Medicaid today plays a critical role for people with long-term care needs. With expenditures of $86.3 billion in 2003, Medicaid is the single largest source of financing for long-term care, providing services to the elderly, working age adults and children with disabilities. Despite Medicaid’s importance to people who need long-term care, Medicaid also has significant limitations. Medicaid’s benefits are provided unevenly across the nation and stringent meanstesting forces people who need care to impoverish themselves to receive assistance. This paper provides a review of how Medicaid works for people with long-term care needs and describes the fiscal challenges that states currently face and that Medicaid may face in the future as the population ages.