A provision in the Deficit Reduction Act signed by President Bush in February requires all persons applying for, or renewing, their Medicaid coverage after June 30, 2006, to provide proof of their citizenship and identity. This provision is a response to growing concerns that many illegal immigrants have been fraudulently claiming U.S. citizenship in order to receive Medicaid benefits.  Approximately 50 million people will have to go through this process to qualify for Medicaid.  Citizenship would only have to be proven once.
The U.S. Department of Health and Human Services (HHS) recently released interim guidance to help states implement the new provision.  It establishes four distinct levels of documentation to verify citizenship and identity. A person may use a passport or certificate of citizenship. If these are not available, the individual may provide proof of identification, such as a driver's license, in addition to a birth certificate, health insurance records, medical records, institutional admission papers, school records for children, or, as a last resort, written affidavits from at least two individuals verifying claim of citizenship. 
The guidance allows for a "reasonable opportunity" for citizens currently enrolled in Medicaid to locate the proper documentation. It calls on states to help new applicants secure their paperwork if they have been unsuccessful doing so on their own, but prohibits coverage until the proper documentation is presented.
The new rules will reduce state and federal Medicaid costs by excluding people—primarily illegal immigrants and some legal immigrants—who are not eligible for the program. There are concerns, however, that the rules will inadvertently cause hardships for eligible U.S. residents who do not possess or cannot locate appropriate documentation. A recent survey from the Center on Budget and Policy Priorities estimated that 3.2 to 4.6 million citizens could experience delays in coverage, or lose it altogether, as a result of the new rule.  Health advocates and hospital leaders have pointed out that certain groups will be disproportionately affected, including African Americans born in the South, mentally disabled and elderly individuals, and victims of natural disasters.  Also, misunderstandings about the rules may deter eligible, legal immigrants from attempting to enroll in Medicaid.
A recent report by the Kaiser Family Foundation recommends delaying implementation of the new rules, requiring states to provide assistance in obtaining necessary documents, and relaxing other aspects of the requirements. The report is based on lessons learned from New York's experience requiring documentation of citizenship for Medicaid.
States face the difficult challenge of complying with the rules to retain federal Medicaid funding, but implementing them in ways that minimize delays or loss of coverage for eligible persons. States will save money on lower Medicaid enrollment, but the new documentation processes will add administrative burden and costs. Also, loss of Medicaid coverage to both ineligible and eligible individuals will place greater stress on the states' safety net systems.
 In the past, federal law has permitted applicants to self-attest their U.S. citizenship under penalty of perjury, and most states do not aggressively pursue documentation unless they suspect an applicant is lying.
 It is important to note that the new rule does not affect Medicaid application for legal immigrants; they will still have to show the same documentation verifying their immigration status. Legal immigrants are ineligible for non-emergency Medicaid services until they have lived in the U.S. for over five years. The Emergency Medical Treatment & Labor Act, enacted by Congress in 1986, ensures "public access to emergency services regardless of ability to pay." As such, even illegal immigrants can receive emergency care, funded by Medicaid. For more information, see: http://www.cms.hhs.gov/EMTALA/.
 See http://www.cms.hhs.gov/MedicaidEligibility/05_ProofofCitizenship.asp for more details.
 For the written affidavit, at least one of the two individuals must not be related to the applicant.
 Ku L, Cohen-Ross D, Broaddus M. Survey Indicates Deficit Reduction Act Jeopardizes Medicaid Coverage for 3 to 5 Million U.S. Citizens. Center on Budget and Policy Priorities, February 17, 2006.
 Many African Americans born in the South were not delivered in hospitals and lack documentation. The mentally disabled and elderly may not be in a position to physically locate their documents, or recall where these documents may be, particularly those in institutions. Victims of natural disasters, such as Hurricane Katrina, may have lost the appropriate documentation.