Medicaid leaves numerous gaps unfilled in the provision of medical coverage for the poor. Medicaid is available only to those impoverished enough to qualify for federal subsidy programs such as welfare and Aid to Families with Dependent Children (AFDC). Standards of eligibility vary by state. Therefore, a person who qualifies for Medicaid in one state may be ineligible in a neighboring state. Also, although federal requirements set certain minimums for medical care, states possess sufficient discretion to circumvent these requirements. The result is a hodgepodge of inconsistencies: "Here was no nationwide program to provide a standard of care to all those whose incomes fell below a certain level . . . The program would stand or fall by the combined activities of fifty different legislatures" (Stevens, 1974, pp. 57-58).
The original Medicaid legislation called for the provision of five basic medical services. These included inpatient hospital services, outpatient hospital services, other laboratory and X-ray services, skilled nursing-home services, and physicians' services (Stevens, 1974, pp. 65-66). In addition to the basics, states had the option of providing ten other services ranging from home health care to rehabilitative services. The optional services were funded through federal matching grants. Thus, financially secure states could afford to provide a wider range of services to their residents than poorer states.
Although Medicaid services are available to needy persons of all ages, the elderly are among the prime beneficiaries. The average per capita expenditure per aged Medicaid recipient was $2,921 in 1981 compared with $930 per capita for non-elderly recipient (Davis and Rowland, 1986, p. 51). Although the number of elderly persons receiving Medicaid has remained relatively stable over the past decade, the amount of funds spent on their medical care has increased sharply. For instance, $2 billion dollars wa...