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Medicaid vs. Medicare: Who They Serve and How They Differ

Medicare is a federal program that provides health insurance for:

• People aged 65 and older
• Younger individuals with qualifying disabilities
• People with end-stage renal disease (ESRD) or ALS

Medicare is available regardless of income, but out-of-pocket costs and coverage limitations still create barriers to care for lower-income seniors.

Medicaid is a lifeline for low-income Americans jointly funded by federal and state governments, which means:

• Eligibility and benefits vary by state, creating inconsistent access nationwide.
• Many low-income adults, pregnant women, and children depend on Medicaid for essential care.
• Reimbursement rates are lower than Medicare or private insurance, discouraging doctors from accepting Medicaid patients.

These differences contribute to unequal healthcare access, provider shortages, and gaps in essential services for Medicaid beneficiaries.

Key Policy Decisions That Drive Health Disparities

Medicaid Expansion: The Coverage Gap That Leaves Millions Without Care

Under the Affordable Care Act (ACA), states were given the option to expand Medicaid eligibility to include more low-income adults. However, not all states participated.

• As of today, 10 states have refused Medicaid expansion, leaving millions of low-income individuals without coverage.
• People in non-expansion states fall into a “coverage gap”—they earn too much to qualify for Medicaid but too little to afford private insurance.
• Studies show that states that expanded Medicaid saw lower rates of chronic disease, higher rates of preventive care, and reduced medical bankruptcies.

Without nationwide Medicaid expansion, health disparities between states will continue to widen.

Low Medicaid Reimbursement Rates Reduce Provider Participation

One of the biggest barriers for Medicaid patients is finding a doctor who accepts their insurance.

• Medicaid pays doctors significantly less than Medicare or private insurance for the same procedures.
• Many specialists, including mental health providers, OB-GYNs, and surgeons, refuse to accept Medicaid due to low payments.
• This results in longer wait times, fewer treatment options, and worsening health outcomes for Medicaid patients.

Without increased reimbursement rates, Medicaid will remain an underutilized but underfunded program, leaving patients without the care they need.

Medicare’s Cost-Sharing Structure Burdens Low-Income Seniors

Medicare covers essential services, but it still requires beneficiaries to pay premiums, deductibles, and co-pays.

• Many seniors struggle to afford these costs, leading them to delay care or forgo treatment.
• Medicare Advantage plans, which provide extra benefits, often limit provider choices and impose high out-of-pocket expenses.
• Lower-income Medicare enrollees must rely on state Medicaid programs for additional support, but eligibility restrictions vary widely.

Without policies to reduce financial barriers, Medicare will continue to leave behind seniors who need care the most.

The Public Health Impact of Medicaid & Medicare Policies

When Medicaid and Medicare policies fail to meet the needs of the population, the effects are felt across the entire healthcare system. One major consequence is the increased reliance on emergency rooms for routine medical care. Many low-income patients struggle to access primary care due to a lack of providers accepting Medicaid, forcing them to seek treatment in emergency departments, which drives up healthcare costs and places additional strain on hospital resources.

Limited access to specialists and necessary medications also results in the poor management of chronic conditions like diabetes, heart disease, and mental illness. Without early intervention and continuous care, these conditions often worsen, leading to higher mortality rates among Medicaid and Medicare beneficiaries.

Mental health disparities are another significant issue, as Medicaid covers more than a quarter of all U.S. mental health services. However, because reimbursement rates are often too low, fewer psychiatrists and therapists accept Medicaid patients, leaving millions without access to essential care. This shortage exacerbates mental health crises and increases hospitalization rates.

Additionally, racial and ethnic disparities in healthcare are deepened by Medicaid’s underfunding. Black, Latino, and Indigenous populations rely more heavily on Medicaid, yet they often face reduced provider options, lower-quality care, and greater medical debt due to systemic inequities in healthcare funding and accessibility.

Without meaningful policy reforms—such as expanding Medicaid access, increasing provider reimbursement rates, and improving mental health coverage—these disparities will persist, disproportionately harming communities that already face significant barriers to care.

Solutions: What Needs to Change?

Expand Medicaid Nationwide

Universal Medicaid expansion would close coverage gaps and improve access to preventive care, reducing long-term healthcare costs.

Increase Medicaid Reimbursement Rates

Raising reimbursement rates would encourage more doctors and specialists to accept Medicaid patients, improving healthcare access.

Strengthen Medicare Affordability Programs

Reducing co-pays, deductibles, and out-of-pocket expenses would prevent seniors from forgoing necessary care due to financial constraints.

Integrate Behavioral Health Services into Medicaid & Medicare

Expanding mental health and addiction treatment coverage would address one of the most critical gaps in U.S. healthcare policy.

Healthcare Access Should Not Be Determined by Policy Gaps

must take action now to ensure that Medicaid and Medicare fulfill their promise of providing equitable, affordable, and comprehensive healthcare for all.

Medicaid and Medicare are meant to protect the most vulnerable populations, yet funding decisions, state-by-state disparities, and reimbursement gaps have turned them into an uneven safety net.

Fixing these issues isn’t just about cost—it’s about ensuring that every American, regardless of income, race, or location, has access to the care they need to live a healthy life.
If healthcare is truly a right, policy must reflect that reality.

Determinants of Health: Access to Healthcare, Socioeconomics, Public Services, Ethnicity, Medical Providers