Exploring the complex subject of Medicare and Medicaid healthcare services for the older population. A brief history of both entitlement programs, the eligibility criteria, the similarities and differences, the strengths and weaknesses, services provided, regulatory agencies, and the financing mechanisms for each are compared and contrasted. Implications for the future are also explored.
The Medicare program was created in 1965 as Title XVIII of the Social Security Act. Its primary purpose was to provide health care coverage for the elderly, who were defined at that time as anyone 65 years of age or older. In 1972, provisions were added to include people who were permanently disabled and those with end-stage renal disease.
Medicare is the chief federal government program that pays for health care for 40 million Americans over age 65 and another 7 million disabled people of all ages. Medicare has serious limitations: It does not pay for the first day of hospitalization; it also does not cover hearing aids, eyeglasses, or dental care. It lacks an emphasis on preventive care. Additionally, it excludes coverage for long-term care services and supports, except for limited periods after hospital discharge.
Medicare is a federal health insurance program. It is the nation’s largest federal health insurance program, covering nearly 47 million Americans (i.e., one in seven Americans). It is basically the same everywhere in the U.S., and is run by the Centers for Medicare and Medicaid Services (CMS), an agency of the federal government. Medicare funding comes primarily from three sources: payroll tax revenues, general revenues, and premiums paid by recipients.
For senior citizens, eligibility for Medicare is not tied to individual needs (income) or to health status. Rather, it is a federal entitlement program; beneficiaries are entitled to it because they or their spouse paid for it through employment or self-employment taxes. The Medicare program is the first level safety-net for America’s elderly and disabled.
Medicare was created in an attempt to address the fact that many older citizens have medical expenses significantly higher than the rest of the population, while it is much more difficult for most seniors to continue to earn enough money to cover those costs.
At the same time that the Medicare program was developed to provide health care for the elderly, Congress also created Medicaid as a program to provide health care for the poor. Enacted as Title XIX of the Social Security Act, Medicaid is different from Medicare in several very specific ways.
Medicaid is a joint federal and state health care assistance program for low-income, financially needy people, set up by the federal government and administered differently in each state. It helps pay medical costs for people with limited income and resources. Medicaid serves the “medically indigent,” those who have no other coverage, and cannot afford to pay for their own care. It is run by state and local governments within federal guidelines set by CMS.
Like Medicare, Medicaid is also a federal entitlement. Eligible persons cannot legally be denied medical assistance, even if the state is facing a massive budget deficit. Waiting lists and enrollment caps are prohibited.
Medicaid programs vary from state to state. Federal guidelines require states to provide 16 basic healthcare services for elderly Medicaid beneficiaries. These services include inpatient and outpatient services, primary care provider services, skilled and intermediate nursing facility services, laboratory and medical imaging services, and home health care. Other services, such as physical therapy, rehabilitation, prescription drugs, hospice, and transportation, are optional.
An estimated 60 million Americans are covered by Medicaid, with the enrollment numbers swelling due to the economic recession. To further stress state financing mechanisms, the new PPACA healthcare reform legislation could add 16 to 23 million people to the Medicaid rolls due to Medicaid expansion. In addition to the considerable drain on state budgets, there are federal budget considerations as well. Currently, Medicare, Medicaid and Social Security consume more than 40 percent of the federal budget. This startling figure will be overshadowed in the next few decades as the massive baby boomer cohort enter their senior years.
Although an individual may qualify for and receive coverage from both Medicare and Medicaid, there are separate eligibility requirements for each program. Being eligible for one program does not necessarily mean someone is eligible for the other. Also, Medicaid pays for some services for which Medicare does not. If a person is eligible for Medicaid, Medicaid may pay Medicare deductibles and the Medicare premium.
The people who qualify for both Medicare and Medicaid programs are called “dual eligibles.” Approximately 8.8 million Medicaid consumers are simultaneously enrolled in Medicare. These individuals are among the nation’s most vulnerable populations – seniors and non-elderly people with disabilities. Most are low-socioeconomic status, in poor health, and have complex comorbid healthcare needs. Given these social and health circumstances, duals are a costly population for whom to provide coverage.
Medicare and Medicaid work together to pay health care costs for low-income persons. Medicare pays first. Then, Medicare recipients with low incomes may also be eligible to receive aid from Medicaid to cover many of the costs not covered by Medicare. For those who are fully covered by Medicaid, the Medicare health care coverage is supplemented by services provided under their respective state’s Medicaid program. Some of these services include:
- Nursing facility care beyond the 100-day limit provided by Medicare.
- Prescription drugs.
- Hearing aids.