Medicare and Medicaid together cover roughly 145 million Americans, making them the backbone of the U.S. healthcare system. These two programs prevent millions of deaths, keep people out of poverty, fund the majority of long-term care in the country, and help rural hospitals stay open. Understanding why they matter starts with understanding how deeply woven they are into nearly every aspect of American health and economic life.
The Scale of Coverage
Medicare covers most Americans 65 and older, plus younger people with certain disabilities. Medicaid and the Children’s Health Insurance Program (CHIP) covered about 76 million people as of November 2025, with nearly 69 million in Medicaid alone and over 7 million children in CHIP. Add Medicare’s roughly 67 million enrollees, and these programs insure more than four in ten Americans. No private insurer comes close to that reach.
This isn’t just about numbers. Medicare and Medicaid serve the populations most likely to face serious health problems and least able to afford care on their own: older adults, children in low-income families, people with disabilities, and pregnant women. Without these programs, tens of millions of people would have no realistic path to health coverage.
They Directly Reduce Deaths
Research from the University of Chicago found that recent Medicaid expansions reduced mortality by 2.5% among low-income adults. People who actually enrolled experienced a 21% reduction in their risk of dying. Between 2010 and 2022, Medicaid expansion saved an estimated 27,400 lives, and researchers calculated that an additional 12,800 deaths could have been prevented if all states had expanded the program.
The same research estimated that 5 to 20% of the mortality gap between low-income and high-income Americans can be traced to differences in health insurance coverage. That gap narrows when people gain access to Medicaid. Insurance lets people catch diseases earlier, manage chronic conditions, and get treatment before emergencies become fatal.
Two of the Strongest Anti-Poverty Programs
Health costs are one of the fastest routes to financial ruin, especially for older adults and families with low incomes. When the Census Bureau measured poverty using a method that accounts for healthcare as a basic need and insurance as a resource, the results were striking: Medicare lifted 21.8 million people above the poverty line in 2024, and Medicaid lifted 15 million. Only Social Security had a larger anti-poverty effect.
This matters because medical debt and unaffordable care don’t just affect bank accounts. They force people to skip medications, delay treatment, and make impossible tradeoffs between rent and prescriptions. By absorbing those costs, Medicare and Medicaid keep millions of families financially stable enough to meet their other basic needs.
Long-Term Care Depends on Medicaid
Most people don’t realize that Medicare covers very little long-term care. If you or a family member needs a nursing home or ongoing home-based care, Medicaid is overwhelmingly the program that pays for it. In 2023, Medicaid covered 44% of the $147 billion the U.S. spent on institutional long-term care and 69% of home care costs.
This isn’t just a program for people who were always low-income. Many older adults who spent their working lives in the middle class eventually qualify for Medicaid after their savings are depleted by years of nursing home costs, which can easily exceed $90,000 a year. Without Medicaid as a safety net, families would face the choice between impoverishing themselves or going without care for aging parents and spouses. Private long-term care insurance exists, but relatively few people carry it, and it often doesn’t cover the full cost. Medicaid fills an enormous gap that no other part of the system addresses.
Keeping Rural Hospitals Open
Hospitals in rural communities operate on thin margins, and many serve large numbers of patients covered by Medicaid or who are uninsured. When states expanded Medicaid under the Affordable Care Act, more patients arrived with coverage instead of bills that would go unpaid. The difference has been measurable: 74% of rural hospital closures occurred in states where Medicaid expansion was not in place or had been in place for less than a year, according to the American Hospital Association.
When a rural hospital closes, the effects ripple far beyond healthcare. The nearest emergency room may be an hour’s drive away. The hospital was often one of the town’s largest employers. Medicaid funding doesn’t just keep individual patients healthy; it helps hold the infrastructure of entire communities together.
Coverage for People With Disabilities
Medicare isn’t only for people over 65. If you receive Social Security disability benefits, you automatically qualify for Medicare after 24 months. People diagnosed with ALS (Lou Gehrig’s disease) get Medicare immediately, with no waiting period. Medicaid, meanwhile, is the primary insurer for millions of adults and children with disabilities, covering services that private insurance rarely does, like personal care aides, supported employment, and home modifications.
For people with disabilities, these programs often represent the difference between living independently in the community and being confined to an institution. Medicaid’s home and community-based services allow people to receive care where they live, which is both less expensive and far better for quality of life.
Better Outcomes for Children Into Adulthood
Medicaid and CHIP cover more children than any other insurance source in the country. The long-term payoff is substantial. The Congressional Budget Office projects that children who gain Medicaid or CHIP coverage experience better health and go on to earn more as adults. CBO estimated that the higher future earnings of children who gained coverage could offset between 15% and 86% of the program’s initial costs through increased tax revenue and economic activity.
This reflects a consistent finding in health economics: children who get adequate medical care, including vaccinations, dental visits, treatment for asthma and infections, and mental health support, miss fewer school days, perform better academically, and enter the workforce healthier. Investing in children’s coverage pays returns over decades.
Preventive Care at No Extra Cost
Medicare covers a broad range of preventive services without charging beneficiaries a copay. These include annual wellness visits, screenings for colorectal cancer, breast cancer, lung cancer, cervical cancer, prostate cancer, and glaucoma, as well as flu shots, pneumonia vaccines, diabetes screenings, depression screenings, and counseling for tobacco use and obesity. Cardiovascular disease screening, hepatitis B and C testing, and HIV screening are also covered.
The value here is straightforward. Catching cancer at stage one instead of stage four, identifying diabetes before it causes kidney damage, or screening for depression before it leads to a crisis costs far less and produces far better outcomes. Removing the financial barrier to these services means more people actually use them.
The Financial Reality for Medicare Households
Even with Medicare, healthcare is expensive for older adults. Medicare households spent an average of $7,000 on health care in 2022, accounting for 13.6% of their total household spending. That’s a significant share, but it reflects costs after Medicare has absorbed the bulk of hospital stays, surgeries, and doctor visits. Without the program, those costs would be catastrophic for most retirees living on fixed incomes.
For context, non-Medicare households spent $4,900 on health care that year, but their total household income was much higher ($74,100 versus $51,800 for Medicare households). Older adults use more healthcare, earn less, and have fewer options for coverage. Medicare doesn’t eliminate the financial burden, but it makes it survivable.