About 9 million people qualify for both Medicaid and Medicare. These people make up only 15 percent of the Medicaid program but account for 39 percent of all Medicaid spending.

Medicaid also plays an important role in the partnership between government and private entities to provide medical care. The program is the primary payer for about two-thirds of nursing home residents, and covers in-home services such as visiting nurses and home health aides, which allow many older adults to stay in their own homes longer.

"About 30 percent of those turning age 65 will have [long-term service and support] costs that exceed their ability to pay and will at some point need Medicaid assistance," AARP said in a letter to Congress last year.

Two issues are bubbling up around Medicaid. First is the program's expansion in 2014 under President Obama's health care law. Residents making up to 138 percent of the poverty threshold, or about $15,400 a year, would qualify for the program. The federal government would pay fully for the first three years of the expansion, and gradually reduce its share to 90 percent after that. The rest would be picked up by the states. Many states are pondering whether to accept the deal.

Second, some in Washington are considering decreasing spending, while others would cap Medicaid spending on a per-capita basis.

Ariel Gonzalez, AARP's director of federal health and family advocacy, says making piecemeal cuts is not the way to go. "Medicaid is just one cog in the entire machine we call the health care system," he says. "Simply reducing government expenditures by lowering costs [in Medicaid and Medicare] simply shifts costs to other payers and leads to the loss of needed care."