-income parents, children, seniors, and people with disabilities.

Medicaid was created on July 30, 1965 through Title XIX of the Social Security Act. Each state administers its own Medicaid program while the federal Centers for Medicare and Medicaid Services (CMS) (formerly the Health Care Financing Administration) in the United States Department of Health and Human Services monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards.

Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among states of similar size or geographic proximity. A person who is eligible for Medicaid in one state may not be eligible in another state, and the services provided by one state may differ considerably in amount, duration, or scope from services provided in a similar or neighboring state. In addition, state legislatures may change Medicaid eligibility, services, and/or reimbursement during the year.

State participation in Medicaid is voluntary; however, all states have participated since 1982. In some states Medicaid pays private health insurance companies that contract with the state Medicaid program, while other states pay providers (i.e., doctors, clinics and hospitals) directly to ensure that individuals receive proper medical attention. The State Children's Health Insurance Program (SCHIP) was established in 1997.

In addition, other programs may exist in some localities that are funded by the states or their political subdivisions to provide health coverage for indigents and minors. There is also general confusion about the differences between Medicaid and Medicare, which is an entirely federal health insurance program available for people age 65 or older, younger people with disabilities, and a few other groups. While Medicaid and Medicare cover similar groups, they are entirely different programs. For example, Medicaid covers a wider range of health care services than Medicare and does not have premiums or deductibles like Medicare. In 2001, about 6.5 million Americans were enrolled in both Medicare and Medicaid.

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