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This brief summarizes Medicaid financing, eligibility, services, and spending patterns. Within the federal guidelines, states have considerable flexibility in establishing their own financial eligibility criteria, benefits packages, and payment policies. Temporary Assistance to Needy Families (TANF) retains current rules for Medicaid eligibility largely intact. Although nondisabled adults and children in low-income families make up almost three-quarters of Medicaid beneficiaries, they account for only about one-third of all direct Medicaid spending. Acute care services accounted for just over half of Medicaid spending in 1994. For nondisabled children and adults, virtually all direct Medicaid spending went to acute care services. For persons with disabilities and the elderly, the amount spent on long-term care is much greater.