The Medicaid program was enacted by Congress in 1965 in the same legislation that created the Medicare program. Medicaid is a state-administered program overseen at the Federal level by the Centers for Medicare & Medicaid Services (CMS). Specific program limits are set through a combination of Federal requirements and options, giving states flexibility in the design of their programs. As a result, standards and rules vary considerably from state to state.

Medicaid was originally designed to provide health care to poor families, children, the aged, and the disabled. Over time, the number of people served, as well as the cost of serving those people, has increased dramatically. A large part of that growth has been the number of people receiving long-term care services and the cost of providing those services.

The most common types of long-term care that Medicaid pays for are institutional care and home- and community-based service.