Medicare and Medicaid

In the United States, Medicare is the program that supports people over age 65 with medical care. It also provides support for persons with certain disabilities and people of all ages who have kidney failure. Medicaid is a state-administered program that provides medical support for a broad range of people. However, each state administers Medicaid individually, and this creates inconsistencies in the program across the country. There are specific rules for judging just how much money someone receiving Medicaid can make and be eligible. In addition, there are separate rules for people in nursing homes and children with disabilities who live at home. There is a long list of regulations that explain who is eligible for which services. The Patient Protection and Affordable Care Act of 2012 (also known as the Affordable Care Act and “Obamacare”) included various changes to Medicare and Medicaid—including changes to eligibility, payments, and enrollment.

Keywords Americans with Disabilities Act (ADA); Baby Boomers; Contractors; Fraud; Lobbyists; Medicare; Medicaid; Providers; Socialized Medicine; Upcoding

Medicare & Medicaid

Overview

Medicaid and Medicare are two of the most enduring social programs in United States history, providing different services to different groups of people. The eligibility rules for Medicaid have been criticized as confusing. Medicaid is a state-administered program, and its rules vary across states. That can present a significant problem to someone enrolled in Medicaid who moves across state lines. The 2012 Patient Protection and Affordable Health Care Act (ACA) included some changes in Medicaid enrollment procedures that saw its expansion in terms of the number of those receiving services. By March 2020, 71.6 million people received Medicaid or CHIP benefits. This number also saw an increase following the COVID-19 pandemic (MACPAC, 2021).

President Lyndon Johnson was responsible for the creation of Medicare and Medicaid in 1965 (Berkowitz, 2008). Since then, both programs have undergone a variety of changes. The passage of the ACA in March 2013 followed decades of debate over healthcare reform in the United States at all levels of government. ACA supporters believed the legislation would go a long way to address the millions of Americans without health insurance coverage.

Understanding Medicare

The push to create a national health plan began almost a century ago. In the beginning, Medicare was thought of as a "sickness insurance program." There were concerns that large segments of the population, especially laborers, could not afford to pay their medical bills. While Medicare was in its planning stages, the American Medical Association (AMA) opposed a national plan from the start. "The AMA, in common with many Americans, thought of medical care as largely a private transaction between a medical practitioner and a patient. There was no need for the State to intervene in this relationship" (Berkowitz, 2008, p. 82). It was not until President John F. Kennedy began the push for a national healthcare plan in 1961 that Medicare received significant political support (Berkowitz, 2008). However, the bill introducing Medicare was defeated in 1962. Many legislators felt the initiative lacked support in the private sector. According to Berkowitz, New York Senator Jacob Javits was one of those politicians who continually lobbied for the private sector to be given continued consideration in new healthcare legislation.

Important to Javits's proposals and to other alternatives offered at the time was the notion of choice. Representative John Lindsay (R-NY) proposed that consumers be given a fundamental choice. They could either accept government health insurance, to be run by the states, or a private health care plan. If they chose the private health plan, they would receive an increase in their social security benefits (Berkowitz, 2008, p. 86).

The modern iteration of Medicare is far more complicated than it was in its original form. There are four sections to Medicare: A, B, C, and D. Sequentially, they cover:

• Hospital insurance,

• Medical insurance,

• Advantage plans

• Prescription drug coverage.

According to Leavitt & Weems, the federal government describes Medicare Advantage Plans as follows:

Medicare Advantage Plans are health plan options (like HMOs and PPOs) approved by Medicare and run by private companies. These plans are part of the Medicare Program and are sometimes called "Part C" or "MA plans." Medicare pays an amount for your care every month to these private health plans. Medicare Advantage Plans must follow rules set by Medicare. Medicare Advantage Plans aren't supplemental insurance (Leavitt & Weems, 2008, p. 38).

Throughout the late twentieth and early twenty-first century, the Medicare program continued to provide the health insurance required by seniors and persons with disabilities while at the same time trying to contain costs. However, high demand and market competition helped cause private and public healthcare costs in the United States to surge.

In 2003, Part D of Medicare was instituted. Part D, Medicare’s prescription drug plan, had been in the planning stages for almost four decades (Berkowitz, 2008).

Understanding Medicaid

Medicaid was developed almost simultaneously with Medicare. In the 1950s, the federal government created a welfare category for people who were poor and a category for those with permanent disabilities. Like Medicare, Medicaid became law in 1965. However, it was initially only a supplemental program. It later developed into a far more significant health insurance program (Berkowitz, 2008). By 2002, all states mandated that families who were under the Federal Poverty Line (FPL) with children under the age of 19 were eligible for Medicaid (Rowland, 2006).

Since its inception, many states have chosen to provide services under Medicaid that go beyond federal guidelines. This choice has led to the expansion of Medicaid and its increased importance in the healthcare field: "These expansions, coupled with the enactment of welfare reform in 1996 that replaced the AFDC program, transformed Medicaid to a broad-based health insurance coverage program for low-income children" (Rowland, 2006, p. 65).

Historically, Medicaid has been a program that provides health insurance coverage for people who live on low incomes. In 1997, the federal government expanded Medicaid by creating the State Children's Health Insurance Program (SCHIP). This allows states to receive federal money in order to expand Medicaid (if they wish to do so) or to create a separate fund for uninsured children whose families are ineligible for Medicaid because their income exceeds the limit for Medicaid (Rowland, 2006).

Medicaid also provides healthcare for pregnant women who live on low incomes. They assist with pre-and postnatal care and delivery. "Reducing financial barriers to accessing necessary health services has been integral to Medicaid's role as the source of health coverage for the low-income population" (Rowland, 2006, p. 67).

Further Insights

Abuses of Medicare & Medicaid

Both Medicare and Medicaid have been fraught with difficulties since their inception. In 2006, the government unveiled new initiatives to control abuse and waste in both programs (Scott & Tabuena, 2006).

Extensive research has been conducted into issues of fraud in the Medicare program. The program involves hundreds of millions of dollars and millions of people. According to Berek & Shetterly, "Medicare is an attractive target for other reasons besides its size; for example, it pays higher-than-market rates for some services. Another major problem is the limited administrative capacity to prevent fraud" (1996, p. 113). These authors also state that approximately 10 percent of all Medicare funding is lost to waste, fraud, and abuse.

Becker, Kessler, and McClellan (2005) suggested that there was definitely 'anecdotal' evidence to support concerns over fraud in both Medicare and Medicaid. They listed some of the ways that patients and providers could defraud the system; billing for treatments that never took place, billing for services by an individual when it should be as a group billing; and (one of the more insidious) changing the person's actual illness to something far more complicated and serious which warrants a higher billing. Some call this 'upcoding.' One of the primary issues in the field of researching abuse was the need for hard evidence. In the case of Medicare and Medicaid, researchers needed to obtain the data from audits and other official files. This presented a major barrier to documenting the actual fraud and/or abuse. After all, these were government programs that were intended to help people. Research determined that more enforcement measures were necessary in order to both prevent and investigate fraud and abuse with Medicare and Medicaid (Becker, Kessler & McClellan, 2005). Berek and Shetterly (1996) agreed with this conclusion and suggested that even though some providers were honest, there would always be those who were not: "We need to put in enough safeguards to catch the crooks without harassing the honest providers or slowing down the payment system" (p. 117).

One of the problems that was been pointed out was that often contractors and doctors did not know what the other was doing. The doctor would bill for one amount, and the contractor would bill for another. However, neither one saw the other's invoices (Berek & Shetterly, 1996). These same researchers did not see a positive future either. Even when all these auditing/invoicing systems were unified, fraud could still take place. "Right now fraud is due to overutilization or fake utilization. With managed care, the problems are underutilization and false enrollment practices. They are different problems" (Berek & Shetterly, 1996, p. 119).

In 2023, the Navajo Nation Commission on Emergency Management issued an emergency declaration due to an Arizona Medicaid scam. Law enforcement officials with the tribe made contact with more than 270 Native Americans living on the streets of Phoenix when the sober living homes where they lived were targeted by the state in an investigation of fraudulent billing. Arizona officials were then investigating other organizations allegedly billing for unnecessary or inappropriate services or services that were never provided.

People with Disabilities & Medicaid

One of the primary issues facing people with disabilities is that they receive money under the same program as senior citizens. However, seniors are often in need of extensive medical services; they often face chronic health problems, physiological and psychological. They also deal with end-of-life issues, and often, their needs overshadow those of people with disabilities. Another issue is that the lives of people with disabilities have substantially changed in the last few decades. New technologies and surgical techniques enable people with disabilities to live longer and survive injuries and accidents that were previously devastating. As little as thirty or forty years ago, a person who was a paraplegic would have little to no chance of employment. That is no longer the case. With the advent of the ADA (Americans with Disabilities Act), people with disabilities must receive equal opportunities in the workplace. That means that a person who is a paraplegic or quadriplegic has an opportunity for work if they can meet the job requirements.

Still, there are people with disabilities without jobs and health insurance who must rely on Medicaid. This puts them, to some degree, in competition for the funds allocated for a very large portion of the population:

Aside from their age, disabled workers differ from older beneficiaries in a number of important ways… studies reveal a heterogeneous population that has a disproportionate number of high use, high benefit cost Medicare recipients. Poor health, low incomes, and lack of access to affordable supplemental coverage make this group particularly vulnerable to program limitations and policy changes (Kennedy & Tuleu, 2007, p. 273).

Many people acquire a disability as a result of an injury in the workplace. In addition to the physical trauma and limitations that may result, many injured workers find it difficult to complete rehabilitation and return to work. They also end up coping with issues such as anxiety or depression and are far more likely to deal with psychiatric issues than seniors (Kennedy & Tuleu, 2007).

An area of disability and Medicaid that requires far more exploration and research is the issue of children who need support through this program. Again, it is worth noting that such a large pool of people to serve creates administrative and financial problems for Medicaid. Children with disabilities (especially children with multiple disabilities) often require a broad range of services, including physical therapy, surgery and ongoing treatments, and adaptive technologies. Even though Medicare is obviously trying to provide the wide range of services a child with disabilities might need, a study in N.Y. state at the beginning of the twenty-first century indicated that not all children's needs were being met. "In the survey sample, the parents of 30 percent of children with physical and mental disabilities report that their child did not get all the care they believed was needed in the past year" (Long & Coughlin, 2005, p. 96).

This state-based research suggests implications for Medicaid. One of the most serious problems reported was finding a doctor who would take Medicaid.

Getting providers to participate in Medicaid has been a longstanding problem for the Medicaid Program. Expanding the network of providers and/or improving the accessibility of the existing network of providers could potentially solve many of the access problems and general dissatisfaction with the healthcare system reported by survey respondents (Long & Coughlin, 2005, p. 101). Changes and reforms in the Medicaid system throughout the 2010s looked to address the issue of physician acceptance. While studies found that Medicaid recipients still received better care than those who were uninsured, issues remained. Doctors reported lower payments when compared to those of the Medicare system. The expansion of Medicaid between 2013 and 2018 causes a surge in Medicaid enrollment, taxing a system that was already fraught with difficulties in finding a provider. Finally, though some states turned to managed care programs to help increase the standard of Medicaid care, this did not lure additional providers into accepting Medicaid patients (Holgash & Heberlein, 2019).

Viewpoints

Political Affiliations & Health Care

Both Medicare and Medicaid reflect the growing breach in America's efforts to provide affordable healthcare for everyone. The passage of ACA in March 2010 was intended to address this breach. On the liberal side of the debate, there was concern about the lack of affordable healthcare as far too many people were left out of the loop— millions of Americans had no healthcare whatsoever. On the conservative side of the debate, the view was that the government should have a very limited role in healthcare as it primarily belonged to the private sector. Throughout the late twentieth century, Democrats consistently lobbied for healthcare reform and sought a larger role for government while Republicans opposed a larger role for government and sought to contain costs. Every Republican legislator in the House and Senate voted against the passage of the ACA in 2010. The ACA became law after receiving the support of 219 Democratic House members and 58 Democratic senators. Following its passage into law, many Republican officials nationwide worked to delay its implementation. Moreover, a series of legal challenges seeking to overturn the law were mounted by its critics. In June 2012, the United States Supreme Court upheld the ACA’s individual health insurance mandate, which required that Americans sign up for a health insurance policy. However, the court also ruled that states could elect to opt out of the expansions to Medicaid included in the ACA. Following the ruling, several states with Republican-led legislators voted to reject the expansion of Medicaid in their jurisdiction. The ACA survived further challenges during the Trump administration in the early 2020s as well. During his time as president, Trump attempted what many saw as a sabotage of the ACA and its progress. Tactics included reduced opportunities for enrollment, the reduction of subsidies to participating insurance companies, and efforts to purposely decline enrollment (Kamarck, 2020). The ACA, however, recovered with the Biden-Harris administration, which saw record enrollment in 2023.

The Affordable Health Care Act & Medicare

Various elements of Medicare have been expanded under the ACA. This included the addition of preventative services (such as colonoscopies) and annual health check-ups. In addition, provisions of the ACA aimed to lower the cost of prescription drugs. The ACA also included provisions aimed at eliminating waste, fraud, and abuse. Changes continued to be made to Medicare in 2023, and these included an increase in the importance of behavioral health, lower prescription drug costs, and the expansion of telehealth services that became popular during the COVID-19 pandemic (Bunis, 2023).

Conclusion

The signing into law of the ACA in March 2010 was the culmination of a politically fraught process of negotiation and debate. The exceedingly partisan climate surrounding the passage of the ACA and the subsequent Supreme Court case considering the constitutionality of its coverage mandate, served to intensify the divide between its critics and supporters. A variety of conservative advocacy groups remain staunchly opposed to the ACA’s implementation. Controversy over the law’s implementation was further stoked in October 2013, when online exchanges were scheduled to begin conducting the purchase of health insurance for citizens nationwide. Problems with the website’s design caused led to widespread system failures, allowing approximately 100,000 people to enroll in a health plan as of mid-November. Although President Obama and members of his administration issue public apologies for the website’s failures, critics cited the website malfunctioning as further evidence of larger systemic problems with the ACA. The execution of the provisions included under the ACA is likely to remain politically charged. Nevertheless, the law included a 12-year extension of the life of the Medicare Trust fund, which ensured that Medicare would remain a central component of the American healthcare infrastructure until at least 2029.

Terms & Concepts

Americans with Disabilities Act: This piece of legislation was enacted by President George H. W. Bush (Sr.) in 1990 to enshrine the rights of people with physical, neurological, and psychiatric disabilities under the law.

Baby Boomers: The children born post WWII, generally considered to be during the years 1946-1964, when the number of U.S. births spiked.

Contractors: The private companies which work with the providers to offer fee for service treatment and health care technologies and devices.

Fraud: When a person or persons use deception for personal, usually financial gain.

Lobbyists: Professionals hired by specific interest groups to influence legislators in the voting process.

Medicare: Often described as a social insurance program that is run by the federal government for health care services to people 65 and over and others who meet a specific set of criteria.

Medicaid: The state-administered program that provides medical support for a broad range of people.

Patient Protection and Affordable Care Act Also known as “Obamacare,” this is a federal law established in March 2010 delineating major reform measures for healthcare in the United States, including changes and additions to Medicare and Medicaid.

Providers: The healthcare professionals who provide the services - doctors, hospitals, therapists, surgeons, etc.

Socialized Medicine: Sometimes referred to as universal healthcare. Countries such as Canada and the U.K. are two of the most famous proponents of this form of healthcare, which allows the government to fund and control the system of health care throughout the country.

Upcoding: A form of fraud in Medicare and Medicaid where the biller (in this case, the provider) indicates that the patient has a far more serious illness than they do which means they are higher up on the coding list, and the provider can bill for more money from the system.

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Suggested Reading

Jesilow, P., Geis, G. & Pontell, H. N. (1993). Presrciption for profit: How doctors defraud Medicaid. Perris, CA : Experienced Books, LLC.

Leonard, V.R. (2008). The social security and medicare handbook: What you need to know explained simply. Ocala, Florida: Atlantic Publishing Co.

Mayes, R., & Berenson, R.A. (2006). Medicare prospective payment and the shaping of U.S. health care. Baltimore, Maryland: JHU Press.

Smith, D.G. (2002). Entitlement politics: Medicare and Medicaid, 1995-2001. Berlin, Germany: Aldine De Gruyter.

Ramanathan, T. (2014). Legal mechanisms supporting accountable care principles. American Journal of Public Health, 104, 2048–2051. Retrieved January 8, 2015, from EBSCO Online Database SocINDEX with Full Text.