Medicare and Medicaid are two government programs in the United States which provide medical and other health-related services to specific individuals. Medicaid is a social welfare scheme, whereas Medicare is a social insurance programme.
After signing amendments to the Social Security Act on 30 July 1965, President Lyndon B. Johnson established both Medicare and Medicaid.
There are two different programs which help people pay for their healthcare. The Medicare and Medicaid Services Centers (CMS), a US division. Health and Human Services Agency (HHS), oversees them.
Medicaid data show that, as of November 2019, it serves some 64.5 million people.
According to the most recent figures, Medicare covered the healthcare costs of more than 58 million enrollees.
According to the Center on Budget and Policy Priorities, Medicaid, Medicare, Children’s Health Insurance Program (CHIP) and other health insurance premiums paid for 26 percent of the federal budget for 2017.
The CMS estimates that in 2018 about 90 percent of the U.S. population had medical insurance.
67.2 percent of people have private insurance, while 37.7 percent have government health care, according to the 2017 U.S. census.
What is Medicaid?
Medicaid is a means tested system for low-income households with few support for health and medical care. In order to qualify individuals must meet those conditions. Such requirements vary from country to country.
Federal authorities regulate Medicaid mainly, but each State is responsible for:
- establishing eligibility standards
- deciding service type, amount, duration, and scope
- setting rate of payment for services
- administering the program
Services under Medicaid
Rising state makes the final decisions about what its Medicaid services have. However to receive federal matching funds, they must meet certain federal requirements.
Not everyone who provides insurance will embrace Medicaid. Users must check their coverage before they receive medical attention.
In a federally qualified health center (FQHC), people who do not have private health insurance will seek help from. These centers have sliding scale coverage, depending on the person’s income.
The terms of the FQHC shall include:
FQHC provisions include:
- prenatal care
- vaccines for children
- doctor services
- nursing services for people of 21 years or more
- family planning services and supplies
- rural health clinic services
- home healthcare for people eligible for skilled nursing services
- laboratory and X-ray services
- pediatric and family nurse practitioner services
- nurse-midwife services
- FQHC services and ambulatory services
- early and periodic screening, diagnostic, and treatment (EPSDT) for under 21s
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:
- diagnostic services
- prescribed drugs and prosthetic devices
- optometrist services and eyeglasses
- nursing services for children and adults under 21 years
- transport services
- rehabilitation and physical therapy services
- dental care
Eligibility for Medicaid
Growing state sets its own rules on Medicaid eligibility. The plan is designed to help people in low-income households. Many conditions for eligibility also refer to:
- assets
- age
- pregnancy status
- disability status
- citizenship
To order for a state to receive funding from federal grants, they must provide Medicaid coverage to people in certain categories of need.
For example, those people who receive federally funded income maintenance benefits and similar groups who don’t receive cash payments must be covered by a State.
Some other classes are also considered “categorically insecure” by the federal government. Individuals in these classes must be eligible for Medicaid, too.
They include:
- Children under 18 years whose household income is at or below 138% of the federal poverty level (FPL).
- Women who are pregnant with a household income below 138% of the FPL.
- People who receive Supplemental Security Income (SSI).
- Parents who earn an income that falls under the state’s eligibility for cash assistance.
States may also choose to provide coverage of Medicaid to other, less well-defined groups which share some of the above characteristics.
These groups may include:
- Pregnant women, children, and parents earning income above the mandatory coverage limits.
- Some adults and older adults with low incomes and limited resources.
- People who live in an institution and have low income.
- Certain adults who are older, have vision loss or another disability, and an income below the FPL.
- Individuals without children who have a disability and are near the FPL.
- “Medically needy” people whose resources are above the eligibility level their state has set.
Medicaid does not offer medical assistance to all low-income and low-resource people.
The 2012 Affordable Care Act offered the opportunity for states to extend their Medicaid coverage. Many at-risk groups are not eligible for Medicaid in States that have not extended their services.
These include:
- Adults over 21 years who do not have children and are pregnant or have a disability.
- Working parents with incomes below 44% of the FPL
- Legal immigrants in their first 5 years of living in the U.S.
Who pays for Medicaid?
Medicaid doesn’t pay people money but sends payments directly to health care providers.
States make these payments in compliance with a fee-for-service agreement or through insurance plans, such as health care organizations (HMOs). Instead, the federal government reimburses each state for a share of its Medicaid spending.
This amount of Federal Medical Assistance (FMAP) varies every year, which depends on the average per capita income level of the state.
The refund rate starts at 50% and hits 77% by 2020. Wealthier states get a smaller share than fewer-money states.
In the states that have opted to extend their coverage under the Affordable Care Act, more low-income individuals and families are covered with the new law requiring up to 138 per cent of FPL enrolment. The federal government, in return, covers all expansion costs for the first 3 years and more than 90 percent of the costs that are going forward.
What is Medicare?
Medicare is a federal health insurance program in the United States that covers hospital and medical care for the elderly. Medicare also supports other people with disabilities.
The program consists of:
- Part A and Part B for hospital and medical insurance
- Part C and Part D that provide flexibility and prescription drugs
Medicare Part A
Medicare Part A, or Hospital Insurance (HI), helps pay for hospital stays and other services.
In the hospital, this includes:
- meals
- supplies
- testing
- a semi-private room
It also pays for home healthcare, such as:
- physical therapy
- occupational therapy
- speech therapy
However, these therapies must be on a part-time basis, and a doctor must consider them medically necessary.
Part A also covers:
- care in a skilled nursing facility
- walkers, wheelchairs, and other medical equipment for older people and those with disabilities
Payroll taxes cover the costs of Part A, and charging a monthly premium is not generally necessary. Anyone who hasn’t paid at least 40 quarters of Medicare taxes will need to pay the premium.
In 2020, people who have paid the tax for under 30 quarters will have to pay a premium of $458. A prime of $252 would refer to those who have invested 30–39 quarters.
Medicare Part B
For specific services, Medicare Part B, or Supplemental Medical Insurance (SMI), helps to pay.
These services include:
- medically necessary doctor’s visits
- outpatient hospital visits
- home healthcare costs
- services for older people and those with a disability
- preventive care services
For example, Part B covers:
- durable medical equipment, such as canes, walkers, scooters, and wheelchairs
- doctor and nursing services
- vaccinations
- blood transfusions
- some ambulance transportation
- immunosuppressive drugs after organ transplants
- chemotherapy
- certain hormonal treatments
- prosthetic devices
- eyeglasses
For Part B, people must:
- pay a monthly premium, which was $144.60 per month, as of 2020
- meet an annual deductible of $198 a year before Medicare funds any treatment
Depending on the person’s income and accrued Social Security benefits, premiums may be higher.
After hitting the premium, most people on a Medicare program will have to pay 20 per cent of Medicare-approved premiums for many doctor services, outpatient specialist therapy, and long-lasting medical devices.
Under Part B, registration is voluntary.
Medicare Part C
Medicare Part C, also known as Medicare Advantage Plans or Medicare+ Choice, allows patients to develop a personalized plan that more closely suits their medical situation.
Part C plans cover all in Part A and Part B but may also offer additional services such as dental, vision, or hearing therapy.
These plans involve private insurance companies to provide some of the coverage. The details of will package will, however, depend on the program, and the individual’s eligibility.
Many Advantage Programs partner with HMOs or preferred provider organizations (PPOs) to provide preventive healthcare or specialist services. Some programs focus on persons with special needs, such as people living with diabetes.
Medicare Part D
A prescription drug package was added later in the year 2006. Parts D is managed by several private insurance companies.
These companies offer cost-varying plans, covering various drug lists.
A person must pay an additional fee to participate in Part D, called the monthly income-related adjustment payment in Part D. The charge is dependent upon the income of the client.
Social Security audits by others will deduct the fee. Others will receive a bill directly from Medicare, instead.
Services that Medicare does not provide
If Medicare does not cover a medical expense or program, an patient can wish to take out a supplementary coverage Medigap plan.
Private companies offer plans for Medigap, too. Medigap may cover: Depending on the individual plan.
- copayments
- coinsurances
- deductibles
- care outside of the U.S.
If a individual has a Medigap program, Medicare will reimburse his / her qualified portion first. Medigap will pay the rest afterwards.
A person must have both Medicare Parts A and B to have a Medigap policy, and pay a monthly premium.
Medigap plans do not include prescription drugs which are covered by a Part D program.
Who is eligible for Medicare?
An individual must be one of the following to be eligible for Medicare:
- age over 65 years
- age under 65 years and living with a disability
- any age with end stage renal disease or permanent kidney failure needing dialysis or transplant
They must also be:
- a U.S. citizen or permanent legal resident for 5 years continuously
- eligible for Social Security benefits with at least 10 years of contributing payment
Dual eligibility
Many people qualify for both Medicaid and Medicare.
Currently, 12 million people have both forms of coverage, including 7.2 million poor-income older adults and 4.8 million disabled people. It accounts for more than 15 percent of Medicaid enrolled citizens.
Provisions vary, depending on the state in which a person lives in the United States.
Who pays for Medicare?
Most of the funding for Medicare comes from:
- payroll taxes under the Federal Insurance Contributions Act (FICA)
- the Self-Employment Contributions Act (SECA)
The employee usually pays half of the bill, while the other half is paid by the employer. This money goes to a trust fund used by the government to reimburse physicians, hospitals, and private insurance companies.
Additional funding for Medicare programs comes from premiums, coinsurance, deductibles, and copayments.
