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Medicare and Medicaid are two government programs that provide medical and other health-related services to specific individuals in the United States. Medicaid is a social welfare or social protection program, while Medicare is a social insurance program.
President Lyndon B. Johnson created both Medicare and Medicaid when he signed amendments to the Social Security Act on July 30, 1965.
The two programs that help people pay for their healthcare are different. The Centers for Medicare and Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services (HHS), oversee both.
Data on Medicaid show that it serves about 64.5 million people, as of November 2019.
Medicare funded the healthcare costs of more than 58 million enrollees, according to the latest figures.
Medicaid, Medicare, the Children's Health Insurance Program (CHIP), and other health insurance subsidies represented 26% of the 2017 federal budget, according to the Center on Budget and Policy Priorities.
The CMS report that around 90% of the U.S. population had medical insurance in 2018.
According to the 2017 U.S. census, 67.2% of people have private insurance, while 37.7 percent have government health coverage.
What is Medicaid?
Medicaid is a means tested health and medical services program for low income households with few resources. Individuals must meet certain criteria to qualify. These criteria vary between states.
Federal authorities primarily oversee Medicaid, but each state is responsible for:
Services under Medicaid
Each state makes the final decisions regarding what their Medicaid plans provide. However, they must meet some federal requirements to receive federal matching funds.
Not all insurance providers must accept Medicaid. Users must check their coverage before receiving health care.
People who do not have private health insurance can seek help at a federally qualified health center (FQHC). These centers provide coverage on a sliding scale, depending on the person's income.
FQHC provisions include:
States may also choose to provide additional services and still receive federal matching funds.
The most common of the 34 approved optional Medicaid services are:
Each state sets their own Medicaid eligibility guidelines. The program aims to support people in low income households. However, other eligibility requirements relate to:
For a state to receive federal match funding, they must provide Medicaid services to individuals in certain categories of need.
For example, a state must provide coverage for some individuals who receive federally assisted income maintenance payments and similar groups who do not receive cash payments.
The federal government also consider some other groups to be "categorically needy." People in these groups must also be eligible for Medicaid.
States may also choose to provide Medicaid coverage to other, less well-defined groups who share some characteristics of the above.
These groups may include:
Medicaid does not provide medical assistance to all people with low income and low resources.
The Affordable Care Act of 2012 gave states the option to expand their Medicaid coverage. In the states that did not expand their programs, several at-risk groups are not eligible for Medicaid.
Medicaid does not pay money to individuals but sends payments directly to healthcare providers.
States make these payments according to a fee-for-service agreement or through prepayment arrangements, such as health maintenance organizations (HMOs). The federal government then reimburse each state for a percentage share of their Medicaid expenditures.
This Federal Medical Assistance Percentage (FMAP) changes each year and depends on the state's average per capita income level.
The reimbursement rate begins at 50% and reaches 77% in 2020. Wealthier states receive a smaller share than states with less money.
In the states that chose to expand their coverage under the Affordable Care Act, more adults and families on low incomes are eligible with the new provision allowing enrolment at up to 138% of the FPL. In return, the federal government cover all expansion costs for the first 3 years and over 90% of the costs moving forward.What is Medicare?
Medicare is a federal health insurance program that funds hospital and medical care for older people in the U.S. Some people with disabilities also benefit from Medicare.
The program consists of:
Medicare Part A, or Hospital Insurance (HI), helps pay for hospital stays and other services.
In the hospital, this includes:
It also pays for home healthcare, such as:
However, these therapies must be on a part-time basis, and a doctor must consider them medically necessary.
Part A also covers:
Payroll taxes cover the costs of Part A, so it is not usually compulsory to pay a monthly premium. Anyone who has not paid Medicare taxes for at least 40 quarters will need to pay the premium.
In 2021, people who have paid the tax for less than 30 quarters will need to pay a $471 premium. A $259 premium will apply to those who have paid for 30–39 quarters.Medicare Part B
Medicare Part B, or outpatient medical insurance, helps pay for specific services.
These services include:
For example, Part B covers:
For Part B, people must:
Premiums might be higher, depending on the person's income and current Social Security benefits.
After meeting the deductible, most people on a Medicare plan will need to pay 20% of costs approved by Medicare for many doctor services, outpatient therapist treatment, and durable medical equipment.
Enrollment in Part B is voluntary.Medicare Part C
Medicare Part C, also known as Medicare Advantage Plans or Medicare+ Choice, allows users to design a custom plan that suits their medical situation more closely.
Part C plans provide everything in Part A and Part B, but may also offer additional services, such as dental, vision, or hearing treatment.
These plans enlist private insurance companies to provide some of the coverage. However, the details of each plan will depend on the program, and the eligibility of the individual.
Some Advantage Plans team up with HMOs or preferred provider organizations (PPOs) to deliver preventive healthcare or specialist services. Other plans focus on people with specific needs, such as individuals living with diabetes.Medicare Part D
This prescription drug plan was a later addition in 2006. Several private insurance companies administer Part D.
These companies offer plans that vary in cost and cover different lists of drugs.
To participate in Part D, a person must pay an additional fee called the Part D income-related monthly adjustment amount. The fee depends on the person's income.
Many people's Social Security checks will deduct the premium. Others will, instead, get a bill directly from Medicare.Services that Medicare does not provide
If Medicare does not cover a medical expense or service, a person may wish to take out a Medigap plan for supplemental coverage.
Private companies also offer Medigap plans. Depending on the individual plan, Medigap may cover:
If a person has a Medigap policy, Medicare will first pay their eligible portion. Afterward, Medigap will pay the rest.
To have a Medigap policy, a person must have both Medicare Parts A and B and pay a monthly premium.
Medigap policies do not cover prescription drugs, which a Part D plan covers.
Who is eligible for Medicare?
An individual must be one of the following to be eligible for Medicare:
They must also be:
Some people are eligible for both Medicaid and Medicare.
Currently, 12 million people have both types of cover, including 7.2 million older adults with a low income and 4.8 million people living with a disability. This accounts for over 15% of people with Medicaid enrolment.
Provisions vary, depending on the U.S. state where a person lives.
Who pays for Medicare?
Most of the funding for Medicare comes from:
Typically, the employee pays half of this tax, and the employer pays the other half. This money goes into a trust fund that the government uses to reimburse doctors, hospitals, and private insurance companies.
Additional funding for Medicare services comes from premiums, deductibles, coinsurance, and copayments.
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