Medicaid’s Role for Medicare Beneficiaries

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Medicaid’s Role for Medicare Beneficiaries

Figure 2: Health and functioning of Medicare beneficiaries who receive Medicaid compared to other Medicare beneficiaries

Key Takeaways
 This brief describes the role that Medicaid plays for 10 million Medicare beneficiaries to help inform upcoming debates about proposals to restructure Medicaid financing in ways that could reduce federal funding.What is Medicaid’s Role for Medicare Beneficiaries?

  • Medicaid covers needed services that Medicare does not, such as long-term care in nursing homes and the community.  Medicaid also helps make Medicare affordable by covering Medicare premiums and/or cost-sharing, which can be high for people with low incomes.

Who are the Medicare Beneficiaries Who Receive Medicaid?

  • Nearly three in four Medicare beneficiaries who receive Medicaid have three or more chronic conditions, such as diabetes or heart disease, which can require regular doctor appointments, medication, and/or medical tests.
  • Over 60% of Medicare beneficiaries who receive Medicaid need help with daily self-care activities, such as eating, bathing, or dressing, which are important for independent living.
  • Nearly six in 10 Medicare beneficiaries who receive Medicaid have a cognitive or mental impairment, such as dementia, which can create the need for supports to live safely at home.

How Much Does Medicaid Spend on Medicare Beneficiaries? 

  • Medicare beneficiaries account for 14% of Medicaid enrollment but 36% of Medicaid spending, as a result of their more intensive health needs and service use compared to other Medicaid beneficiaries.
  • Nearly three-quarters of states devote more than 30% of their total Medicaid spending to Medicare beneficiaries, and spending for Medicare beneficiaries comprises more than 45% of Medicaid budgets in six states.

Looking Ahead

Because Medicaid spending for Medicare beneficiaries is disproportionate to their enrollment, policy changes that lead states to limit per enrollee Medicaid spending or cut costly services could especially affect these beneficiaries.  Medicare beneficiaries who receive Medicaid are poorer than other Medicare beneficiaries, and many have intensive medical and long-term care needs as a result of old age, disability, and chronic illness.  Medicare beneficiaries rely on Medicaid to cover expensive but necessary services, especially long-term care in the community and nursing homes, that are generally not available through Medicare or private insurance.  They also depend on Medicaid to make Medicare affordable because Medicare’s out-of-pocket costs can be high for those with low incomes.  In addition, because the share of state Medicaid budgets devoted to Medicare beneficiaries varies by state, any changes that limit federal Medicaid financing will impact individual states differently. Because changes to Medicaid’s financing structure could have significant consequences for enrollees and states, the potential implications warrant careful consideration for their impact on Medicare beneficiaries.

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