Medicare and Medicaid are U.S. governmental health insurance programs administered by the Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration. Both programs were signed into law on July 30, 1965, by President Lyndon B. Johnson. Medicare is a federal health insurance program for people age 65 and older, people with certain disabilities, and people with end-stage renal disease (ESRD), and has two principal parts (not including the prescription drug element begun in 2006). Medicare Part A is hospital insurance, which most Americans automatically become eligible for on their sixty-fifth birthday. Coverage under Part A does not require the payment of premiums, although there are deductible and coinsurance payments. Medicare Part B is optional medical insurance, primarily for outpatient care and doctor's services, and requires payment of monthly premiums. However, 95 percent of those eligible for Part B choose to participate. Medicaid is a state-administered health insurance program, primarily for people who are low income and for those with disabilities, that is partially financed by the federal government. Eligibility and benefits for Medicaid differ by state.

Most of the data sets discussed in this chapter contain primarily administrative data, most often evidence of medical claims paid by either the Medicaid or the Medicare system. Particularly in the case of Medicaid, therefore, researchers must be cautious about interpreting data in these files as representing the total health care needs or utilization of persons enrolled in either system because evidence of any care not paid for through the Medicaid or Medicare system would not be included in these data.