Come on now. We've got a severe case of unexplained healthcare costs. Let's get on it. Pull up the charts. This is just the facts. Data driven facts to help you make up your own mind. In this episode, the cost of healthcare. Nearly 92% of Americans have health insurance, but that does not mean everyone is in the same health care system. Some get coverage through work, some buy it themselves, some are covered by Medicare, some by Medicaid. And each group faces very different costs.

To figure out if you're getting your money's worth, it pays to look first at what health care actually costs you. So, let's do that. We're going to look at what different people pay. But first, let's zoom out. In 2024, the United States spent about $5.3 trillion on healthcare. That's all healthcare spending. It includes money that is spent on insurance premiums, co-pays, deductibles, and co- insurance, prescriptions, over-the-counter medication, and public health and health research. All of that is included, and that totals about $15,500 for every person in the United States.

In 2024, individuals spent about $4,300 out of their own pocket, while the government and private businesses and even not for profits covered the rest. These are averages. In real life, what kind of insurance a person has and factors like their age and health matter a lot to how much people actually spend on healthcare. To explore the details, we need to use 2023 data. the most recent available as of this recording. But before we go any further, we need to define three concepts that we're going to use throughout this video. Trust me, this will save us all some confusion later. First are insurance costs. These are the premiums you pay every month just to have insurance coverage. It's a fixed monthly cost like a gym membership. You pay it whether you use care or not.

The second term, out-of-pocket costs. These are the health care expenses people pay when they actually use health care. That includes deductibles, which is the amount you pay before insurance begins helping you, co-pays, which are the fixed fees every time you go to the doctor, and co- insurance, the percentage of a medical bill that you pay yourself after the deductible is met. Insurance companies often don't pay for everything. When getting insurance, it pays to pay attention to the fine print as there can be big differences amongst insurance plans.

Finally, we will talk about what other entities pay for your health care. That includes employer contributions to premiums, government spending, subsidies, and other forms of financial support for health care, like workers compensation, for example. Or put another way, the money somebody else is spending for your health care so you don't have to. We're done now with definitions. Now, let's look at five big buckets that cover insurance.

First up, employer sponsored insurance, which is exactly what it sounds like, health insurance provided through a person's employer. It's the most common form of health coverage in America. In 2024, just over half of Americans had employer sponsored insurance. For people with this coverage in 2023, individuals paid about $3,150 of which $2,38 was for premiums and other out-of-pocket costs at 1,115. Of course, these are averages and especially in healthcare, actual costs can vary widely depending on employer's plan and your health. So, individuals with employer sponsored insurance pay on average $3,153 for their insurance and healthcare, but that is not what it costs because employers add another $5,765 per person on average. Compared to 20 years ago, individual costs increased by 47% and company costs have increased by 38% both adjusted for inflation.

The next group of Americans with insurance coverage is much smaller. Direct purchase insurance is a private insurance plan people by themselves rather than receiving through an employer. In 2024, about 7% of Americans had this type of coverage. There are two main ways to get direct purchase insurance. Nearly nine out of 10 people though with direct purchase insurance got it through Affordable Care Act marketplaces. Affordable Care Act, also known as the ACA or for some Obamacare. The rest of the people purchased it directly from insurance companies. In 2023, people with direct purchase insurance spent about $3,300 total, including $2,200 plus on premiums and $1,100 plus for out-of-pocket costs. Another $4,437 was paid primarily by the government through ACA tax credits and subsidies. Because the ACA didn't come into effect until 2014, the picture from 20 years ago was quite different. You can see government and other contributions were close to nothing. In 2023, people paid about the same amount themselves, but government and others contributed a lot more.

Why did total cost increase so much? Before the ACA, direct insurers were not required to cover common medical services and could charge more or deny coverage based on an applicant's health status. The ACA required plans to cover everyone regardless of pre-existing conditions and to provide a minimum of 10 essential health benefits, increasing total costs for people who buy insurance through an ACA marketplace. A lot has changed recently. In 2021, the government changed the tax credit people can receive when purchasing ACA plans. The changes made more families eligible for the credit and the credit was larger. This increased tax credit expired at the end of 2025. As a result, many marketplace enrollees saw their premiums rise between 2025 and 2026. Some lost eligibility for tax credits entirely and others switched to lower cost plans with higher deductibles.

Even so, enrollment in ACA marketplace plans remains near an all-time high. So far, we've been talking about private insurance. Now, let's move to public insurance. Medicare is a federal health insurance program primarily for people aged 65 and older. It also covers some younger people with disabilities or certain medical conditions. In 2024, about 20% of Americans had Medicare coverage, including people of my age. There are different parts to Medicare. Part A covers hospital stays. And for just about everyone, it's premium free because you have to have worked or be married to someone who worked for at least 10 years. So almost everybody qualifies.

Then there are parts of Medicare that do require premiums. Medicare Part B covers outpatient and preventive care and part D covers prescription drugs. Those are the basic parts, but nearly all Medicare enrollees choose to purchase some sort of supplementary coverage which is discussed in Medicare part C. People can choose to get Medicare Advantage, a private insurance alternative to Medicare that includes parts A, B, and usually part of D, but all together. It can be simpler with a single premium. Others purchase supplemental insurance called meta gap to help cover costs that Medicare doesn't. These people pay more for premiums in general, not always, in order to guard against high out-of-pocket costs if they become ill.

Some Medicare recipients also qualify for Medicaid based upon their income. In fact, only a small share of Medicare beneficiaries rely solely on traditional Medicare coverage, just 6%. So when someone says, "I'm on Medicare," that doesn't necessarily tell you the whole story. Combined, these various Medicare enrollees experienced just over $4,100 in cost, including premiums on average of just over $2,500 in 2023 and an additional almost $1,700 of out-of-pocket costs. The government and other contributions though towards Medicare totaled $14,897 per person. You can see most Medicare costs are covered by taxpayers just as today's recipients subsidize Medicare coverage for earlier generations.

How did this change from 2003? Adjusted for inflation, what people pay actually remains almost the same, about $4,200. But in 2023, premiums are higher while out-of-pocket costs are lower. also with the government pay has gone up by about $3,000. This is partially because part D prescriptions was introduced in 2006, which meant that Medicare and your extra premium started covering prescription drugs instead of that money coming just from your own pocket.

Medicaid, which is a health insurance program for lower income Americans, is complicated for a completely different reason. Unlike Medicare, which is based primarily on age, Medicaid eligibility is generally based on income and other requirements established by federal and state governments. It is jointly funded by federal and state governments. In 2024, about 25% of Americans had Medicaid coverage. Because Medicaid does not require premiums and covers most health care costs, Medicaid enrollees spent just about $230 out of pocket. The rest was covered by the program, nearly $9,600 per person.

Medicaid has grown from 43 million enrollees in 2003 to 92 million in 2023, much larger even than the growth in population. It's been driven by the expansion of eligibility through the ACA and other policies enacted during the CO 19 emergency at least partially due to this energy growth that brought in healthier enrollees which cost less. Government spending per Medicaid enrollee is actually down from $10,700 in 2003.

By now, you might notice a pattern. In every group we've looked at, what people have to pay themselves is less than what their care actually costs. Whether the rest comes from an employer, the government, or government subsidies and tax credits, the bill never disappears. It just moves. So far, we've looked at employee coverage, direct purchase insurance, Medicare, and Medicaid.

And then there's one final group, people without health insurance, which sounds simple, but as we've learned by now, almost nothing in healthcare is ever quite that simple. In 2024, about 8% of Americans were uninsured. For uninsured individuals in 2023, their out-of-pocket costs were $547. Others, such as workers compensation, community and neighborhood clinics, and state and local health programs, spent another $465 per person. Together, that comes to only just over $1,000. Comparing that cost to the total costs that go into insured people, you could say the uninsurance number looks a lot lower.

While the uninsured do receive less care than those with insurance, they also receive something called uncompensated care. Uncompensated care is health care that providers, hospitals, doctors deliver without ultimately receiving payment. About 60% of uncompensated care occurs in hospitals. One reason is that nearly all hospitals with an emergency department are required under federal law to provide a first medical screening and treat life-threatening situations without first assessing people's ability to pay. Hospitals that serve a high percentage of patients on Medicaid or people who are uninsured do find themselves sending bills to patients that the patients often can't pay. Now, federal data on the total amount of uncompensated care for the uninsured is limited, making it difficult to determine exactly how much this affects total health care cost estimates or health care received. But we do know that governments help offset some of these costs.

For example, the federal Medicaid disproportionate share hospital program or DSH spent $19 billion in fiscal year 2021 to help hospitals that serve large numbers of Medicaid and uninsured patients. That $19 billion does not represent the total cost of uncompensated care. This DSH fund also supplements Medicaid payments as Medicaid often does not pay doctors at the same rate as Medicare or private insurance. That is the best estimate that government provides and it still doesn't tell us exactly how much uncompensated care there was for the uninsured. But one thing we do know is that we need more data about this.

So, where does 5.3 trillion in healthcare spending actually come from? The answer is lots of places. Individuals, employers, taxpayers, insurance programs, and depending on the type of coverage a person has, the mix can look completely different. Someone with employer sponsored insurance faces one set of costs. Someone purchasing insurance on their own, a different set of costs. Medicare and Medicaid beneficiaries face very different arrangements and people without insurance really do face challenges of their own. But throughout all of these categories, one thing stays the same. Health care costs are shared. Sometimes individuals pay more, sometimes employers pay more, sometimes taxpayers pay more, but somebody is paying. So when you assess your health care costs for you or your family, it's good to have all of this complexity in mind because there are so many variables that determine what it costs, what you pay, and in so many different ways, the government is part of the picture.

Who pays for healthcare in America and how much? Definitely a complex puzzle with important implications for your pocketbook and especially for your health. I'm Steve Balmer and those are some important healthcare facts brought to you by USAFacts. Hey, thanks for watching this episode of Just the Facts. To learn more, make sure you subscribe to our channel here on YouTube. And to get weekly facts delivered straight to your inbox, visit our website, usafacts.org, and sign up for our newsletter. See you next time.