Medicaid vs. Medicare

Medicaid
Medicare

Medicaid and Medicare are government-sponsored healthcare programs in the U.S. The programs differ in terms of how they are governed and funded, as well as in terms of who they cover. Medicare is an insurance program that primarily covers seniors ages 65 and older and disabled individuals who qualify for Social Security, while Medicaid is an assistance program that covers low- to no-income families and individuals. Some may be eligible for both Medicaid and Medicare, depending on their circumstances. Under the Affordable Care Act (a.k.a., "Obamacare"), 26 states and the District of Columbia have recently expanded Medicaid, thus enabling many more to enroll in the program.

Comparison chart

Medicaid

Medicare

Overview Medicaid in the U.S. is an assistance program that covers the medical costs of low- to no-income families and individuals. Children are more likely than adults to be eligible for coverage. Medicare in the U.S. is an insurance program that primarily covers seniors ages 65 and older and disabled individuals of any age who qualify for Social Security. Also covers those of any age with end-stage renal disease.
Eligibility Requirements Strict income requirements related to Federal Poverty Level (FPL). With expansion under the Affordable Care Act, 26 states cover at or below 138% of FPL. States that opted out have a variety of income requirements. Regardless of income, anyone turning 65 can enroll in Medicare so long as they paid into Medicare / Social Security funds. People of any age with severe disabilities and end-stage renal disease are also eligible.
Services Covered Children more likely to have comprehensive coverage in all states than adults. Routine and emergency care, family planning, hospice, some substance and smoking cessation programs. Limited dental and vision. Routine and emergency care, hospice, family planning, some substance and smoking cessation programs. Limited dental and vision.
Cost to Enrollees Varies by state, with some imposing deductibles. Usually low, but much may depend on what little income one has. Part A costs nothing for those who paid Medicare taxes for 10 years or more (or had a spouse who did). Part B in 2014 costs $104.90/mo for most. Part D costs vary, usually around $30/mo. Medicare Advantage costs vary.
Governance Jointly governed by the federal and state governments. Affordable Care Act sought to make more Medicaid rules universal, but the Supreme Court ruled states could opt out. Entirely governed by the federal government.
Funding Variety of taxes, but most funding (~57%) comes from federal government. Sometimes hospitals are taxed at the state level. Along with Medicare, Medicaid accounts for roughly 25% of federal budget. Payroll taxes (namely, Medicare and Social Security taxes), interest earned on trust fund investments, and Medicare premiums. Along with Medicaid, Medicare accounts for roughly 25% of federal budget.
User Satisfaction Relatively high High
Populations Covered All states, D.C., territories, Native American reservations. Around 20% of population on Medicaid. 40% of all childbirths covered by it. Half of all regular AIDS/HIV patients. All states, D.C., U.S. territories, Native American reservations. Around 15% of population on Medicare.

Contents: Medicaid vs Medicare

Eligibility

Whether a family or individual qualifies for Medicaid coverage depends on very strict income requirements — specifically, whether the enrollee(s) are low income or no income and often whether they are below the Federal Poverty Level (FPL — also sometimes known as the federal poverty limit or line). Because the cost of Medicaid is covered partially by the federal government and partially by state governments, Medicaid eligibility rules vary significantly by state. Federal Medicaid law recognizes some groups of people as "mandatory eligibility groups," while others are "optional eligibility groups" that states may or may not cover under Medicaid. In many cases, children are more likely than adults to be eligible for coverage, as most states have specifically expanded Medicaid coverage for children.[1]

When it comes to Medicare, anyone turning 65 can enroll in the program up to three months before their 65th birthday. Medicare does not approve or reject applications based on income factors, only age and whether the enrollee paid into the Medicare Social Security fund for some period during his or her life — usually at least 30 fiscal quarters for full Medicare coverage. Two exceptions are made to the age and Medicare fund payment rules of Medicare: People under 65 with certain severe disabilities who qualify for Social Security are also likely to qualify for Medicare. Likewise, any person with end-stage renal disease qualifies for coverage.

By law, both Medicaid and Medicare programs are open only to U.S. citizens. (However, there have been reports of undocumented immigrants receiving Medicare benefits.) Medicaid usually has further residency requirements, such as an enrollee must live within the state from which he or she is receiving Medicaid coverage.

Dual Eligibility

Low-income Medicare beneficiaries may also qualify for Medicaid coverage. This dual coverage helps someone on Medicare cover their premium costs and out-of-pocket expenses. A sizable minority of Medicare beneficiaries qualify — or eventually come to qualify — for Medicaid coverage.

This document (PDF) from the Center for Medicare & Medicaid Services further explains eligibility requirements for dual coverage. This Slideshare presentation by the Kaiser Family Foundation provides a lot of data and statistics on healthcare spending on people who are dual eligible for Medicare and Medicaid.

Medicaid Expansion

One of the biggest and most controversial reforms in the Affordable Care Act (a.k.a., "Obamacare") was the expansion of Medicaid by way of easing some income requirements for the program and by making these new rules more universal. Specifically, anyone below 138% of the federal poverty level was meant to be eligible for Medicaid under the reform, which was in great contrast to previous Medicaid income eligibility requirements that varied hugely by state.

This was not well-received by numerous state governments and politicians, and a subsequent 2012 Supreme Court ruling allowed states to opt-out of expanding Medicaid. As of 2014, 26 states and the District of Columbia (D.C.) have expanded the program, several are still debating expansion, and 19 have entirely opted out.

Source: Vox
Source: Vox

Services Covered

In general, Medicare attempts to cover all health services to some degree under its various parts: Medicare Part A, Part B, Part C (a.k.a., Medicare Advantage), and Part D.[2] Medicaid, however, only covers some services.[3] Which services the program covers depends on the state. Just as the federal government requires mandatory Medicaid coverage for some and optional coverage — as determined by state governments — for others, so, too, does the federal government allow states to optionally cover a number of medical services.

The service categories below are by no means a complete list. Those on Medicare can refer to Medicare.gov for more in-depth service coverage information. Medicaid beneficiaries can refer to Medicaid.gov and state Medicaid websites that may provide more localized information.

Regular and Outpatient Medical Care

Routine medical care, such as doctor and specialist visits, preventive care, and diagnostic laboratory tests, are covered under both Medicaid and Medicare. In Medicare terminology, this is some of what Medicare Part B covers.

Vaccines

Medicaid covers all immunizations for those 21 and younger who are on Medicaid or otherwise underinsured. Furthermore, all Native Americans, including Alaska Natives, are eligible for Medicaid vaccination coverage through age 18.[4] Adults on Medicaid are less likely to have their vaccinations covered by the program, but rules vary by state.

Medicare Part B provides limited vaccination coverage. Specifically, the program tends only to cover preventive vaccines, such as pneumonia and flu vaccines, as well as the vaccine for Hepatitis B for those at high risk for contracting the disease. Other immunizations that a patient might want, such as the vaccines for chickenpox, shingles, tetanus and pertussis (whooping cough), are not covered under Medicare Part B but are likely covered under Medicare Part D, which provides additional drug and immunization coverage.

Prescription Drugs

Though federal law makes prescription drug coverage under Medicaid optional, no state's Medicaid program currently lacks prescription drug coverage.[5] How the coverage works varies by state, however, with some states charging higher copays for non-preferred and/or brand name drugs, as well as for drugs ordered by mail.[6]

As mentioned above, Medicare Part D is what covers prescription drugs in Medicare. It is an additional plan on top of the "default" Medicare plans, which include Part A (hospital insurance) and Part B (medical insurance). Medicare beneficiaries can purchase a Part D plan through a private insurer. Beneficiaries also have the option to switch to a Medicare Advantage (a.k.a., Medicare Part C) plan that will typically cover all traditional Part A and Part B services as well as (sometimes) Part D prescription drug coverage.

Mental Healthcare

Medicare offers fairly comprehensive coverage for mental healthcare services. Medicare Parts A and B cover inpatient and outpatient mental health services, and a Medicare Part D plan will cover psychiatric drugs at an affordable cost. Psychiatric hospitalization is limited to 190 days; beyond this point, beneficiaries are expected to pay for their own inpatient care.

While all state Medicaid programs cover some mental health services, how expansive the coverage is varies, as for these services are considered optional. Psychological evaluations may be covered, but counseling and psychotherapy are rarely covered or have limitations on coverage.[7] Medicaid programs are more likely to cover care needed by those with behavioral health disorders (e.g., PTSD, OCD) and substance abuse disorders (e.g., alcoholism, nicotine addiction).[8] Some states' Medicaid programs have alternative benefit plans which may offer additional mental health coverage. All states provide more mental healthcare coverage for children than for adults in their Medicaid programs.

Emergency Room / Hospital Care

Visits to an emergency room and stays in the hospital are covered under Medicare Part A; services received from hospital doctors are covered under Part B. Coverage is fairly expansive and includes a semiprivate room (not a private one), meals, medications, general nursing, etc.[9] Medicare fully covers care costs for up to 60 days and will coinsure 30 additional days. After 90 days in the hospital, Medicare covers no costs until there is a new benefit period.[10]

The federal government requires all Medicaid programs cover inpatient hospital care and emergency room visits. It should be noted that state governments are allowed to charge Medicaid recipients higher copays if they visit an emergency room for a non-emergency health issue that could have been accessibly evaluated and cared for at an urgent care clinic or family practice.[11] One reason this rule has come about in some states is due to reports of Medicaid recipients being more likely to visit ERs for non-emergencies; for example, this occurred in Oregon after Medicaid expansion. However, at least one study has suggested Medicaid beneficiaries are no more likely to visit ERs for non-emergencies than any other group of people.

In addition to mandatory emergency care coverage for Medicaid recipients, the U.S. government also requires Medicaid cover emergency care for undocumented immigrants and legalized non-residents / temporary residents.

Dental and Vision Care

As with many forms of Medicaid care, dental and visual care is available to all children but may or may not be available to adults, as states can decide whether either type of care will be covered. State programs are more likely to cover emergency dental care than ongoing preventive care, such as cleanings or fillings.[12] Some states will cover one eye exam and one pair glasses every three years for adults 21 and older.[13]

Similar to how Medicaid covers dental care, Medicare tends only to cover emergency dental care and dental surgery. It does not cover routine preventive care or dentures. (Note: Some Medicare Advantage plans may cover some dental services.) Hospitalizations related to dental ailments will be covered under Medicare Part A, but the cost of a dentist or periodontist will not be covered.[14] Vision care is similarly limited under Medicare, with the program generally not covering any non-emergency and/or non-disease-related eye problems.[15]

Family Planning

Family planning services are mandatorily covered under Medicaid, and both pregnancy and childbirth are fully covered under Medicaid and Medicare.[16][17] Fifteen states cover infertility treatment under Medicaid.[18]

D.C. and 32 states' Medicaid programs will also cover abortion in cases of rape, incest, or life endangerment.[19] Medicare covers abortions in the same circumstances.[20] Under the Hyde Amendment, neither program is allowed to cover elective abortions.

Children's Health

When it comes to Medicaid, children — typically defined as anyone under the age of 19 for most services — are the most broadly covered demographic group. Furthermore, children in families with adults who otherwise do not qualify for Medicaid may sometimes be covered by a jointly-funded Children's Health Insurance Program commonly known as CHIP. The federal government requires states to cover many health services for children in Medicaid and CHIP, and most states have chosen to further expand these programs by covering a variety of optional services.

Medicare does not usually apply to children. However, it may sometimes apply if a child has ongoing kidney problems that require dialysis or a kidney transplant.

Hospice Care

Often both Medicaid and Medicare cover hospice, or end-of-life, care, but they go about doing so in different ways. Medicare covers all hospice costs but is only available to those whom a regular doctor has said only have six months or less to live.[21] Meanwhile, under Medicaid, hospice care is an optional service (for both adults and children), so some states may not cover this care or may have very restrictive limits on covering it. Moreover, when a Medicaid recipient utilizes hospice care under Medicaid, he or she waives all other Medicaid-covered care that may be seeking a cure or treatment for the disease. This decision can be reversed at any time. All it means is that one can be in hospice and seeking treatment.[22]

Native American Health

Many Native Americans and Alaska Natives are eligible for Medicaid benefits, including CHIP, and become eligible for Medicare once they reach 65. An important Medicaid/Medicare feature for this population is cost reimbursement. As many reservations may not have a provider who accepts Medicaid/Medicare, beneficiaries within these communities are allowed to visit local providers who are later reimbursed for their treatment costs.[23]

Under the Affordable Care Act, which further expanded Medicaid services within native communities, Native Americans and Alaska Natives are able to sign up for healthcare any time of the year (unlike other U.S. citizens) and a number of out-of-pocket costs are waived.[24]

Drug, Alcohol, and Smoking Cessation Programs

Medicare Part A and Part B cover inpatient and outpatient substance abuse programs, respectively. With the exception of methadone, Part D will often cover the drugs used to help end drug abuse.[25] Smoking cessation programs are also covered, but only for up to eight counseling sessions for a year.[26]

One of many reasons for expanding Medicaid in the Affordable Care Act was to expand smoking cessation and other substance abuse programs, though these programs remain optional by law. However, even with expansion, there are still limitations to these programs, especially in some states, often in terms of how long a beneficiary is allowed to attend a program for little to no cost.

In the past, when states, such as Massachusetts, have expanded access to these programs via Medicaid, there have been noticeable, positive effects, including "an almost 50 percent drop in hospital admissions for heart attacks among those who used [smoking cessation benefits]."[27] It is worth noting that tobacco cessation programs are mandatorily covered by Medicaid for pregnant women.

A map showing how comprehensive Medicaid's coverage of smoking cessation programs is across the U.S. As of 2014, only two states — Indiana and Massachusetts — have truly comprehensive programs. Source: American Lung Association
A map showing how comprehensive Medicaid's coverage of smoking cessation programs is across the U.S. As of 2014, only two states — Indiana and Massachusetts — have truly comprehensive programs. Source: American Lung Association

Cost to Enrollees

For most individuals and families, neither Medicaid nor Medicare is completely free. In some ways, these benefit programs operate as government-based insurance programs and therefore come with small fees or premiums. However, individual cases, experiences, and costs will vary. Most importantly, costs and coverage usually change annually.

Medicaid costs for enrollees differ by state. Some states require Medicaid recipients pay small copayments or coinsurance, pay other minor out-of-pocket fees, and even work with deductibles. The one exception to this is that the federal government restricts states from imposing any fees on emergency care, family planning services, pregnant women seeking care, and preventive services for children. No services can be denied to those who fail to make copayments, etc., but a state may try to recoup this lost money later.[28]

Nearly all Medicare beneficiaries — who are not also on Medicaid or another assistance program — pay a monthly premium, just as one does to receive private insurance. For Medicare Part A in 2014, a beneficiary is charged a premium amount according to his or a spouse's work history. Those who have personally paid, or had a spouse pay, Medicare taxes for at least 10 years pay no premium for Part A, hospital insurance. There are Part A premiums for those who have not paid Medicare taxes for at least 10 years.

For Part B, medical insurance, there is a flat monthly premium of $104.90 for those with an annual income of less than $85,000 or $170,000 for couples. Those with higher incomes pay higher premiums for Part B.[29]

Medicare Part D is an additional expense on top of any Part A and Part B premiums. As this coverage is provided by private insurers, costs vary, but the national average monthly premium for a Part D plan in 2014 is just under $33. Any person with regular, costly drug prescription expenses should be aware that Part D plans often have a maximum annual coverage amount and rather prohibitive coinsurance rates after that. This is being phased out under the Affordable Care Act.[30]

Medicare Advantage plans, which are often network-based HMOs or PPOs, tend to charge Part B's premium, plus about a $40 Medicare Advantage premium and about $30-$70 for prescription coverage, depending on the type of plan.[31][32]

Deductibles

Some states set deductibles for Medicaid recipients, especially those who qualify for Medicaid but are not within the lowest of the qualifying income levels. For example, in the state of Wisconsin, those who earn at least $100 a month have a $600 deductible, per six-month deductible period. Rules on Medicaid deductibles vary tremendously by state, so referring to local governmental information is a must.

Medicare Part A has an annual deductible of $147, while Part B has a deductible of $1,216 for each benefit period.[33]

Reimbursement

Depending on the location, finding a doctor or specialist who will accept Medicaid or Medicare may be difficult. When it is extremely difficult, and when the nearest health providers who accept these programs are far enough away as to be inaccessible, Medicaid and Medicare recipients may be allowed to visit any local doctor. The doctor will later be reimbursed for providing health services. Unfortunately, reimbursement rates can be low and slow, and the process of receiving them requires a lot of paperwork.[34][35]

This inefficient process has resulted in negative side effects, namely than many healthcare providers do not voluntarily see patients who are on Medicaid and Medicare. The Affordable Care Act has tried to combat this problem by promising physicians a higher federal reimbursement rate for Medicaid patients, but only time will tell if this helps solve the problem.

Governance and Funding

Medicaid is jointly governed and funded by the U.S. federal government and individual state governments. Even so, the federal government has the final say regarding mandatory coverage categories and often covers a larger percentage of costs (~57%); it also further reimburses states for many of their Medicaid costs and for the cost of expansion under new healthcare reform.[36][37] A variety of different taxes, including taxes on hospitals, to help fund Medicaid.[38]

Payroll taxes (namely, Medicare and Social Security taxes), interest earned on trust fund investments, and premiums fund Medicare.[39] In recent years some have been concerned that declining birth and immigration rates may make it difficult to fund expensive entitlement programs like Medicaid, Medicare, and Social Security.

Put together, Medicaid and Medicare accounted for roughly 25% of all federal spending in 2013. This was followed by Social Security (23%) and defense (18%).[40]

Populations Covered by Medicaid and Medicare

Enrollment in Medicaid has been steadily increasing since the program began in 1965 but is increasing more rapidly in states that have expanded Medicaid under the Affordable Care Act. An estimated 71 million people — roughly 22% of the U.S. population — will be on Medicaid by 2015.[41] Most Medicaid enrollees are over the age of 65 and therefore also qualify for Medicare.[42]

The disabled and elderly are the most widely covered groups under Medicaid and also the most expensive groups to cover. Source: Statista
The disabled and elderly are the most widely covered groups under Medicaid and also the most expensive groups to cover. Source: Statista

Medicaid is also an important health service for the HIV/AIDS population, covering nearly 50% of all individuals living with HIV/AIDS in the U.S. who seek regular care.[43] Finally, 40% of all childbirths in the U.S. are partially or wholly covered by Medicaid, and 28 million children benefit from Medicaid, with another 5.7 million benefitting from CHIP.

Medicaid and Medicare Coverage Gaps

Medicaid and Medicare have coverage gaps, which largely contribute to the number of uninsured individuals of the U.S., a majority of whom are self-employed independent contractors. When it comes to Medicaid, these gaps are often caused by states cutting off Medicaid eligibility for all except those who are extremely poor (e.g., <50% below the FPL). With many of these states refusing to expand Medicaid, this problem is likely to continue.[44]

In Medicare there are similar coverage gaps, though to a lesser extent. The most common coverage gap for Medicare beneficiaries is the Medicare Part D coverage gap, which is also sometimes known as "the donut hole." After a beneficiary has met a drug insurance maximum for the year, he or she is then responsible for all or a large portion of drug costs. For some, this is too great of an expense, which forces some elderly to stop taking medically necessarily drugs or to go onto Medicaid. Because of such coverage gaps, many Medicare beneficiaries buy supplemental insurance known as Medigap.

User Satisfaction

Source: Mother Jones
Source: Mother Jones

Both programs are very popular in the U.S., and consumers are more likely to rate Medicaid or Medicare more favorably than coverage bought from a private insurer. Because of this, cutting funding to either program is very unpopular.[45]

Despite the popularity of Medicaid, expanding the program through the Affordable Care Act has not been met with universal approval. This sort of reluctance is not abnormal among Americans when it comes to sweeping healthcare changes, however. Historically, Americans strongly disliked Medicare when it was introduced and were highly skeptical of Medicare Part D as well. Only time will tell how consumers will come to view Medicaid expansion.

Last edited on August 14, 2014.

References

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