The flexibility factor: finding the right balance.

ABSTRACT

Medicaid is financed with federal and state dollars and administered by states subject to certain federal rules. This design has strengths and weaknesses, and inherent tensions. Rising costs, state fiscal pressures, and new federal waiver policies have prompted some states to seek authority to use Medicaid dollars in ways that do not conform to current federal standards. These changes could have a sizable impact on the program and its beneficiaries. As federal and state roles and responsibilities are discussed, a range of options, including some that extend beyond Medicaid, will need to be considered to address the cost and resource issues that lie beneath much of the current debate.