Written by Christine Wan | Edited by Zainab Bhatti and Nicole Xu

Medicare and Medicaid are oftentimes confused and used synonymously. However, these two programs bear fundamental differences. Each measure is regulated by laws and policies unique to that particular program and is specifically designed for different populations.

The most evident difference between these two programs lies in the types of people who qualify for them as well as the purpose each measure serves. In regards to Medicare, this measure is an insurance program, in which medical bills are paid from trust funds that individuals with such coverage have paid into. Regardless of income level, all U.S. citizens over the age of 65 who have difficulty covering expenses related to medical care and treatment are aided by Medicare (Mitchell & Potter). This measure, however, also serves younger patients with specific illnesses, including end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s Disease (Masterson). Patients pay a portion of costs through deductibles¹ for hospital costs, while monthly premiums² are required for non-hospital coverage. Moreover, Medicare being a strictly federal measure allows it to offer relatively the same services in every region of the United States (U.S. Department of Health & Human Services). Conversely, Medicaid is more of an assistance program and is constructed to serve low-income populations, regardless of patients’ ages. Both state and federal governments regulate Medicaid as a means to best assist low-income households with healthcare expenses. This includes—but is not limited to—major hospitalizations and treatments as well as routine medical care (Mitchell & Hope). Typically, patients who participate in this program have no financial obligations with regards to medical expenses—though a small co-payment may be required at times. This measure is a federal-state program, so its services vary between states (U.S. Department of Health & Human Services). 

In terms of coverage, there are also differences and similarities between the two programs. For Medicare, there are several parts that each cover a specific aspect of healthcare. Medicare Part A is involved with hospital insurance and is offered without premiums to eligible patients who have paid Medicare taxes for a minimum of forty calendar quarters within their life spans (Mitchell & Potter). Part A is typically associated with skilled nursing care, hospital services, hospice services, and home healthcare. Patients ineligible for Part A oftentimes have the option of purchasing it. In contrast, Medicare Part B is associated with medical insurance and covers outpatient hospital care, physician services, and other comparable services that are traditionally covered in typical health insurance plans. In addition, the combination of Parts A and B is often referred to as Original Medicare. Medicare Part C, otherwise known as Medicare Advantage, is run by approved private insurers and includes all the benefits included in Medicare Parts A and B (Masterson). For all the above-mentioned plans, patients have the option of purchasing other benefits, including those involving dental, vision, and prescription drug coverage. Lastly, Medicare Part D involves prescription drug payments only. Individuals can automatically enroll in Medicare as soon as they turn 65, but if individuals choose to delay enrollment, possibly due to already being insured by an employer or other organization, these individuals must manually enroll later on. However, for Medicare Parts C and D, individuals must sign up once they become eligible or during specific annual enrollment periods. The State Health Insurance Assistance Program, or SHIP, serves to inform and educate people who are eligible for Medicare about their options and the diverse kinds of coverage offered. This service also aids beneficiaries in applying to other programs, including Medicaid (Mitchell & Potter).

Medicaid involves a similar distinction regarding benefits issued and covered since these benefits vary based on the issuing state. However, the following benefits are included in every program: lab and X-ray services, inpatient and outpatient hospital services, family planning services (such as birth control and nurse-midwife services), health screenings, applicable child medical treatments, nursing facility services for adults, and adult surgical dental services  (Mitchell & Potter).

Additionally, certain individuals are eligible for both programs due to concurrent disability benefits. As an example, these individuals could have the Original Medicare (Parts A and B) or a Medicare Advantage plan (Part C). Medicare would subsequently cover prescription drugs under Part D, while Medicaid covers other forms of care and medications that Medicare does not. Thus, having both programs would allow individuals to cover most of their healthcare costs (Mitchell & Potter).

As such, Medicare and Medicaid are two distinct U.S. government programs that are designed to aid different populations in gaining access to the healthcare they need.

¹Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services (Healthcare.gov).

²Premium: The amount you pay for your health insurance every month (Healthcare.gov).

Bibliography

Masterson, Les. “Medicare vs Medicaid – What Is the Difference between Medicare and Medicaid?” Insure.com, 15 June 2020, www.insure.com/health-insurance/key-differences-between-medicare-and-medicaid.

Mitchell, Jennifer, and Daniel Potter. “Medicare vs. Medicaid.” Healthline.com, Healthline Media, 10 Dec. 2019, www.healthline.com/health/medicare/medicare-vs-medicaid#disability.U.S. Department of Health & Human Services. “What Is the Difference between Medicare and Medicaid?” HHS.gov, 2 Oct. 2015, www.hhs.gov/answers/medicare-and-medicaid/what-is-the-difference-between-medicare-medicaid/index.html.