Healthcare Payer Systems: Medicare and Medicaid

Topic: Administration
Words: 668 Pages: 2


Medicare is a US program responsible for government health insurance, which works by subsidizing healthcare services. Congress created Medicare as a part of the Social Security Act amendment in 1965. The system is supposed to give coverage to people 65 years and older who do not have insurance coverage (Zahner et al., 2022). It also covers younger individuals who meet the eligibility criteria and individuals with certain illnesses. The extended coverage is for individuals with specific disabilities and those with conditions such as amyotrophic lateral sclerosis, end-stage renal disease, and Lou Gehrig’s disease. Medicare is divided into different plans that cover several healthcare situations. The four Medicare parts provide various types of services to insured individuals. The parts include Medicare parts A, B, and C, and Medicare Part D involves prescription drugs.

Ways the U.S. Government Finances and Reimburses Medicaid

A variety of sources contribute to the funding of the Medicare program. It is financed by combining general federal taxes, general revenues, payroll tax revenues, and premiums played by the individual beneficiaries. The mandatory payroll tax is responsible for payment for Part A Medicare (Zahner et al., 2022). U.S. taxpayers contribute to the Medicare program through the Federal Insurance Contributions Act, which is responsible for Medicare deductions and social security. Each of the four Medicare parts has its reimbursement structures. Medicare Part A Providers may receive the reimbursement under the inpatient prospective payment system. For Part B, providers may accept the reimbursement under the outpatient future payment system. Part C has private companies that manage and enroll benefits, and the providers claim the reimbursement. The Medicare program eliminates the need for private health insurance while increasing the financial load on taxpayers. The public option preserves the role of commercial insurers and maintains administrative authority over health care.


Medicaid provides health insurance coverage to low-income individuals and families. Many Americans are eligible for Medicaid’s health care coverage. According to federal law, states are in charge of administering Medicaid. Over half of Americans are covered by Medicaid, including those with expensive and demanding medical requirements (Olfson et al., 2018). Because of this program, most Americans have long-term care insurance. Most Medicaid recipients do not have other low-cost options for health insurance. Medicaid funds hospitals, community health centers, physicians, nursing homes, and healthcare jobs, accounting for more than 5% of all personal health care expenditures in the U.S. (Olfson et al., 2018). Medicaid covers a wide range of medical treatments at little or no cost to those who use them.

Ways the U.S. Government Finances and Reimburses Medicare

The state and the federal government jointly finance Medicare. For every dollar a state spends, the federal government contributes a percentage of that money back to the state. Treatment and services supplied under a state plan are covered only if the state can pay its proportionate share of the expenditures of Medicaid. States can set their own Medicaid provider payment rates as long as federal standards are followed. In most cases, services are reimbursed via managed care or fee-for-service contracts. States must submit a State Plan Amendment to the Centers for Medicare and Medicaid Services for review and approval before making changes to Medicaid provider payment. Reimbursement for Medicaid varies from state to state, and the regulations differ based on state regulations. Most reimbursement models for Medicaid have managed care and fee-for-service or a combination of both to pay the providers.

Impact of Government Health Care Policy and Funding on Rural Area Community

Rural populations have numerous challenges when seeking medical treatment, including a scarcity of physicians, the recent closure of countryside hospitals, and long distances to drive to reach clinicians. Commercial insurance leaves deficiencies filled by Medicare and Medicaid (Mroz et al., 2020). Most health care in the areas is covered by private insurance. Still, non-elderly residents of rural areas are less likely than urban residents to have such coverage. To reduce the gap between Medicaid and private insurance, Medicaid covers nearly a quarter of non-elderly persons in these regions.


Mroz, T. M., Patterson, D. G., & Frogner, B. K. (2020). The impact of Medicare’s Rural Add-On Payments on Supply of Home health agencies serving rural counties: Study examines how Medicare rural add-on payments affected the number of home health agencies serving rural counties. Health Affairs, 39(6), 949-957. Web.

Olfson, M., Wall, M., Barry, C. L., Mauro, C., & Mojtabai, R. (2018). Impact of Medicaid expansion on coverage and treatment of low-income adults with substance use disorders. Health Affairs, 37(8), 1208-1215.

Zahner, G. J., Croughan, P. W., & Blumenthal, D. M. (2022). Medicare advantage for all: A potential path to universal coverage. JAMA, 327(1), 29-30. Web.

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