Differences between Medicaid and Medicare

Medicare and Medicaid in the United States

Medicare and Medicaid are the two primary public health insurance programs in the United States. Both were established in 1965 through the Social Security Amendments, signed into law by President Lyndon B. Johnson. While both programs provide medical coverage, they serve different populations and operate under different administrative structures. Medicare is a federal program primarily for individuals aged 65 and older, whereas Medicaid is a joint federal and state program designed for individuals with limited income and resources.

Comparison Table

Category	Medicare	Medicaid
Primary Eligibility	Individuals aged 65+ or those with specific disabilities.	Individuals with low income or limited financial assets.
Administration	Managed solely by the federal government.	Jointly managed by federal and state governments.
Funding	Funded by payroll taxes, premiums, and federal revenue.	Funded by state and federal tax revenues.
National Uniformity	Consistent rules and benefits across all states.	Benefits and eligibility vary by state.
Long-term Care	Does not cover most long-term nursing home care.	Primary payer for long-term nursing home services.
Prescription Drugs	Provided through optional Part D plans.	Included as a standard benefit in most states.
Cost-sharing	Includes deductibles and monthly premiums.	Minimal or no cost-sharing for most beneficiaries.

Venn diagram comparing Differences between Medicaid and Medicare

Administration and Funding

Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services. It is funded through two trust funds held by the U.S. Treasury: the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund. These are financed by FICA payroll taxes and monthly premiums paid by beneficiaries.

Medicaid administration is decentralized. While the federal government sets broad guidelines and provides "matching" funds to states, each state designs its own program. This results in differences regarding who qualifies and what services are covered. In states that adopted the Affordable Care Act (ACA) expansion, eligibility extends to most adults with incomes up to 138% of the federal poverty level.

Eligibility and Benefits

Medicare eligibility is generally based on age or work history. Most citizens become eligible at age 65 if they or their spouse paid Medicare taxes for at least ten years. Younger individuals may qualify if they receive Social Security Disability Insurance (SSDI) or have End-Stage Renal Disease (ESRD). Medicare is divided into four parts: Part A (hospitalization), Part B (outpatient services), Part C (Medicare Advantage), and Part D (prescription drugs).

Medicaid eligibility is means-tested. Applicants must prove their income and assets fall below certain thresholds. Beyond medical services, Medicaid covers several "optional" benefits that Medicare does not, such as dental care, vision services, and long-term custodial care in nursing homes. Because of these differences, some individuals qualify for both programs; these "dual eligibles" often have their Medicare premiums and cost-sharing covered by Medicaid.