What is the Difference Between Medicare and Medicaid?

Mary McMahon

Medicare and Medicaid are both government-funded health care programs in the United States, but they work differently, and are intended to serve different populations of Americans. Both, however, are overseen by the Centers for Medicare and Medicaid Services (CMS), which also oversees the Children's Health Insurance Program (CHIP), another government health care program. Understanding the difference between these programs can be important for people who need their services.

Those nearing the age of 65 and seeking Medicare coverage can enroll online or at their nearest Social Security office.
Those nearing the age of 65 and seeking Medicare coverage can enroll online or at their nearest Social Security office.

Medicare and Medicaid were established in 1965 under the Social Security Act, to address growing concerns about American seniors and Americans living in poverty. Historically, these populations often struggled to obtain and pay for health care, because they lacked the ability to pay. The Social Security Act was designed to protect these vulnerable populations in the United States, providing benefits such as Social Security payouts to seniors to supplement retirement, and health care services to seniors and people living in poverty.

Medicaid helps families from lower income brackets receive medical care.
Medicaid helps families from lower income brackets receive medical care.

Medicare is an entitlement program funded entirely by the federal government. Every American over age 65 is eligible for Medicare services, providing that he or she paid taxes into the Social Security fund. Certain people with disabilities are also eligible for coverage under Medicare. Several different Medicare programs including Medicare Part A for hospital care, Medicare Part B for medical care, and Medicare Part D for prescription drugs, are designed to provide complete coverage. People may be obligated to pay deductibles and copays for certain services provided by Medicare, and Medicare also reserves the right to refuse to pay for treatments it does not deem necessary.

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Medicaid, on the other hand, is administered primarily by the states, although it is overseen by CMS. Funding for Medicaid comes in part from the federal government, and in part from the individual states. This program is a means-tested state level form of health care which is designed to provide care for people who meet the requirements for Medicaid coverage. People must apply for Medicaid, and demonstrate that they have a proved need. Standards for coverage under Medicaid vary by state, as do the services available; some states, for example, provide dental services, while others do not.

Some Americans are eligible for coverage under both Medicare and Medicaid; low income is a common situation for seniors and people with disabilities and this can result in dual coverage. Funding problems have plagued both Medicare and Medicaid, raising concerns about how sustainable these programs are, and whether or not care will be available to future generations, including working Americans currently paying Social Security taxes.

People with certain disabilities can get coverage under medicare.
People with certain disabilities can get coverage under medicare.

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Discussion Comments


Sunny27-The history of Medicare and Medicaid began in 1965. Medicare now covers over 42 million Americans that include seniors over the age of 65 and those with disabilities.

In 2006, Medicaid and Medicare offer prescription drug coverage as well. Both programs offer preventive care benefits such as Flu shots and preventive care medical exams.


Icecream17-I agree that Medicare fraud is a big problem. It could include billing Medicare for services that were not offered or given.

It can also include billing Medicare for different services than you actually received. It also includes billing Medicare for equipment that was returned.

It is important to note if a provider tells you that a test is free or that additional tests are cheaper.

Also, if they tell you that certain equipment is free or even offer you payment to go to a clinic to receive additional services these are all circumstances that you should report. You report the findings to the Inspector General at 1-800-447-8477.


Medicaid and Medicare programs are used to offset the cost of Medical care. Medicaid is a low income program that offers health care insurance for families and single people earning below a certain amount annually.

Medicare and Medicaid eligibility is different. Medicaid is based on income, while Medicare is a program that is based on age. Seniors 65 or over are entitled to these health care benefits as long as they have paid into Social Security and have reached the age of 65.

The problem with many of these programs is due to the sheer size there are huge problems with Medicare and Medicaid fraud.

Until this is addressed, the costs of Medicare and Medicaid coverage will continue to rise which puts the Medicare and Medicaid program future at risk.

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