Medicare is a vital health insurance program if you’re an older adult or have a disability. When you turn 65, you become eligible for the original federal health care program or a privately run Medicare Advantage plan. You can also qualify for Medicare after you’ve received Social Security Disability Insurance (SSDI) for two years. While Medicare will pay for many of your medical costs, depending on your overall health, income, and personal savings, you may not have enough to afford all of your health-related expenses.
That’s where Medicaid comes in.
More than 12 million Medicare enrollees are also enrolled in Medicaid, a joint federal-state program. They rely on the program for help with their health care costs beyond what’s covered by their Medicare plan. Any cuts to Medicaid—including those being considered by Congress in current budget negotiations—would make it harder for millions of Americans to afford essential health care services.
Meet the “dual eligibles”
One in five—or 20 percent—of all Medicare enrollees also qualify for Medicaid based on their income and personal assets—a category sometimes referred to as dual eligibles. Medicaid helps dually eligible individuals pay for their Medicare premiums as well as medical benefits that aren’t covered by original Medicare, such as dental, hearing, and vision coverage, which can be costly.
Individuals with lifelong intellectual and developmental disabilities are also considered dually eligible for Medicare and Medicaid. So, too, are people under age 65 who had to leave the workforce prematurely because of a severe physical or mental impairment.
Beyond insurance premiums and certain medical expenses, Medicaid helps pay for other benefits that aren’t covered by Medicare. Most notably, Medicare-Medicaid enrollees can receive appropriate home and community-based services (HCBS) outside of an institutional setting.
Ultimately, Medicare reflects a health system designed to address acute care, not chronic care. And yet the reality is many people need assistance with chronic care so they can avoid having to move into an institutional setting or exhaust their financial resources.
Whether the care is provided at a facility, at home, or in the community, Medicaid is the largest payor for long-term care. And because people who rely on both Medicare and Medicaid can be found in every state and every congressional district in the country, the demand for long-term care is a nationwide reality, not a situation limited to a particular region.
A closer look at Medicaid services
Many of the long-term services and supports covered by Medicaid are required by federal law. Nursing home care is perhaps the best example of an essential service. Home and community-based services, on the other hand, vary from state to state and are considered optional services and supports. Some examples include personal care, behavioral health management, caregiver training, congregate meals, adult daycare, and nonmedical transportation.
It stands to reason that if federal funding is limited, states are compelled to decrease their optional services. Even so, although the word optional implies that something is extra and not essential, significant progress has been made over the past several decades, thanks to the impact of HCBS. Home and community-based services are consistent with what most older adults and adults with disabilities prefer—to receive care at home or in a home-like setting, instead of at an institution. Additionally, research has shown that it costs our health system far less for people to remain at home.
Dually eligible individuals: a snapshot
KFF, a nonpartisan health policy organization, offers this snapshot of dual eligibles based on data from 2020:
- 87% had an income of less than $20,000
- Almost 40% were under age 65 but qualified for Medicare because they had received 24 months of Social Security Disability Insurance payments
- Nearly half (49%) were people of color
- 44% were in fair or poor health compared to 17% of Medicare beneficiaries without Medicaid
- Nearly half (48%) had at least one limitation in their activities of daily living (ADLs), which include eating, bathing, and toileting
A matter of health equity
No one can predict exactly how the GOP-led Congress intends to cut costs to finalize the federal budget.
Whatever the restrictions end up being, Medicaid’s role as a safety net program could be substantially affected. With scaled-back federal funding, states would have to reallocate dollars to meet their own budgets. People who are enrolled in both Medicare and Medicaid could find themselves struggling to pay for essential medical services, including long-term care. This would disproportionately impact low-income people, make health outcomes worse, and increase the strain on our health care system. The ripple effects could be felt for generations to come. In fact, although eliminating access to services like HCBS may save money in the short term, it would cost the health system far more in the long run.
At the Health Foundation, we support an approach that provides quality care for every person who needs it. Ensuring access to that care is a matter of health equity. As Congress moves ahead with the budget reconciliation process, protecting people who are dually eligible for Medicare and Medicaid must be a priority—and that means keeping Medicaid funding levels intact.
