Government-sponsored healthcare coverage

The United States relies on a mixed healthcare system that combines both public and private elements.

As a result, healthcare coverage in the U.S. is not uniform, but instead made up of a patchwork of coverage options each with its own structure and benefits. The vast majority obtain insurance coverage through an employer. Some qualify for government-funded programs based on factors like age, income, or military service history, while others purchase insurance on their own or pay for services directly out-of-pocket.

Broadly, healthcare coverage in the United States can be summed up in three categories: private insurance, government-funded insurance, and self-pay.

Let's start with private health insurance, which plays a central role in the U.S. healthcare system, serving as the primary coverage option for most of the population. This type of coverage is offered by insurance companies and includes both employer-sponsored plans and plans that individuals purchase on their own.

Many people receive insurance through their employer, where the cost is often shared between the employer and the employee. Others, like freelancers, self-employed individuals, or those working jobs that do not offer benefits, may purchase insurance independently.

With private insurance, individuals typically pay a monthly premium, along with out-of-pocket costs such as deductibles, which refer to the first dollar costs before insurance begins to kick in, say the first 500 dollars; copayments, which are small user fees for accessing services, for example 25 dollars; and coinsurance, which is a percent of the costs, like 20 percent of the total cost.

On the flip side, there’s government-sponsored healthcare insurance. This type of coverage is funded by the government and is designed to support people who may have difficulty affording care or who meet specific eligibility criteria, such as age, disability status, income, or military service. Major government-sponsored programs in the U.S. include Medicare, Medicaid, the Veterans Health Administration, and the Indian Health Service.

Okay, let’s shift our focus to two of the largest government-sponsored programs in the United States: Medicare and Medicaid, starting with their history. On July 30, 1965, President Lyndon B. Johnson signed the Medicare and Medicaid Act, also known as the Social Security Amendments of 1965. This legislation established two major programs: Medicare, a federally funded program designed to provide health insurance for individuals aged 65 and older, and Medicaid, a joint federal and state program designed to provide coverage for individuals with limited income.

For Medicare, in most cases, eligibility begins when an individual turns 65, as long as they meet basic residency requirements, and them or their spouse paid Medicare taxes for at least 10 years. However, some individuals can qualify earlier, like those receiving long-term disability benefits, and individuals with conditions like end-stage renal disease or amyotrophic lateral sclerosis.

Medicare is divided into four parts: A, B, C, and D.

Part A covers inpatient care, including hospital stays and skilled nursing facility care; hospice services; and some home health care.

Part B focuses on clinician payment and outpatient care. It covers the hospital physician and things such as clinic visits, preventive services, and medical equipment, like wheelchairs and walkers. Together, Parts A and B are often referred to as the Original Medicare.

Some patients choose to receive their coverage through Part C, also known as Medicare Advantage. These are private plans that combine Parts A and B and often include additional benefits, such as dental, vision, hearing, and fitness programs.

Finally, Part D, or drug coverage, helps cover the cost of prescription medications, including many vaccines.

Now let’s look at a case that highlights how different parts of Medicare work together. Mr. Thompson is a 67-year-old retired individual who recently enrolled in Medicare. After a fall at home, he was admitted to the hospital for a hip replacement.

The hospital coordinator explains: “Medicare Part A will cover your hospital stay, including the surgery and inpatient care.”

After discharge, Mr. Thompson follows up with his primary care clinician and begins physical therapy. At this point, Medicare Part B covers these outpatient visits and rehabilitation services. By the way, it was Part B that also covered the hospitalist who cared for Mr. Thompson during his hospital stay.

As part of his recovery, Mr. Thompson is prescribed medications for pain and bone health.

The pharmacist reviews his prescriptions and explains: “Medicare Part D can help cover these medications.”

Now, let’s take a closer look at Medicaid. When it first started, it mainly provided health insurance coverage to individuals who were already receiving government financial assistance. Over time, it expanded to include additional populations.