This paper compares the United States' two major public health insurance programs: Medicare and Medicaid. It explains who qualifies for each program, how each is financed, and what benefits are provided. Medicare serves seniors aged 65 and older and certain disabled individuals, and is funded directly by the federal government. Medicaid serves low-income Americans and is jointly funded through a federal-state matching formula. The paper highlights key structural differences, including eligibility criteria, cost-sharing arrangements, and the degree of state discretion in determining coverage, as well as the pressures that economic downturns place on state Medicaid budgets.
Despite ongoing resistance to healthcare reform, the United States possesses two major public health insurance programs: Medicare and Medicaid. Medicare is the public health insurance program designed to provide the nation's elderly population with health services, while Medicaid is designed to provide healthcare services to Americans living below the poverty line. The primary difference between the two programs is that Medicare is directly financed by the federal government, while federal funds for Medicaid are disbursed to the states, "matching" the state money used to finance the program.
Medicare is offered to lawful U.S. residents aged 65 or older who have lived in the country for more than five years. Some individuals with certain permanent disabilities, as well as all U.S. residents with end-stage renal disease, are also eligible for Medicare. The program is divided into two main parts. Medicare Part A helps pay for inpatient care, while Medicare Part B pays for medically necessary outpatient care. Medicare Part A does not carry a standard monthly premium for most citizens if they or their spouses paid Social Security taxes; Medicare Part B does. Under standard Original Medicare, there are deductibles and coinsurance requirements for services.
Additional support exists in the form of Medicare Part D prescription drug coverage — an important benefit given that prescription drugs are often a major expense for seniors — and the Medigap (Medicare Supplement Insurance) policy, which helps cover copayments, coinsurances, and deductibles. Seniors with limited income and resources can also receive additional help paying these expenses through Social Security or their state Medicaid office (What is Medicare, 2011, Medicare). Medicaid can pay Medicare deductibles and premiums, as well as 20 percent of all other charges not covered by Medicare (Medicare and Medicaid: What's the difference, 2011, Nolo).
Medicare is not a poverty-based program — anyone meeting the age or disability criteria is eligible. It was established in recognition of seniors' increased medical costs and historically lower levels of income, and was designed to prevent seniors and permanently disabled persons from falling into poverty due to failing health and an inability to work (Medicare and Medicaid: What's the difference, 2011, Nolo). In contrast, Medicaid primarily serves low-income citizens living at or below a state-determined poverty threshold. Depending upon the state, other groups may also be eligible, including pregnant women, children, low-income seniors who have difficulty paying Medicare expenses, disabled individuals, and people residing in nursing homes.
"How matching funds and federalism shape Medicaid"
"State variation in optional benefits and coverage"
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