Medicare and Medicaid Programs

Topic: Administration
Words: 645 Pages: 2

Medicare is an insurance program designed to cover healthcare costs for individuals above 65 and those with disabilities. It assists elderly and disabled people with paying for drugs, physicians, hospital and home health services, and other medical necessities. Medicare is often confused with Medicaid, an assistance program for low-income citizens. Medicaid helps people with limited income to pay for health care services, such as hospitals and nursing. Medicare and Medicaid can be combined for citizens eligible for both systems. These payer systems aim to make healthcare more accessible and affordable for all Americans. CMS, The Centers for Medicare and Medicaid Services, is responsible for regulating the programs (Board of Trustees of the Federal Hospital Insurance, 2019). CMS is a federal agency comprised of six members, which regulates these programs with the help of federal laws and guidance. Affordable Care Act (ACA) and Medicare Access and CHIP Reauthorization Act (MACRA) are the measures that regulate the costs of the programs.

Medicaid and Medicare programs significantly help a large population of the United States with healthcare expenses. Programs’ accessibility is the main advantage associated with how systems finance the healthcare sector. According to the Federal Hospital Insurance Board of Trustees, Medicare assisted 51.2 million elder and 8.8 million disabled people in 2018, spending around 740.6 billion dollars (2019, p. 6). Another advantage is that the programs become more inclusive with time as Medicaid started including adults without children and “all individuals below 138 percent of the Federal Poverty Level” (Gottlieb & Shepard, 2017, para. 2). Healthcare payer systems improve the financial stability of Americans, as an experiment in Oregon showed that individuals with access to Medicaid had fewer healthcare expenses, less medical debt, and lower probability of refusing medical treatment (Gottlieb & Shepard, 2017).

The disadvantage of the way systems finance healthcare is that they highly rely on government and state funds. These funds can be insufficient to help all the members of programs since the healthcare payer systems reported having issues with managing their budget. In 2018, Medicare spendings were 1.6 billion dollars higher than its income, and The Board of Trustees expects to continue having a shortage in the future (Board of Trustees of the Federal Hospital Insurance, 2019, p. 6). The systems need to find more funding sources or get additional financial help from the government to address this issue.

Medicare is a fully federally funded program, while the states and the federal government fund Medicaid. The United States government finances Medicare mainly with payroll taxes, Federal income taxes, and interest from the general fund of the Treasury (Board of Trustees of the Federal Hospital Insurance, 2019, p.10). Funding for Medicaid, in turn, is made from the state budget and differs across the states as each creates its plans to allocate funds.

Healthcare payment programs noticeably contribute to the quality of care in rural communities as they financially help low-income, disabled, and older people. The research in Oregon reported finding “large improvements in mental health and self-reported health” after two years of Medicaid coverage (Gottlieb & Shepard, 2017, para. 4). Research revealed that the program reduced the mortality of children, teenagers, and adults from 1984 to 2005 (Gottlieb & Shepard, 2017). Programs help citizens fund appointments with physicians, hospital services, and medicals. They assist rural communities who otherwise would refuse to receive treatment because of their financial state.

Medicare and Medicaid are systems that provide healthcare to those who cannot afford it. The federal government funds Medicare, which helps older and disabled citizens to cover medical expenses. Medicaid specializes in low-income individuals, and it is financed by the government and states. Programs are regulated by The Centers for Medicare and Medicaid Services, and payroll taxes, income taxes, and state funds reimburse them. Research demonstrates that Medicare and Medicaid improve the health and financial stability of American citizens, significantly benefiting the United States healthcare system.


Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. (2019). Letter of Transmittal. 

Gottlieb, J. D., & Shepard, M. (2017). Evidence on the value of Medicaid. Econofact.

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