Healthcare in the United States (US) is delivered through a combination of private providers and public programs. The US is the only high‑income country without universal healthcare, and coverage varies widely by income, employment, age, and state.
Strengths and Weaknesses of the System
The US healthcare system is one of the most expensive & complex globally, with significant strengths in innovation but persistent challenges in equity, affordability, and outcomes. It features world‑leading medical research & innovation, including rapid development of new drugs and technologies, and high-quality tertiary care and a strong specialist workforce.
But coverage is incomplete, as about 10% of adults are uninsured. Health outcomes are poor relative to other wealthy nations, including higher infant mortality and lower life expectancy. And there are large disparities by race, income, and geography. The system has a high financial burden even for insured individuals, due to deductibles & copays.
Private insurance
Healthcare coverage comes from a variety of providers. Employer-sponsored insurance is the most common form of coverage. Nearly half of all Americans receive health coverage through their jobs. Employees typically pay a monthly premium deducted from their paychecks, while the employer covers the remainder.
Individuals can also purchase health insurance plans directly or through the Health Insurance Marketplace created by the Affordable Care Act (ACA). This allows individuals who do not have employer or government coverage to buy private insurance. Tax credits & subsidies are frequently available to lower premium costs.
Medicare
Medicare is a federal program that provides health insurance for people age 65 or older and younger people with certain disabilities. It started in 1965 under the Social Security Administration and is now administered by the Centers for Medicare & Medicaid Services. In 2022, it provided health insurance for over 65 million people.
Medicare is divided into four parts. Part A covers hospital, skilled nursing, & hospice care, while Part B covers outpatient services. Part C is an alternative that allows patients to choose private plans with different benefit structures that provide the same services as Parts A & B. Part D is for self-administered prescription drugs.
Medicare covers about half of the healthcare expenses of those enrolled. Beneficiaries typically have other healthcare-related costs, including deductibles & co-pays, the costs of long-term care (which are not covered by Medicare), and the costs resulting from Medicare’s lifetime & per-incident limits. Enrollees cover these costs by taking supplemental private insurance and enrolling in a Part D prescription drug plan.
Contributions vs Benefits
In 2013, the Urban Institute published a report that analyzed the amounts that various households contributed to the Medicare program over their lifetimes, and how much someone living to the statistically expected age would expect to receive in benefits.
It found differing amounts for the different scenarios, but even the group with the “worst” return on their Medicare taxes would have concluded their working years with $158,000 in contributions & growth (assuming annual growth equal to inflation plus 2%) but would receive $385,000 in benefits (both numbers are in 2013 inflation adjusted dollars). Overall, the groups paid into the system 13-41% of what they were expected to receive.
Medicaid
Medicaid is a federal/state program that provides health insurance for adults & children with limited income & resources. It is partially funded and primarily managed by state governments, which also have wide latitude in determining eligibility & benefits, but the federal government sets baseline standards for state programs and provides a significant portion of their funding. States are not required to participate in the program, although all have since 1982.
Medicaid was established in 1965 and was significantly expanded by the ACA in 2010. In most states, any member of a household with income up to 138% of the federal poverty line qualifies for Medicaid coverage.
Medicaid is the largest source of funding of health-related services for people in the US with low incomes, providing taxpayer-funded health insurance to 85 million low-income & disabled people in 2022. Medicaid recipients must be US citizens or qualified non-citizens, and may include low-income adults, their children, and people with certain disabilities.
Medicaid also covers long-term services & supports, including both nursing home care and home- and community-based services. Of the 7.7 million Americans who used long-term services & supports in 2020, about 5.6 million were covered by Medicaid.
Children’s Healthcare Insurance Program
The Children’s Healthcare Insurance Program (CHIP) is a federal program administered by the states that provides low-cost coverage for children in families that earn too much to qualify for Medicaid but too little to afford private insurance.
Department of Veterans Affairs
The Department of Veterans Affairs (VA) is a cabinet-level department of the federal government charged with providing lifelong healthcare services to eligible military veterans at the 170 VA medical centers & outpatient clinics throughout the country. It was established in 1930 as the Veterans’ Administration. In 1989, the Veterans’ Administration became the cabinet-level Department of Veterans Affairs.
The VA also provides non-healthcare benefits, including disability compensation, vocational rehabilitation, education assistance, home loans, & life insurance. And it provides burial & memorial benefits to eligible veterans & family members at 135 national cemeteries.
