Wonky Word Wednesdays: Medicare vs. Medicaid

Jul 29, 2015

Tomorrow marks the 50th anniversary of the creation of Medicaid and Medicare. (Don’t worry we are doing a special blog to celebrate.) Both are federal social insurance programs that aim to help cover healthcare costs. However, because the programs have similar names, many people get confused about what program serves which population. So ahead of the official anniversary, we decided to dedicate this week’s wonky word to describing the programs side by side and explain how each aims to improve the health care of elderly and low-income populations in the country. Let’s break it down. The simple way to explain it is both programs are about affordable health care. Medicare helps older Americans and Medicaid helps low-income Americans. More specifically, Medicare is a federal program through Social Security to provide affordable quality heath care to U.S. citizens who are 65 years or older, regardless of income. Individuals under the age of 65 that have a disability and receive Social Security Disability Insurance can also qualify for Medicare. The program provides benefits in four parts, [A] coverage for hospitalization or hospice care, [B] medical insurance, [C] private supplemental insurance (Medicare Advantage plans), and [D] prescription drug plans. Benefits in parts A and B are paid for by payroll taxes and deductions from Social Security income while benefits under parts C and D are paid for out-of-pocket by Medicare participants. Medicaid was designed to help low-income Americans afford quality health care. Medicaid is jointly funded by federal and state governments but is managed by individual states. States determine eligibility based on an individual or families’ income level and other factors including the number of children, pregnant women, caretakers, disability, and age. Currently, parents with children with income at or below 47% of the poverty line ($7,487 for a single mom with one child) and pregnant women with income at 157% of the poverty line are eligible for Medicaid in Montana. However, once CMS approves the state’s waiver, Medicaid will be available to adults, ages 19-64, with incomes below 138% of the poverty line (about $16,000 for a single adult). Federal mandates state that Medicaid coverage includes things like hospitalization, doctors’ services, screenings, family planning etc. However, states can also provide additional coverage options for prescription drugs, dental services, optometrist services etc. Also, unlike Medicare, Medicaid can be used to cover long-term health care costs associated with disability, nursing facility services, chronic illnesses etc. So now that you better understand the difference between Medicare and Medicaid, you are ready for tomorrow’s blog celebrating their 50th Anniversary. Stay tuned.
Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.