Medicaid began in 1965 as a joint venture between federal and state governments to provide medical assistance to certain needy people. Today, Medicaid provides a large portion of the medical care that America’s poorest people receive. Because the states regulate Medicaid, each makes its own determination of who is eligible; therefore, someone who is eligible in one state may not be in another. There are federal standards that mandate certain groups that Medicaid must include for coverage. However, there are optional groups such as certain elderly people with Alzheimer’s that states have the option of including or not.

Currently, Medicaid offers a prescription drug coverage benefit that states can choose whether to include. Every state currently offers this benefit because of the value it represents for their users. Medicare currently does not offer prescription drug coverage, with a few exceptions for serious illnesses. Medicaid is particularly valuable for qualifying senior citizens. According to a study conducted by the Kaiser Foundation in 2002, the disabled and elderly account for 20 percent of all Medicaid recipients, but for 80 percent of Medicaid spending on prescription drugs.

Prescriptions are one of the top Medicaid cost drivers, and as a result states are trying to find ways to make prescription coverage more cost-effective. Because Medicaid provides for so many people, states often encourage substituting generics for brand names because they provide the same care at a lower cost. If a doctor wants a patient to have only the name brand, he or she must specify this and fill out a form. In addition, some states put caps on the number of prescriptions one person can receive through Medicaid at one time in order to keep costs down. Some also use co-payments that establish a certain amount a person must pay for their medication. These are usually somewhere between $3 and $15.

There are certain excluded drugs on Medicaid. These often include pricey medications such as HIV medication. States vary on which drugs are excluded.

Many people who need medication are against the restrictions that have been recently imposed concerning what Medicaid recipients are allowed to receive. There are advocacy groups throughout the United States who are trying to convince states to relax their policies.