Medicare and Medicaid programs and their policy implications

Medicare & Medicaid

The two main federal health care programs are Medicare and Medicaid. Both were enacted by Congress in 1965, but they are significantly different. Medicare coverage is granted to all persons over the age of 65 -- younger persons only with specific disabilities or conditions. Medicare eligibility is blanket, and is not income-based. Medicaid, in contrast, is open to Americans of all ages, but is means-tested. Only those whose income falls below the threshold are eligible for Medicaid (Golinker, 2001).

Since being signed into law, Medicare was evolved to meet the needs of a changing society. One of the first changes was the extension of eligibility to people with disabilities and end-stage renal disease (Humana, no date). The program was originally designed only for seniors, but this extension came about to reflect the reality that some people were unable to work and therefore were for all intents and purposes retired, through no fault of their own. Government made a specific decision to care for these people as well. Some were likely covered already under Medicaid, but Medicare offered them the more comprehensive care that they needed. In addition, those who are dying from end-stage illness will not utilize Medicare because they will not live to see their 65th birthday. Thus, the extension to include them was required in order to provide some care for them.

The HMO Act of 1976 built on the development of HMOs by expanding federal participation in the development of HMOs. The federal government saw HMOs as a solution to a number of problems. President Ford noted at the time that this law meant to address the concerns about the quality of care, the rising cost of care, the maldistribution (sic) of physicians and the need to promote preventative medicine and to maintain good health (Ford, 1976). The amendments offered HMOs as a Medicare option, something that expanded the access to health care for Medicare recipients and promoted the growth of the HMO system.

The next major change was in 1997 with the introduction of Medicare Advantage. While the original Medicare offered state-run plans, Advantage plans are from private providers. Such plans offer consumers the ability to sign up for plans that go beyond the basic Medicare offerings. This change arose as a response to demand from consumers for greater choice in health care and greater integration between their Medicare benefits and their private plans. In 2003, President Bush expanded Medicare, by subsidizing prescription drug costs under Part D.