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Medicaid isn’t sexy. Financing Medicaid by Shanna Rose likely isn’t the first book you’d pick up at the bookstore, but if you’re a student of public policy (especially of health policy), it should be.

Financing Medicaid is a fascinating, brilliantly researched book that will catapult your knowledge of Medicaid’s history into wonk status. It is also especially relevant with the ongoing implementation of the Affordable Care Act (ACA).

The book begins with a thorough retelling of the beginnings of Medicaid – a federal-state health care program that serves low-income pregnant women, parents with dependent children, children, the severely disabled, and seniors. Medicaid became law in 1965 and was, in fact, a mere rider to the Medicare legislation, passing quickly in Congress with little floor debate. Medicaid was designed to serve as a protective layer around Medicare to prevent the latter from ballooning, but within a year of its passing, Medicaid was projected to dwarf Medicare. As states took their first steps toward adopting Medicaid programs, state budgets were consumed, and it became abundantly clear that an about-face was nearly impossible. Today, Medicaid is the largest health care program in the nation – with 56 million Americans enrolled.

Rose makes two very clear arguments throughout the book:

● First, the very financing structure of Medicaid – federal-state cost sharing – is the reason it has grown so rapidly over the past five decades. Open-ended federal matching grants are simply too enticing for states to refuse. State leaders therefore continue to allocate state funds toward Medicaid to gain additional federal funds. Rose points out that “Medicaid may be fiscally unsustainable, but it is politically self-sustaining” which brings readers to her second argument.

● Rose asserts that the leading advocates of Medicaid are – and have been since its inception – the nation’s governors. Rose tells story after story of Medicaid surviving efforts at retrenchment, repudiation, and repeal largely because of the intergovernmental lobby of the state governors. In fact, much of Financing Medicaid pertains to the rise of the National Governors Association (NGA), and specifically how Medicaid helped spur the NGA’s growth in power, prestige, and influence.

Chronological history, case studies, and theory are woven seamlessly throughout the text, with quotes from politicians and media outlets sprinkled liberally throughout. It is particularly compelling to juxtapose the political initiatives undertaken by each presidency (from LBJ to Obama) and to see partisan trends emerge. The book also discusses actions taken by politicians still in office today as well as enduring state health reform programs like the Oregon Health Plan and MassHealth (the latter of which served as the inspiration and catalyst for the ACA).

In the book’s final chapter, Rose shifts from providing historical context to analyzing three prominent proposals on long-term financial sustainability of Medicaid. The first is restructuring Medicaid as a block grant to the states – a proposal that has been suggested time and again, especially during the mid-90s by Republican governors. A block grant would give states more discretion over funds, but would cap the total amount. The second proposal is federalization, which would bring Medicaid under federal control. Federalization would set a minimum level of benefits to be covered by federal funds, with any benefits beyond that level covered by federal-state cost sharing.

The third and final proposal is a hybrid reform model, which would essentially break Medicaid in two parts: (1) a block grant for children and non-disabled adults, and (2) federalization over dual eligibles – low-income elderly and disabled individuals – who quality for both Medicaid and Medicare. These groups consume a disproportionate amount of Medicaid funds due in large part to long-term care. The hybrid reform model, as Rose argues, is more likely to receive intergovernmental support than block grants or federalization alone, and also has the potential to reduce federal-state cost-shifting and financially sustain Medicaid in the long run.

Financing Medicaid is not only a must read for public policy students, but also anyone with a general interest in political science and U.S. politics. The reader is guaranteed to never look at Medicaid the same way again.


Rose, S. (2013). Financing Medicaid: Federalism and the Growth of America’s Health Care Safety Net. Ann Arbor, Michigan: The University of Michigan Press.