Emergency room overutilization is a major cause of today's ever-increasing healthcare costs. The majority of patients seen in emergency rooms across the nation are Medicaid recipients, for non-emergency reasons. The federal government initiated Medicaid Managed Care programs to provide better health care delivery, adequately compensate providers, and reduce health care costs. Has Medicaid Managed Care addressed the issues and solved the problem? The answer is 'Yes' and 'No'. Throughout the early 1980s and 1990s the federal Medicaid program was challenged by rapidly increasing costs of the Medicaid program and a growing uninsured population. One of the main reasons for the overall increase in healthcare costs is the excessive use of hospital emergency rooms. This is a direct result of the lack of a primary care physician and/or family doctor who is the primary source of healthcare for an individual and/or an entire family. The traditional Medicaid program does not offer, or require, recipients to choose physician-based health care like its Medicare counterpart. Medicare still operates under the traditional fee-for-service methodology and does not require beneficiaries to identify a primary provider as well as have direct access to specialty services. This allows for a cost-sharing approach that results in higher out-of-pocket expenses and does not cover drug or prescription benefits. In an effort to provide better services and access to health care, as well as reduce costs, the federal government has allowed states to turn to managed health care systems and has proposed mandatory state-level implementation for the Medicaid population. To make major changes like these, states must request waivers from Medicaid regulation... half of document ......sive.(Practice Trends)." Clinical Psychiatry News 33.2 (February 2005): 88 (1) Academic OneFile . Thomson Gale. Retrieved February 25, 2013, from: .5. Improving Medicaid Managed Care (Quality Assurance Reporting Requirements). . Ran (November 2005) Cost and utilization analysis of a pediatric emergency department diversion project in Pediatrics, 116, p1075(5) Retrieved July 11, 2013, from InfoTrac OneFile via Thomson Gale: