Medicaid: Medicaid: waivers--2005. End of Year Issue Brief

In 1965, President Lyndon Johnson signed the Social Security Act into law, which was designed to help the elderly and the poor receive needed health insurance. This landmark legislation ushered in a new chapter of federal assistance in providing health care, authorizing the creation of both Medicare under Title XVIII and Medicaid under Title XIX. Since January 1966, states have administered medical assistance and medical assistance to the aged programs under Title XIX, with the federal government paying from 50 percent to 85 percent of the cost. When Medicaid was created in 1965 as a joint federal-state medical assistance program, states were initially under strict guidelines to comply with federal requirements in order to receive matching funds from the federal government. However, after years of experience with the program, and with different states having different needs and challenges due to demographics such as size and population, an abundance or paucity of urban areas, age of the population, quantity of providers, and other factors, the federal government eventually allowed "waivers" to the Social Security Act to help states best meet the needs of their Medicaid recipients and to contain costs in their Medicaid programs. In short, the term waiver is used to describe the statutory authority under which the federal government, through the Centers for Medicare and Medicaid Services (CMS), allows states to receive federal matching funds for its programs even though the state is no longer in compliance with technical requirements of the Social Security Act.