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Understanding Health Insurance
Health insurance represents a commitment making health care better and coverage more affordable for all Americans. Read more about how health insurance providers are working to build a sustainable health care that allows Americans to access the best possible care and live their healthiest life.
Medicare and Medicare Advantage
Medicare-eligible enrollees can access Medicare through the original Medicare program, run by the government, or through Medicare Advantage, a public-private partnership. In Medicare Advantage, health insurance providers compete to offer original Medicare benefits, plus additional benefits and savings not offered in original Medicare.
Today, more than 60 million Americans have Medicare.
Medicare covers Americans 65 and over, and younger people with certain disabilities.
Additional benefits a Medicare Advantage plan may offer include a cap on out-of-pocket costs; vision, dental, and hearing benefits; and wellness programs.
- More than 30 million Americans — approximately 50% of those eligible to enroll — choose Medicare Advantage.
- Medicare Advantage covers more racially diverse populations (32%) than original Medicare (21%).
- 40% of Medicare Advantage members make less than $25,000 a year.
- For the 2023 benefit year, the average Medicare Advantage premium dropped to $18.00, an 8% decrease from 2022.
- Medicare-eligible enrollees can access Medicare through the original Medicare program, run by the government, or through Medicare Advantage, a public-private partnership. In Medicare Advantage, health insurance providers compete to offer original Medicare benefits, plus additional benefits and savings not offered in original Medicare.
- The Medicare Payment Advisory Committee (MedPAC) estimated that in 2022, the average Medicare Advantage plan enrollee had access to nearly $2,000 in extra benefits.
Medicaid
Medicaid is an essential part of American health care. It helps improve the health and financial security of millions of Americans every day, including more than 2 million veterans. Medicaid is the largest health care program in the country, covering approximately 1 in 5 Americans.
In addition to traditional health care services, Medicaid covers services critical to their health and independence, like help in their homes with activities of daily living, medical equipment like wheelchairs, and nursing home care.
Medicaid provides health coverage to low-income families and individuals, including children, parents, pregnant women, seniors, and people with disabilities.
Medicaid and the Children’s Health Insurance Program (CHIP) cover more than 87 million Americans, including more than 40 million children and 2 million veterans. That’s about 1 in 4 Americans.
- 75% of Medicaid enrollees are served by Medicaid managed care organizations (MCO), which are public-private partnerships between state governments and health insurance providers.
- Medicaid is funded jointly by the federal government and the states.
- MCOs allow states to shift the risk to health insurance providers, leverage health insurance providers' negotiating power, and direct taxpayer dollars to drive quality, outcome-based care.
- Compared with traditional Medicaid fee-for-service, Medicaid MCOs saved over 25% more per prescription, delivering $6.5 billion in net savings during fiscal year 2018.
- 40 states, including D.C., have expanded Medicaid — providing access to care to 16 million more Americans.
- Nearly half of all Medicaid spending goes towards care for people with disabilities.
- CHIP is a federal-state program for low-income children whose families earn too much to qualify for Medicaid. It is funded as a block grant to states and, unlike Medicaid, must be reauthorized regularly by Congress.
- States have the option of including coverage for pregnant women in their CHIP programs, and of administering CHIP through Medicaid or separately.
See How Medicaid is Helping People in Your State
As the largest health care program in the United States, Medicaid covers about 25% of the U.S. population including millions of children, older adults, people with disabilities, and 2 million veterans.
Individual Health Insurance
As policymakers consider the future of the individual health insurance market, AHIP has developed recommendations for solutions that can deliver long-term benefits for consumers: lower costs, more choices, and better-quality care.
Individual coverage delivers important financial protections. For example, people who live near the poverty line and receive federal support to buy health care coverage are 25% less likely to fall behind on their housing payments.
More than 90% of Americans who buy coverage through the ACA’s health insurance exchanges receive tax credits to help them pay their premiums.
- 80% of Americans are able to buy coverage through the ACA’s health insurance exchanges for $10 or less per month after tax credits.
- More than 44 million Americans have individual coverage, purchased either through Affordable Care Act (ACA) health insurance exchanges or directly from a health insurance provider.
- More than half of enrollees in Healthcare.gov states receive subsidies to lower their out-of-pocket costs.
- Enhanced subsidies enacted by the federal government in 2021 and extended through 2025 help lower out-of-pocket costs, with the median deductible falling from $450 to $50 after implementation.
- Comprehensive coverage offered through the individual marketplace provides access to 10 essential health benefits, including important protections for patients with pre-existing conditions, prescription drug coverage, and no annual or lifetime limits.
Employer-Provided Coverage
Employer-provided coverage delivers affordable access to care, effective ways to improve health, and financial security for more than 180 million Americans. Thanks to diverse and active competition from health insurance providers in every state, consumers and employers have access to high-quality and affordable care choices that deliver financial protection and peace of mind – now and for the future.
Over 180 million Americans receive their health insurance coverage through their employers — that’s about 90% of all American workers.
This includes 6 million children covered by a parent’s or guardian’s plan.
- 15% of Americans with an income below the federal poverty line — $20,578 for a family of 3 — rely on the cost savings employer-provided coverage delivers.
- On average, employers pay 83% of the coverage costs for a single person, and 72% of the coverage costs for a family.
- Employer-provided health insurance provides a net benefit of $1.5 trillion to Americans through its value to employers and employees and its role in driving down the prices charged by health care providers.
- 41 million Americans with employer-provided coverage received mental health support covered by their plan in 2020.
- Nearly half of Black Americans (47%) and more than 40% of Hispanic Americans are enrolled in employer-provided coverage.
- 91% of American workers are employed by a company that offers benefits.
Supplemental Health Insurance
Supplemental health insurance products augment more comprehensive health care coverage, such as major medical insurance or government programs (Medicare and TRICARE).
- Supplemental health insurance helps cover expenses not covered by primary health insurance, such as accidents, specific diseases, and nonmedical expenses.
- Tens of millions of Americans invest in supplemental coverage, including disability income protection, long-term care insurance, dental, and vision coverage.
- Nearly 14.5 million seniors depend on Medicare Supplement coverage.
- Approximately 7.2 million people have invested in LTC coverage for their security and peace of mind.
Understanding Health Insurance Regulation
Health insurance is a highly regulated industry, with both federal and state oversight.
States primarily regulate health insurance providers by setting standards for how and when a state-licensed health insurance provider must accept an individual applying for insurance.
- States closely regulate health insurance providers and their prices, making health insurance providers the only entity in the health care system accountable to complying with this sort of careful oversight.
- On the federal level, regulatory laws include ERISA and the Health Insurance Portability and Accountability Act (HIPAA).
- ERISA sets national standards for employer and union-sponsored health plans and prohibits states from regulating self-funded employer- and union-sponsored health plans.
- HIPAA allows individuals to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also protects the privacy of a patient’s personal health information. Health insurance providers, as well as care providers, must comply with HIPAA.