In the United States, medical care is paid for by a mix of private insurance, government programs, and patients themselves. Private health insurance covers the largest share at 31% of all national health spending, followed by Medicare at 21%, Medicaid at 18%, and direct out-of-pocket payments from patients at 11%. The remaining share comes from other government programs, the military health system, and various smaller sources.
Private Insurance: The Largest Payer
Private health insurance accounted for $1.64 trillion in spending in 2024. Most Americans with private coverage get it through their job. For family plans, employers typically pay about 69% to 72% of the monthly premium, with employees covering the rest. That employer contribution is a major reason workplace insurance remains the most common form of coverage in the country.
If you don’t have access to employer coverage, you can buy an individual or family plan through the federal marketplace (healthcare.gov) or directly from an insurer. Marketplace plans follow rules that cap how much you can spend out of pocket each year: for 2025, the maximum is $9,200 for an individual and $18,400 for a family. In 2026, those caps rise to $10,600 and $21,200.
Medicare: Federal Coverage for Older Adults
Medicare is federal health insurance primarily for people 65 and older, though younger people with certain disabilities or conditions also qualify. It spent $1.12 trillion in 2024. The program is funded through two trust funds held by the U.S. Treasury, drawing money from payroll taxes (the Medicare tax on your paycheck), general federal revenue, and premiums paid by enrollees themselves. If you’re on Medicare, you still pay monthly premiums for medical and drug coverage, plus deductibles and coinsurance when you receive care.
One important gap: Medicare is not designed to cover long-term care like nursing homes or extended home health services. It covers short-term skilled nursing or rehabilitation after a hospital stay, but those benefits are limited in duration. This catches many families off guard.
Medicaid: Coverage for Lower Incomes
Medicaid is a joint federal and state program for people with limited income and resources, and it accounted for $932 billion in 2024 spending. Unlike Medicare, Medicaid usually costs the patient little or nothing for covered services, though some states charge small copayments for certain items.
Medicaid also serves as the primary payer for long-term care in the U.S., covering nursing home stays and home health services for eligible beneficiaries for as long as they qualify. For many older adults who exhaust their savings on care costs, Medicaid becomes the safety net that keeps paying.
What You Pay Out of Pocket
Even with insurance, Americans spent $557 billion out of pocket in 2024, or about 11% of all health spending. This includes copays, deductibles, coinsurance, and services your plan doesn’t cover (dental and vision care, for example, often fall outside standard medical insurance).
If you’re paying entirely out of pocket, either by choice or because you lack coverage, federal rules now require hospitals to post their prices publicly. Since January 2021, every hospital in the U.S. must publish a machine-readable file listing prices for all items and services, plus a consumer-friendly display of common “shoppable” services. This means you can compare prices across hospitals before scheduling a procedure, something that was nearly impossible a few years ago.
Protections Against Surprise Bills
Before 2022, a common financial shock was getting an enormous bill from an out-of-network doctor you didn’t choose, often an anesthesiologist or radiologist who happened to work at your in-network hospital. The No Surprises Act now restricts this practice. If you have a job-based or individual health plan, you’re protected from surprise billing for emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers. Your cost sharing for these services is based on in-network rates, and disputes over payment go through a federal resolution process between the insurer and provider, not through your wallet.
If You Don’t Have Insurance
About 27.1 million people in the U.S., or 8.2% of the population, had no health insurance in early 2024. The uninsured rate is heavily tied to income: among adults earning below the federal poverty level, 23.4% lacked coverage, compared to just 3.9% of those with higher incomes. Hispanic adults are uninsured at higher rates than Black adults, who in turn are uninsured at higher rates than White and Asian adults.
When uninsured people receive care they can’t pay for, hospitals absorb the cost as “uncompensated care.” Nationally, this averaged $42.4 billion per year in the 2015 to 2017 period. Hospitals don’t simply eat those losses. The bulk, roughly $33.6 billion in 2017, is offset through a complicated web of public funding from federal, state, and local governments. Ultimately, taxpayers help cover the cost of treating uninsured patients whether they realize it or not.
Financial Assistance at Hospitals
If you’re uninsured or underinsured, nonprofit hospitals are required by federal tax law to offer financial assistance. Under Section 501(r) of the tax code, every tax-exempt hospital must maintain a written financial assistance policy that covers all emergency and medically necessary care. These policies must spell out who qualifies, whether the assistance means free or discounted care, how to apply, and what the hospital can and cannot do to collect unpaid bills.
Hospitals must make this information easy to find: posted on their website, available in paper form for free, and displayed in emergency rooms and admissions areas. If you’re facing a large bill and your income is low or moderate, it’s worth asking the hospital’s billing department for a financial assistance application before assuming you owe the full amount. Many patients qualify for significant reductions or complete write-offs and never know to ask.