Medicare and Medicaid: Compare and Contrast

Examination of the two programs and a call for a universal healthcare system that combines features of both

Medicare and Medicaid both possess attributes that would make for a successful system of universal health insurance coverage. Both are government funded programs that provide insurance for millions of Americans, but they differ in their regulation, funding and breadth of coverage. While neither system alone would be ideal for developing a program to insure all Americans, attributes of Medicare and Medicaid could be combined to yield a health insurance system that would be favorable. You should support a program that integrates the best features of Medicare and Medicaid and thus appeals to the greatest proportion of people.

It is important to examine the differences between the operation of Medicaid and Medicare in order to select the attributes of each program that would work best for a universal healthcare system. An important distinction between the two programs is how they are regulated and funded. Medicare is created and administered federally whereas Medicaid is jointly run by the state and federal government. Two of the four parts of Medicare are regulated by the federal government and the remaining two parts are offered through private insurance companies that are contracted through Medicare (Feldstein, 2018). Part A, the hospital insurance program, is financed by the HI payroll tax, and Part B, supplemental insurance, is financed mostly by federal general revenues and partly by a beneficiary premium. Parts C and D, respectively Medicare Advantage Plans and Prescription Drug Coverage, are optional programs that can be purchased by individuals from insurance companies to cover additional health costs not covered by Parts A and B. On the other hand, Medicaid is funded and run jointly by the federal and state governments. Each state receives a different amount for its Medicaid program from the federal government. The proportion of the funds a state receives from the federal government is based on the wealth of that state, with wealthier states receiving less federal funding (Feldstein, 2018). For instance, New York State receives the lowest Medicaid matching rate from the federal government and must fund the remainder of its Medicaid costs itself (Feldstein, 2018).

Expansion of either Medicare or Medicaid to cover all Americans regardless of age or income would require a large increase in funds for the program and thus an increase in taxes. It would be ideal to split the burden of acquiring the larger amounts of funds through taxes between the federal and state governments. Thus, an ideal “Healthcare for All” program should be dually financed by the state and federal governments in a way similar to Medicaid. Under this system, the federal government would provide each state with a portion of the money needed to finance the program based on that state’s need, and the state would acquire the remaining funds through its own taxes. By splitting the tax increase between the federal government and the state governments, it would be less visible to the taxpayers and thus they would be less likely to oppose the government assuming the role as the single payer of health insurance.

Medicare and Medicaid also differ in their direct costs to patients. Medicare for All has higher potential costs to patients than Medicaid for All. Medicare requires monthly premiums, deductible, and other potential out of pocket costs, specifically related to the services in Parts C and D (Feldstein, 2018). Some enrollees choose to purchase supplemental insurance to cover the costs that Medicare does not, while others choose not to do so and incur these costs directly (Feldstein, 2018). On the other hand, Medicaid requires very little, if any, direct payment by enrollees. Since a Healthcare for All program will increase patient costs indirectly through increased taxes, the direct costs for care should be kept to a minimum otherwise people would not support the legislation. Keeping the premiums, deductibles, and out of pocket costs low would make the universal healthcare program more popular and more accessible.

However, there are potential consequences of shielding patients from direct costs of their healthcare. Studies demonstrate that when patients are unaware of the cost of their healthcare because they are not paying for it directly, they tend to use more since they are unaffected by the price (Feldstein, 2018). Therefore, eliminating direct costs for care altogether encourages greater, and often unnecessary, use of the healthcare system. This increased usage ultimately drives up costs, a trend that has been seen with Medicaid (Feldstein, 2018). Therefore, a program providing coverage to all Americans should lie between Medicaid and Medicare in terms of direct costs to patients. The premiums and deductibles should be contained to a low amount since participants will already be experiencing a tax hike, but they should not be too low as they would result in the superfluous use of services.

Finally, Medicare and Medicaid differ in what services they cover. Generally, Medicaid is a more comprehensive insurance provider than Medicare. Medicare requires supplemental insurance to cover many services that Medicaid automatically covers. Part A of Medicare insures acute hospital care and limited post-hospital care after an acute episode of illness. Individuals may enroll in Part B to cover physician and ancillary services such as diagnostic tests, medical supplies and equipment, and home health care. Individuals who choose to enroll in only Parts A and B are not protected from several other healthcare costs unless they enroll in a Medicare Advantage Plan (Part C) or Part D Prescription Drug Coverage. On the other hand, Medicaid covers a more comprehensive list of benefits, although these vary by state. The federal government mandates coverage of 12 services in every state’s Medicaid program. These include hospitalization, laboratory services, X-ray, doctor services, nursing services, clinical treatment, and home healthcare, among several others (Feldstein, 2018). The states have the option to include additional benefits such as prescription drug coverage, eye care, physical therapy, dental services, and more at their discretion (Feldstein, 2018).

A Healthcare for All plan should be regulated in a way similar to Medicaid with both federal and state input. As with Medicaid, under this proposed system the federal government should mandate coverage for core services and states should have the option to expand the services covered as needed. This approach would allow greater flexibility of the states to prioritize coverage for the health services that are needed by its residents. Since the primary responsibility for public health rests with state and local governments, state control, rather than federal control, of the single payer health insurance system would allow for greater flexibility of the program to each state’s needs (Wiley, 2018). This would allow for greater compatibility between a state’s public health objectives and the services covered by the insurance program and thus result in a more integrated system of addressing health issues.

A healthcare program for all Americans should combine the aspects of Medicare and Medicaid that would lead to a successful insurance system with the greatest support from the most people. The system would benefit from dual regulation and funding by the states and the federal government in order to personalize the system to the needs of individual states. Additionally, individuals should be protected from most, but not all costs to prevent the overuse of services that would cause increased spending. Finally, the program should cover a core set of services but should have flexibility to be customized by the individual states. Your support of this legislation would earn the approval of individuals who would benefit from the expansion of insurance coverage. Those who favor this plan would be individuals who currently do not have insurance coverage, such as those with income too high to qualify for Medicaid but too low to buy their own insurance. There are almost 30 million uninsured Americans, so an important part of your electorate would likely be in favor of this legislation.

References

Feldstein, P. J. (2018). Health policy issues: An economic perspective (7th ed.). Health Administration Press.

Wiley, L. (2018). Medicaid for all?: State-level single-payer health care. Ohio State Law Journal, 79(4).