How Does the Health Care System Work in the United States?

Written by: Rocio Torres
Last Updated by Rocio Somoza: February 7, 2023
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health care system

The health care system in the United States stands out as one of the most advanced in terms of technology and professional training. No matter how remote a location is, you are likely to find clinics and hospitals there. And although most of these hospitals are part of the private system, they are subsidized by local and state governments.

The United States does not have a single health care system, but rather a mix of state and federal programs that together make up the health care system. These include Medicaid and Medicare, as well as private programs offered by insurance companies. The Affordable Care Act (ACA), also known as Obamacare, was created to expand health insurance coverage to Americans who did not have access to affordable health insurance. In this article, we analyze how the health care system works in the United States.

Types of Health Care Insurance in the United States

There are five main types of health insurance in the United States: private health insurance, short-term plans, Medicare, Medicaid, and long-term care plans. These programs vary in coverage and price. The right plan for an individual may depend on factors such as age, health status, and whether or not he or she has an employer that offers private health insurance.

While all of these programs have their own benefits, one thing remains the same: All of these health programs provide patients with the medical care needed to maintain good health. This includes regular doctor visits, prescription drugs, and treatment in the event of illness or injury. By choosing the right insurance, Americans can enjoy easy, efficient, and quality access to medical care.

health care system

How Medicare and Medicaid Work


Created in 1965, Medicare covers people 65+ and young people with disabilities or severe kidney problems. It can also be used by those who have contributed for 10 years to the U.S. health care system. This program is made up of four components:

Hospital Insurance (A): Covers overnight hospitalization with semi-private room service, food, examinations, and medical fees, and occasionally may cover short convalescent stays.

Medical Insurance (B): Covers services of an outpatient nature, not included in Part A.

Medicare Advange (C): Allows users to receive Medicare services through private insurers.

Prescription Drug Plans (D): In effect since 2006, provides access to drugs for people covered under Parts A and B.


This program covers low-income families protected by federal law: pregnant women, children, the elderly, people with disabilities, and qualified parents under the country’s poverty standards.

Health care in the United States depends on a combination of state, federal, and private programs. Although there are some differences among the programs, they all accomplish the same goal: to provide an acceptable level of health care to Americans.

Private Insurance

Workers can also obtain private health insurance through their employer. These programs require companies to offer a health plan with certain features, such as coverage for childbirth or dental treatment. Health plans must include basic coverage, such as preventive medicine and treatment of illnesses. Any additional coverage can be purchased separately.

Private plans also allow policyholders to select their own health care providers. These providers may include hospitals, clinics, and private physicians. Private plans are usually more expensive than state and federal programs, but offer greater flexibility and a wider range of options.

State Children’s Health Insurance Program

The State Children’s Health Insurance Program is a partnership between states and the federal government to provide health insurance coverage to children whose families cannot afford private insurance. It targets low-income families with children under age 19 who do not qualify for Medicaid. Program benefits include preventive services such as immunizations, surgeries if needed, and outpatient care. Coverage also includes hospital bills, prescription drugs, and other medical treatments.

health care system

Analyzing the U.S. Health Care System

What distinguishes the U.S. health care system from the rest is the predominance of the private sector over the public sector and the lack of universal health care coverage. A recent survey showed that:

48% of the U.S. population received private health insurance through their employer.

5% purchased health insurance independently.

13% were covered by the Medicare program.

18% were covered by Medicaid.

16% had no health insurance.

This 16% of the uninsured have limited access to health care and are at increased risk for untreated chronic diseases. This is concerning, as the cost of medical care can be a barrier for low-income patients without adequate coverage.

Health Care Spending in the United States

Health care costs have risen significantly in recent years, and health care expenses account for an increasing share of the U.S. household budget. According to the Center for Public Health Studies, the average household spends about $10,000 on medical services and related products per year. This includes insurance, prescription drugs, dental care, and medical treatment. While overall health care costs are high, there are resources available to assist families with paying medical bills. These state and federal programs can help patients get the medical care they need without having to worry about the cost.

Reorganization in the U.S. Health Care System

Despite the high costs associated with the U.S. health care system, there are political and economic efforts to help improve the situation. In March 2010, the Patient Protection and Affordable Care Act, also known as Obamacare, was approved. This was one of the major advances in health insurance since the implementation of Medicare in 1965. The law extended insurance coverage to millions of previously uninsured people and improved accessibility to treatment for those with insurance.

The ACA in the U.S. Health Care System

  • The ACA extends coverage by requiring all individuals to have health insurance, funding expanded state coverage programs, and requiring states to cover all children whose income is below the federal poverty level.
  • The ACA also mandates that private plans must cover certain services, such as preventive care and treatment of chronic illnesses. This coverage is offered through state marketplaces, where consumers can choose from different levels of benefits. Prices vary by plan, but low-income policyholders can obtain government subsidies to help pay the cost.
  • The ACA also requires plans to cover certain essential coverage, such as childbirth and newborn care, and charge reasonable prices for medical treatments.
health care system


The U.S. health care system is a controversial and constantly evolving topic. The government has implemented numerous programs to promote the accessibility of quality health care for all citizens, but the gaps between what is offered and what many people can afford remain a major concern. The ACA has helped reduce the number of uninsured, but it has not addressed all of the challenges Americans face in seeking health care. However, with a greater understanding of the health care system and the various options available for obtaining health care, citizens can make informed decisions about their health care and seek the best coverage for their needs.

The debate over reforming the U.S. health care system will continue, but we hope that changes in the future will help ensure equitable and affordable access to health care for all.