Almost Half of Healthcare in the U.S. is Government-Backed. Is Your Insurance Secure?

Almost Half of Healthcare in the U.S. is Government-Backed. Is Your Insurance Secure?

Most Americans think their healthcare is private, but the reality is shocking: 91% of Americans receive some form of government-funded healthcare. Here's the lowdown on where those funds come from:

1. Medicare, the government-run healthcare program for individuals aged 65 and older, covers 67 million Americans at a yearly cost of over $1 trillion. Half of enrollees are covered through traditional fee-for-service, while the other half are in privately managed Medicare Advantage plans.
2. Medicaid and CHIP provide health coverage for around 80 million low-income and disabled Americans, including tens of millions of children. Despite privately managed care organizations handling 41 states' Medicaid programs, the cost remains public, with a total annual spending of $900 billion – the federal government covers 70%, while states shoulder the rest.
3. The online healthcare marketplace is for self-employed individuals and those without employer-provided medical coverage. This Affordable Care Act program offers federal subsidies to 92% of its 23 million enrollees, helping lower premium costs and out-of-pocket expenses. The Congressional Budget Office projects that a permanent extension of these subsidies (which end this year) would cost $383 billion over the next decade.
4. Veterans and military families benefit from government healthcare through TRICARE and VA Care, programs covering roughly 16 million individuals at a combined annual cost of $148 billion for the federal government.
5. Employer-sponsored health insurance comes with an often-overlooked government subsidy. For nearly 165 million American workers and their families, companies pay the majority of their health insurance premiums, exempt from taxes. This tax break, dating back to World War II, subsidizes workers at an annual government cost of approximately $300 billion.

So, 91% of Americans receive some form of healthcare assistance from the government. As lawmakers face mounting budget pressures, these subsidies – and your coverage – could be at risk. If government healthcare spending is scaled back, medical costs may skyrocket.

In February 2025, the federal budget deficit reached $307 billion, up 4% from the previous year and nearly 2.5 times January's deficit. Total federal spending surged to $603 billion, a 6% year-over-year increase, pushing the fiscal year-to-date deficit to $1.147 trillion – a staggering 38% higher than the previous year. With interest payments making up 12% of the federal budget and projected to rise sharply, most economists agree this trajectory is unsustainable. Lawmakers will need to rein in spending, and healthcare subsidies will likely be among the first targets.

However, simply cutting these subsidies doesn't eliminate the need for healthcare or reduce long-term costs. The solution is to address the root causes of high healthcare costs. Here are three ways to achieve this:

1. Address the obesity epidemic: Obesity contributes to diseases like diabetes, heart disease, stroke, and breast cancer, which collectively kill millions of Americans and cost the U.S. healthcare system hundreds of billions annually. Congress can take two immediate steps to reverse this crisis:
2. Tax high-calorie, highly processed foods and use the revenue to subsidize healthier options, making nutritious food more affordable for all Americans.
3. Cap the price of GLP-1 weight-loss medications to match prices in peer nations, ensuring these highly effective treatments are accessible.
4. Enhance chronic disease management with technology: Broad adoption of generative AI technology has the potential to reduce costs in every industry. Healthcare could do the same by applying generative AI to chronic disease management. This would enable real-time monitoring of patient health and identify when medications need adjustment, ultimately preventing costly and life-threatening complications.
5. Reform healthcare payment models: Under today's fee-for-service system, providers are paid based on the number of services provided. Instead, Congress should fund pilot programs and create financial incentives for insurers, doctors, and hospitals willing to transition to pay-for-value models like capitation, which incentivize providers to deliver high-quality care efficiently and prioritize prevention and effective chronic disease control.

Now is the time to speak up and demand a more affordable healthcare system that works for everyone.

1. Despite private management in some states, a significant portion of Medicaid's expenditure, totaling $70 billion yearly, is considered federal government spending, as the federal government covers 70% of Medicaid costs.
2. In light of the likely targeting of healthcare subsidies by lawmakers seeking to address escalating budget deficits, it is crucial to consider taxing high-calorie, highly processed foods to generate revenue for subsidizing healthier food options, contributing to the prioritization of affordable healthcare.
3. If the affordability of healthcare is a primary concern, prioritizing the reform of healthcare payment models, such as transitioning from fee-for-service to pay-for-value models, may help reduce long-term costs and provide a more sustainable healthcare system, making it more likely for Americans to afford coverage and remain insured.

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