Medicare and Medicaid are not the Same

A lot of people think that Medicare and Medicaid are the same thing. They are however, not the same, not even close. Yet both in our minds and in the news media, Medicare and Medicaid are always lumped together.

On July 30, 1965, President Lyndon Johnson signed both Medicare and Medicaid into law as part of Title XIX, The Social Security Act. Both are related to healthcare. Both have substantial Federal involvement. There are some individuals who are eligible for both. That is where similarities end.

Before 1965, only those who were in the workforce could get employer-subsidized health insurance. Thus, the retired (and the non-working) were effectively prevented from acquiring medical insurance coverage. The Medicare Program was planned, like social security, as a pay-in-advance-of-need system where the worker paid a certain amount each month into a government-run fund. At age 65, when the worker retired, this pot of money called Medicare would provide all his or her medical coverage funding. Initially, the Medicare Fund was maintained and accounted separately but quickly the Federal government lumped it into the General Fund.

Twenty-five years later (1990), the GAO measured how much Medicare was actually costing versus what was projected. Medicare then cost more than 800% over projections! This was a medical insurance plan whic intended to pay for itself but instead had become a Federal entitlement that was never intended.

Medicaid was always intended as an entitlement – a social welfare and protection plan funded jointly by State and Federal government funding. Initially, the Program covered low-income and non-working people, children and indigent people.
Medicaid as specific qualifications. To qualify, you must make less than a minimum income level, plus you must meet one of the categorical requirements such as age, pregnancy, disability, blindness, HIV, legal citizenship, etc. In contrast to Medicare, Medicaid recipients pay nothing into any fund. It always was and is an entitlement.

Beware when we tout single payer health insurance funded by the government as a means to provide universal health care that will reduce costs. The upward spiral of healthcare costs will reach the stratosphere – the truly unsupportable – for two reasons. 1) As entitlements expand, costs go UP certainly not down. 2) The government is a notoriously inefficient provider of, well, anything. When Government takes over an activity, the bureaucracy and its associated costs expand exponentially. Just think of the postal service or HIPAA. If you need additional proof of how costly government-run programs are, just remember the initial estimate for cost of Medicare and compare to the reality.

As time has progressed, there has been more attention given to Medicare and Medicaid. The current lawmakers are making some cutbacks wile at the same time trying to make both of these work. We will see what happens in the near future as some of the legislation that is being worked on is rolled out. In the meantime, at least there is an attempt to bring both programs forward into te 21st century.

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