FIGURE 2-2 Medicare beneficiaries with five or more chronic conditions account for two-thirds of Medicare spending.

SOURCE: Centers for Medicare and Medicaid Services, 1999.

Medicaid is administered and financed jointly by the federal government and the states, although the federal government pays for over 50 percent of aggregate program expenditures (U.S. Government Printing Office, 2002). There is a good deal of variability in methods of health care delivery and financing across states. Medicaid programs rely extensively on private-sector health care providers, managed care plans, and community health centers to deliver services and, to a lesser degree, state, county, or other publicly owned facilities or programs. Nationwide, over half of the total Medicaid population is enrolled in Medicaid managed care arrangements. Institutionalized, disabled, dually eligible, and elderly beneficiaries are most likely to receive services through FFS payment arrangements.

The majority of Medicaid beneficiaries are children (54 percent), most under the age of 6 (see Figure 2-3). Each year, over one-third of all births in the United States are covered by Medicaid. While a minority of the program in terms of population (26 percent), the aged/blind/disabled account for 71 percent of program expenditures. Over half of Medicaid expenditures are for long-term care services, with the majority going to institutional long-term care providers (Centers for Medicare and Medicaid Services, 2000a).

While coordinated collection of Medicaid data from the states is lacking, other data sources indicate a substantial prevalence of chronic condi-



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