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Medicare and Medicaid

Medicare is a federal government program established in 1965 as part of the Social Security program that provides medical care (in exchange for a nominal annual premium) to people eligible for social security benefits (persons age 65 and older, the permanently disabled, and surviving spouses and minor children of deceased workers). It is not means tested. The main types of medical care not covered by Medicare are long term care (i.e. nursing homes), and, historically, prescription drugs.

Some Medicare beneficiaries may choose an HMO option which provides additional benefits at the cost of less choice over medical providers like doctors. Congress enacted prescription drug benefit legislation with the support of the American Association of Retired Persons (AARP), despite protests from many members. This provides a confusing array of drug discount cards (and $600 of free drugs for low income seniors) in the phase in period, and greater, but limited, coverage for prescription drugs purchases in later years.

More than 39 million Americans receive Medicare. It is the largest social program in force in terms of expenditures, at the state or federal level, other than Social Security.

Medicaid is a joint state-federal government program, also adopted in 1965 along with Medicare, that provides medical care to selected groups of people on a means tested basis. Generally speaking, it provides care for federal welfare (i.e. TANF) receipients, disabled people (particularly low income disabled people receiving SSI, a social security related means tested program), and persons 65 and over who require long term care. Eligibility standards are more lenient for senior citizens than for other beneficiaries. Many states also go well beyond federal minimum requirements by providing benefits to working class children. Coverage of legal immigrants is a state by state option under the program. Medicaid generally pays doctors less than the prevailing rate for their services and does not allow doctors to require additional payments from their patients. As a result, many providers do not accept new Medicaid patients.

More than 40 million Americans receive Medicaid. In many states, Medicaid is the largest social program after K-12 and Higher Education, in terms of expenditure.

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