With the Social Security Act’s adoption in 1965, Medicare was established to offer health insurance to Americans 65 and older and those with specific chronic disorders.
MEDICARE: What is Medicare?
Medicare‘s fundamental coverage policy is based on whether a service is “medically essential.” If it is, Medicare will pay for it. Local coverage decisions, national rules, and federal legislation all impact this issue.
There are four steps, or parts, in the actual program. Medicare is simpler to comprehend when it is divided into these four steps. Each of these steps has a unique set of monthly rates and frequently includes a preset deductible in addition to coverage.
- Step 01
The majority of the services in Step 01 are for inpatients. This coverage may cover everything from overnight hospital stays due to an urgent medical issue to hospice care and other protracted stays in a hospital or nursing home. Step 01 has several limitations and requirements designed to control costs and promote better healthcare. For instance, Medicare won’t pay the physician for this service if the patient needs to revisit the hospital for the same surgery within 30 days.
- Step 02
Step 02 offers medical insurance for procedures and services not covered by Step 01. Along with some forms of nursing care and durable medical equipment like canes and walkers, this includes doctor services like x-rays. The basic Medicare coverage package comprises Step 02 of Medicare and Step 01.
- Step 03
Step 03, also called the Medicare Advantage plan, enables Medicare members to receive all their coverage from a private company. Private HMO and PPO businesses provide Medicare Advantage. It is not necessary to subscribe to Steps 01 and 02 to Step 03. Medicare Advantage does not involve filing claims with Medicare; instead, the federal government reimburses the private payer.
- Step 04
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 led to the implementation of Medicare Step 04, the program’s most recent addition. Prescription drug prices are covered by Step 04 of the healthcare system. To receive coverage from this part of Medicare, patients must actively enroll in it (and then pay its monthly payments).
A person must be 65 years old, a citizen of the United States, and enrolled in Social Security to be eligible for Medicare benefits. Medicare allows exceptions for those under the age of 65 who have end-stage renal failure, which necessitates ongoing dialysis, and those under the age of 65 who have additional specific disabilities or illnesses, such as Lou Gehrig’s disease.
MEDICAID: What is Medicaid?
People who might not otherwise be able to afford care can receive it through Medicaid, a joint state and federal healthcare program. Medicaid offers health insurance to low-income families, individuals, people with disabilities, and some older people.
Medicaid rules and restrictions differ from state to state, unlike Medicare, a federal program with uniform criteria. Each state is required to maintain its own Medicaid program (like Medi-Cal in California or BadgerCare in Wisconsin). Even though each state-based Medicaid program must adhere to a set of federally mandated standards, you should anticipate more variance in Medicaid regulations than in Medicare policies.
Let’s concentrate simply on the minimal requirements for the program, as outlined by the CMS and the federal government, as Medicaid coverage varies widely between states. Seven of the fundamental services that Medicaid covers are listed here.
- Caring in family planning
- Cost of prescription drugs
- Hospital inpatient and outpatient services
- Children’s services
- Care for mental health
- Physical, occupational, and speech therapy
- Dental services and related healthcare
A person’s eligibility for Medicaid may differ by state, just like the programs that Medicaid offers. However, there are a few generally accepted minimum standards for coverage, such as:
- Adults with kids who make less than a specified income threshold (varies by state and number of children)
- People making up to 133% of the federal poverty level (this provision is part of the Affordable Care Act and will go into effect in January of 2014)
- Those with incomes above the poverty line may still be eligible for Medicaid if they pay an extra premium.
- Individuals with long-term impairments
- People who get Social Security benefits may also be Medicaid eligible.
These aren’t strict requirements for enrollment. Medicaid only accepts specific types of subscribers. That is, their eligibility is not only based on their income. Instead, a patient’s eligibility is determined by how well they fall into a specific category, including those who are poor, disabled, pregnant, or nursing moms.
Medicaid functions similarly to Medicare as a third-party payer, paying providers for their medical services. Contrary to Medicare, most Medicaid subscribers are enrolled in a managed care program. Subscribers to this program are required to pay a monthly fee. Older people with lower incomes are more likely to enroll in the Medicaid program’s basic fee-for-service model. In contrast, younger Medicaid enrollees are more likely to choose the managed care option.
These are Medicare and Medicaid’s essential components.
Difference between Medicare vs. private health insurance
Assessing your health insurance options may be a good idea even if you are eligible for Medicare. For instance, if you are over 65 but have yet to retire, your employer may still provide you with private insurance choices. Medicare could not offer as good of coverage as the one provided by your employer.
You can still shop for private insurance through the insurance market even if your employer doesn’t offer it. It would be best to consider the monthly payments (premiums), out-of-pocket expenses when the insurance is utilized, and the scope of coverage when choosing a plan. It is beneficial to carefully examine each insurance plan throughout this stage of the procedure.
Choosing Medicare or a commercial health insurance plan depends on your priorities. Compare the prices and advantages of Medicare with the commercial insurance plans you are considering. For your information, monthly Medicare premiums can be as high as $170.5. On the other hand, the average monthly premium for personal private health insurance is $456.
It would help if you also compared the doctor networks offered by Medicare and private health insurance plans. You can visit any physician who accepts Medicare with the National program, which is many.
You might have more choices within a private health insurance plan, but it depends on which one you’re considering and how it works. Since the coverage differs from plan to plan, we advise carefully scrutinizing each insurance choice.
The impact of the Affordable Care Act (ACA) on Medicare and Medicaid
Since it was enacted into law, the Center has maintained that the ACA is good for Medicare and the families who rely on it. ACA and Medicare: Improving the Lifeline Millions Depend On It is increasing the solvency of Medicare while saving older and disabled Americans tens of thousands of dollars annually.
- Reducing the gap in Medicare drug coverage.
The “Donut Dole” coverage gap is already being phased down for people on Medicare. The Donut Hole will be closed entirely by the end of this year thanks to the Affordable Care Act, giving beneficiaries of Medicare Part D improved access to the medications they require. With an average savings of over $600, this ACA provision has helped Medicare recipients save over $5.7 billion on their prescription medication expenses.
- Medicare beneficiaries can receive free preventive services.
Both those with commercial insurance and those with Medicare are now eligible for several preventative tests and services free under the ACA. Over 34 million Medicare recipients used at least one free preventive benefit in the past year alone, including mammograms and other vital tests.
- Changes to Medicare Advantage (MA) Payments.
The percentage of original Medicare rates that make up Medicare Advantage payments is being reduced. Before the restructuring, the average MA payment was 13% more than the standard Medicare payment. Additionally, MA plans are not permitted to charge higher cost-sharing for skilled nursing facility care, chemotherapy, or renal dialysis than original Medicare.
Medicaid underwent several modifications due to the Patient Protection and Affordable Care Act. The increased eligibility for individuals with incomes up to 133% of the federal poverty level is arguably the topic that has received the most excellent attention. The Medicaid expansion was once necessary, but it became an option due to the June 2012 Supreme Court decision in the National Federation of Independent Business v. Sebelius. More than 75 percent of states have chosen to grow as of this point.
In addition to expanding Medicaid, the Affordable Care Act (ACA) made changes to the private insurance market, such as eliminating prior condition exclusions and creating yearly caps on out-of-pocket expenses, to increase the number of Americans with health insurance. The bill also mandated that most people obtain minimal needed coverage and permitted young persons to continue on their parent’s health plans until age 26.
Other elements of the ACA related to Medicaid and the State Children’s Health Insurance Program included a maintenance-of-effort requirement that forbade states from lowering eligibility below that which was in effect on the day the ACA was passed.
The clause applied to adults until 2014 and to children until 2019. The ACA also required some states to transition older children from separate programs into Medicaid by setting the minimum eligibility criteria for children at 133 percent of FPL. Before the ACA, conditions were required to provide Medicaid coverage for newborns and young children up to 133% of the federal poverty level (FPL) and children between the ages of 6 and 18 up to 100% of the FPL.
A single application must be submitted for Medicaid, CHIP, and subsidized exchange coverage, for example, as part of the ACA’s provisions to simplify eligibility, enrollment, and renewal procedures.
All states have seen an increase in Medicaid spending and enrollment due to these reforms, regardless of whether they extended coverage to non-disabled adults.
The role of government agencies, such as the Centers for Medicare and Medicaid Services (CMS), in regulating and administering Medicare and Medicaid
- The most extensive healthcare programs in the country, including Medicare, Medicaid, and CHIP, are managed by the CMS federal organization.
- In addition to producing research reports and working to eradicate instances of fraud and abuse within the healthcare system, it gathers and analyzes data.
- The organization seeks to improve the healthcare system’s quality of care, coverage options, and health.
The difficulties and disputes relating to Medicare and Medicaid
Hospitals, doctors, and other healthcare providers are paid by Medicare using several administered price mechanisms. Many of its practices have been widely imitated by private insurers and other nations, including diagnostic-related groups for hospital payments and the resource-based relative value scale (RBRVS) for physician payments. However, it is a constant struggle for Medicare to prevent its prices from adversely influencing the treatment its beneficiaries receive since providers adjust their services in response to how and how much Medicare pays (Newhouse, 2002b). Additionally, it is a constant struggle to avoid paying too much because Medicare typically cannot observe the equivalent of a market price.