Written by: Ryan J. Rosso, Analyst in Health Care Financing
U.S. Health Care Coverage and Spending
In 2018, the United States had an estimated population of 322 million individuals. Most of those individuals had private health insurance or received health care services under a federal program (such as Medicare or Medicaid). About 8.9% of the U.S. population was uninsured. Individuals (including those who were uninsured), health insurers, and federal and state governments spent approximately $3.5 trillion on various types of health consumption expenditures (HCE) in 2018, which accounted for 16.9% of the nation’s gross domestic product.
Private Health Insurance
Private health insurance is the predominant source of health insurance coverage in the United States. The private health insurance market includes both the group market (largely made up of employer-sponsored insurance) and the non- group market (commonly referred to as the individual market, which includes plans directly purchased from an insurer both on and off health insurance exchanges). In 2018, these markets covered an estimated 178 million individuals (55.2% of the U.S. population) and 43 million individuals (13.4% of the U.S. population), respectively.
In 2018, private health insurance accounted for $1,243 billion (35.8% of overall HCE). Private health insurance expenditures include amounts paid by insuring organizations to providers and all insuring organizations’ non-medical net costs, which include, but are not limited to, taxes, net gains or losses to reserves, and profits.
Most of this spending was for hospital care and physician and professional services. Private health insurance spending, as a percentage of all health consumption expenditures, has increased by about 12 percentage points since 1960. This growth is partially due to increases in enrollment and, when considered alongside the implementation and expansions of Medicare and Medicaid, corresponds with the drop in out- of-pocket spending since 1960.
Medicare is a federal health insurance program that pays for covered health care services for most people aged 65 and older and for certain permanently disabled individuals under the age of 65. An estimated 57 million individuals (17.6% of the U.S. population) were enrolled in Medicare in 2018. The program accounted for $750 billion (21.6% of overall HCE); this share is about 10 percentage points higher than Medicare’s percentage of HCE in 1970. In 2018, most of the spending was for hospital care and physician and professional services.
Health care services for military servicemembers, veterans, and their dependents are provided by the Department of Defense, through programs such as TRICARE, and the Department of Veterans Affairs. In 2018, an estimated 9 million individuals (2.7% of the U.S. population) had TRICARE and 7 million (2.3% of the U.S. population) individuals had VA Care. Together, these departments accounted for $120 billion (3.4%) of total HCE.
Other Health Services
Other health care spending covers services provided through public and private programs not listed above, including worksite health care programs, philanthropic support, Indian Health Service activities, workers’ compensation, general assistance, the Maternal and Child Health program, vocational rehabilitation, Substance Abuse and Mental Health Services Administration grants, federal and state public health activities, school health programs, and other programs whose primary focus is the provision of care or treatment of disease. Other health services accounted for $370 billion (10.7% of total HCE) in 2018. Out-of-pocket spending (other than premiums) includes all amounts paid by the privately insured and other insured individuals for coinsurance, deductibles, and services not covered by insurance. It also includes any amounts paid by the uninsured for health care goods and services. Among all individuals, out-of-pocket spending totaled $376 billion (10.8% of total HCE) in 2018.
Approximately 29 million individuals (8.9% of the U.S. population) were uninsured in 2018. The uninsured rate was relatively stable from 2008 to 2013 before dropping 6 percentage points by 2016. This drop in the uninsured rate corresponds with increases in non-group coverage and Medicaid/CHIP coverage, which are associated with the implementation of various provisions of the Affordable Care Act (ACA; P.L. 111-148, as amended), such as the exchanges and premium tax credits and the Medicaid expansion.