U.S. SENATOR Jeff Bingaman

Wednesday, June 15, 2011

What is the difference between Medicare and Medicaid?

Medicare and Medicaid are critical sources of health insurance for many Americans. Both are health programs.

• Medicare is a health insurance program providing care for Americans age 65 and older, and the disabled.  Medicare hospital coverage is paid for by a payroll tax on every worker, and in turn, every worker is eligible to receive Medicare after age 65. Other seniors and those with disabilities may choose to purchase this hospital coverage. Medicare coverage for outpatient services and prescription drugs is financed by a combination of taxes and premiums. Beneficiaries voluntarily choose to enroll in this coverage program.
• Medicaid is a health program for certain categories of low income Americans like children and some seniors. Two-thirds of Medicaid funds go toward low-income seniors and the disabled, particularly on health expenses like long-term care, such as nursing homes. One-third of American children are insured through Medicaid (or SCHIP).

Recently, the Senate rejected a House-passed budget proposal written by House Budget Chairman Paul Ryan that proposed sweeping changes to the way Medicare and Medicaid are financed, including a provision that would have converted Medicare to a voucher program and a provision that would have converted Medicaid funding into a block grant.

This measure would have restricted future Medicare beneficiaries' options and more than doubled their health care expenses, and would devastate Medicaid for many states. According to a recent analysis by the Kaiser Family Foundation, the New Mexico Medicaid program would have been cut in half by 2021 because of the Ryan proposal, and the state would have lost $15.1 billion—more than a third of the program's federal support—over the next ten years.

Senator Bingaman voted against the proposal.