What's the difference between Medicare and Medicaid? What to know as cuts pass Congress
President Donald Trump’s massive legislation package, which includes the largest cuts to Medicaid in history, heads to the White House for signature after House Republicans won a near party-line vote on July 3.
The so-called “One, Big Beautiful Bill,” spanning over 900 pages, cuts funding to several public safety net programs, which in part help pay for a continuation of 2017 tax cuts, along with other funding priorities for the administration, like increased immigration enforcement and and significant investments in the military and border security.
The largest cut is to Medicaid, which will pull roughly $1 trillion from the joint federal and state program over the next decade, according to recent estimates from the nonpartisan Congressional Budget Office. The Senate’s version of the bill could leave 11.8 million Americans uninsured by 2034, according to the report.
The final version of the reconciliation bill emerged after nearly four days of wrangling among Senate Republicans, with the expansive cuts to Medicaid, along with decreases in funding to Medicare, a leading source of contention among lawmakers before making it out of the upper chamber.
Overnight negotiations on the Senate’s version of the bill in the House temporarily threatened to derail passage before all but one Republican, Brian Fitzpatrick of Pennsylvania, voted to allow the bill onto the floor.
Republicans won final passage by a four-vote margin, with all Democratic members, as well as Fitzpatrick and Thomas Massie of Kentucky voting against it.
Trump is set to sign the bill into law on July 4 during a 5 p.m. ET ceremony at the White House, Press Secretary Karoline Leavitt said.
As the bill’s cuts to the two programs set to be signed into law, here’s what to know about the difference between Medicare and Medicaid.
What is Medicare?
Medicare is a federal health insurance program for people 65 or older, but also extends to some individuals under 65 with certain disabilities or medical conditions.
It was established alongside Medicaid on July 30, 1965 by President Lyndon B. Johnson, and has expanded eligibility over the decades. There are more than 68 million Americans enrolled in the program, according to the latest federal data collected in March, with over 90% of those covered over 65.
Original Medicare consists of two parts: Part A, which covers hospital insurance, and Part B, which pertains to medical insurance. The insurance covers most, but not all, costs for approved health care services and supplies, according to the U.S. Centers for Medicare and Medicaid Services, which administers the two programs. Most people are required to pay premiums, deductibles and copays while enrolled in Medicare.
After individuals in the Medicare program meet their deductibles, they then pay the remaining costs for care and services, if applicable. There’s no limit on out-of-pocket costs per year, so supplement plans, also known as “Medigap plans,” are often used to bridge the coverage. More than 81% are enrolled in the Medicare Part D plan to help offset prescription drug costs, according to federal data.
What is Medicaid?
While Medicare is a federal program that mainly serves seniors and people with disabilities, Medicaid is a state-administered program for members of other groups in need of health care and insurance assistance, and gets its funding from both federal and state governments. Those covered include low-income families, people who are pregnant and those with disabilities, and Americans needing long-term care.
States tailor their Medicaid programs, according to the U.S. Centers for Medicare and Medicaid Services, so there’s a wide variation in what is offered, depending on where individuals live, and each state has its own eligibility criteria. Medicaid offers benefits that Medicare doesn’t typically cover, the Department of Health and Human Services says, such as nursing home care and personal care services. Those with Medicaid usually don’t pay anything for covered medical expenses, according to the department, but may owe a small co-payment for some items or services.
This story has been updated with new information.
Contributing: Sarah Wire, Joey Garrison, James Powel Paste BN.
Kathryn Palmer is a national trending news reporter for Paste BN. You can reach her at kapalmer@usatoday.com and on X @KathrynPlmr.