Medicare is the federal health insurance program established in 1965 under Title XVIII of the Social Security Act for people age 65 or older, regardless of income or medical history, and later expanded to cover people under age 65 with long-term disabilities. Today, Medicare provides health insurance coverage to 68 million people, including 61 million people age 65 or older and 7 million people under age 65. Medicare covers a comprehensive set of health care services, including hospitalizations, physician visits, and prescription drugs, along with post-acute care, skilled nursing facility care, home health care, hospice, and preventive services. People with Medicare can choose to get coverage under traditional Medicare or Medicare Advantage private plans.

Medicare spending comprised 13.5% of the federal budget in 2024 and 21.2% of national health care spending in 2023. Funding for Medicare comes primarily from government contributions, payroll tax revenues, and premiums paid by beneficiaries. Over the longer term, the Medicare program faces financial pressures associated with higher health care costs, growing enrollment, and an aging population.

Most people become eligible for Medicare when they reach age 65, regardless of income, health status, or medical conditions. Residents of the U.S., including citizens and permanent residents, are eligible for premium-free Medicare Part A if they have worked at least 40 quarters (10 years) in jobs where they or their spouses paid Medicare payroll taxes and are at least 65 years old. People under age 65 who receive Social Security Disability Insurance (SSDI) payments generally become eligible for Medicare after a two-year waiting period. People diagnosed with end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS) become eligible for Medicare with no waiting period.

Medicare covers a diverse population in terms of demographics and health status, and this population is expected to grow larger and more diverse in the future as the U.S. population ages. Currently, most people with Medicare are White, female, and between the ages of 65 and 84 (Figure 1). The share of U.S. adults who are age 65 or older is projected to grow from 17% in 2022 to nearly a quarter of the nation’s total population (24%) in 2060. Among people ages 65 and older, the share of people ages 80 and older will increase from 23% in 2022 to 34% in 2060. As the U.S. population ages, the number of Medicare beneficiaries is projected to grow by more than one-third from 68 million people in 2024 to more than 93 million people in 2060. The Medicare population will also grow more racially and ethnically diverse. By 2060, people of color will comprise 44% of the U.S. population ages 65 and older, up from a quarter in 2022.

While many Medicare beneficiaries enjoy good health, others live with health problems that affect their quality of life, including multiple chronic conditions, limitations in their activities of daily living, and cognitive impairments. In 2022, nearly half (45%) of Medicare beneficiaries had four or more chronic conditions, more than a quarter (28%) had a functional impairment, and 17% had a cognitive impairment (Figure 2).

Most Medicare beneficiaries have limited financial resources, including income and assets. In 2024, one in four Medicare beneficiaries – 16.5 million people with Medicare – lived on incomes below $24,600 per person, and half (32.9 million) of all Medicare beneficiaries lived on incomes below $43,200 per person; one in four Medicare beneficiaries had savings below $18,950 per person in 2024, while half had savings below $110,100 per person. Income among Medicare beneficiaries is generally lower for women than men, for people of color than White beneficiaries, and for beneficiaries under age 65 with disabilities than older beneficiaries (Figure 3).

Benefits. Medicare covers a comprehensive set of medical care services, including hospital stays, physician visits, and prescription drugs. Medicare benefits are divided into four parts: 

• Part A, also known as the Hospital Insurance (HI) program, covers inpatient care provided in hospitals and short-term stays in skilled nursing facilities, hospice care, post-acute home health care, and pints of blood received at a hospital or skilled nursing facility. An estimated 67.5 million people were enrolled in Part A in 2024. In 2023, 13% of beneficiaries in traditional Medicare had an inpatient hospital stay, while 7% used home health care services (which are also covered under Part B), and 3% had a skilled nursing facility stay (Figure 4). (Comparable utilization data for beneficiaries in Medicare Advantage is not available.)
• Part B,the Supplementary Medical Insurance (SMI) program, covers outpatient services such as physician visits, outpatient hospital care, and preventive services (e.g., mammography and colorectal cancer screening), among other medical benefits. An estimated 62 million people were enrolled in Part B in 2024. A larger share of beneficiaries use Part B services compared to Part A services. For example, in 2023, more than 9 in 10 (92%) traditional Medicare beneficiaries used physician and other services covered under Part B and 59% used outpatient hospital services.
• Part C, more commonly referred to as the Medicare Advantage program, allows beneficiaries to enroll in a private plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO), as an alternative to traditional Medicare. Medicare Advantage plans cover all benefits under Medicare Part A, Part B, and, in most cases, Part D (Medicare’s outpatient prescription drug benefit), and typically offer extra benefits, such as dental services, eyeglasses, and hearing exams. In 2025, 34.1 million beneficiaries are enrolled in Medicare Advantage, which is 54% of Medicare beneficiaries who are eligible to enroll in Medicare Advantage plans. (See “What Is Medicare Advantage and How Is It Different From Traditional Medicare?” for additional information.) 
• Part D is a voluntary outpatient prescription drug benefit delivered through private plans that contract with Medicare, either stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug (MA-PD) plans. In 2025, 54.8 million beneficiaries are enrolled in Part D, with 58% enrolled in MA-PDs and 42% enrolled in PDPs. In 2023, over 9 in 10 Medicare beneficiaries enrolled in Part D (93%) used prescription drugs. (See “What Is the Medicare Part D Prescription Drug Benefit?” for additional information.)

Although Medicare covers a comprehensive set of medical benefits, Medicare does not cover long-term care services. Additionally, coverage of vision services, dental care, and hearing aids is not part of the standard benefit, though most Medicare Advantage plans offer some coverage of these services.

Premiums and cost sharing. Medicare has varying premiums, deductibles, and coinsurance amounts that typically change each year to reflect program cost changes.

• Part A: Most beneficiaries do not pay a monthly premium for Part A services, but are required to pay a deductible for inpatient hospitalizations ($1,676 in 2025). (People who are working contribute payroll taxes to Medicare and qualify for premium-free Part A at age 65 based on having paid 1.45% of their earnings over at least 40 quarters.) Beneficiaries are generally subject to cost sharing for Part A benefits, including extended inpatient stays in a hospital ($419 per day for days 61-90 and $838 per day for days 91-150 in 2025) or skilled nursing facility ($209.50 per day for days 21-100 in 2025). There is no cost sharing for home health visits.
• Part B: Beneficiaries enrolled in Part B, including those in traditional Medicare and Medicare Advantage plans, are generally required to pay a monthly premium ($185 in 2025). Beneficiaries with annual incomes greater than $106,000 for a single person or $212,000 for a married couple in 2025 pay a higher, income-related monthly Part B premium, ranging from $259 to $628.90. Approximately 8% of Medicare beneficiaries with Part B coverage are expected to pay income-related Part B premiums in 2025. Part B benefits are subject to an annual deductible ($257 in 2025), and most Part B services are subject to coinsurance of 20 percent.
• Part C: In addition to paying the Part B premium, Medicare Advantage enrollees may be charged a separate monthly premium for their Medicare Advantage plan, although three-quarters (76%) of enrollees are in plans that charge no additional premium in 2025. Medicare Advantage plans are generally prohibited from charging more than traditional Medicare, but vary in the deductibles and cost-sharing amounts they charge. Medicare Advantage plans typically establish provider networks and may require higher cost sharing for services received from non-network providers.
• Part D: Part D plans vary in terms of premiums, deductibles, and cost sharing. People in traditional Medicare who are enrolled in a separate stand-alone Part D plan generally pay a monthly Part D premium unless they qualify for full benefits through the Part D Low-Income Subsidy (LIS) program and are enrolled in a premium-free (benchmark) plan. In 2025, the average enrollment-weighted premium for stand-alone Part D plans is $39 per month, substantially higher than the enrollment-weighted average monthly portion of the premium for drug coverage in MA-PDs ($7 in 2025).

Sources of coverage. Most people with Medicare have some type of coverage that may protect them from unlimited out-of-pocket costs and may offer additional benefits, whether it’s coverage in addition to traditional Medicare or coverage from Medicare Advantage plans, which are required to have an out-of-pocket cap and typically offer supplemental benefits (Figure 5). However, based on KFF analysis of data from the 2022 Medicare Current Beneficiary Survey, 3.2 million people with Medicare have no additional coverage, which places them at risk of facing high out-of-pocket spending or going without needed medical care due to costs. 

• Medicare Advantage plans now cover more than half (54%) of all Medicare beneficiaries enrolled in both Part A and Part B, or 34 million people (in 2022, Medicare Advantage enrollment was just under half of beneficiaries, or 29.9 million people). (See “What Is Medicare Advantage and How Is It Different From Traditional Medicare?” for additional information.)
• Employer and union-sponsored plans provided some form of coverage to 14.5 million Medicare beneficiaries – nearly a quarter (24%) of Medicare beneficiaries overall in 2022. Of the total number of beneficiaries with employer coverage, 9.1 million beneficiaries had this coverage in addition to traditional Medicare (31% of beneficiaries in traditional Medicare), while 5.4 million beneficiaries were enrolled in Medicare Advantage employer group plans. (These estimates exclude 5.6 million Medicare beneficiaries with Part A only in 2022, primarily because they or their spouse were active workers and had primary coverage from an employer plan and Medicare as a secondary payer.) 
• Medicare supplement insurance, also known as Medigap, covered 2 in 10 (21%) Medicare beneficiaries overall, or 42% of those in traditional Medicare (12.5 million beneficiaries) in 2022. Medigap policies, sold by private insurance companies, fully or partially cover Medicare Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. 
• Medicaid, the federal-state program that provides health and long-term services and supports coverage to low-income people, was a source of coverage for 11.6 million Medicare beneficiaries with low incomes and modest assets in 2022 (19% of all Medicare beneficiaries), including 7.0 million enrolled in Medicare Advantage and 4.6 million in traditional Medicare. (This estimate is somewhat lower than KFF estimates published elsewhere due to different data sources and methods used.) For these beneficiaries, referred to as dual-eligible individuals, Medicaid typically pays the Medicare Part B premium and may also pay a portion of Medicare deductibles and other cost-sharing requirements. Most dual-eligible individuals are eligible for full Medicaid benefits, including long-term services and supports.

Medicare Advantage, also known as Medicare Part C, allows beneficiaries to receive their Medicare benefits from a private health plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO). Medicare pays private insurers to provide Medicare-covered benefits (Part A and B, and often Part D) to enrollees. Virtually all Medicare Advantage plans include an out-of-pocket limit for benefits covered under Parts A and B, and most offer additional benefits not covered by traditional Medicare, such as vision, hearing, and dental. The average Medicare beneficiary can choose from 34 Medicare Advantage plans with prescription drug coverage offered by eight insurance companies in 2025. These plans vary across many dimensions, including premiums, cost-sharing requirements, out-of-pocket limits, extra benefits, provider networks, prior authorization and referral requirements, denial rates, and prescription drug coverage.

More than half of all eligible Medicare beneficiaries (54%) are currently enrolled in a Medicare Advantage plan, up from 25% in 2010 (Figure 6). The share of eligible Medicare beneficiaries in Medicare Advantage plans varies across states, ranging from 2% in Alaska to 63% in Alabama and Michigan.  Growth in Medicare Advantage enrollment is due to a number of factors. Medicare beneficiaries are attracted to Medicare Advantage due to the multitude of extra benefits, the simplicity of one-stop shopping (in contrast to traditional Medicare where beneficiaries might also purchase a Part D plan and a Medigap plan), and the availability of plans with no premiums beyond the Part B premium, driven in part by the current payment system that generates high gross margins in this market (see “How Does Medicare Pay Private Plans in Medicare  Advantage and Medicare Part D?” for additional information). Insurers market these plans aggressively, airing thousands of TV ads for Medicare Advantage during the Medicare open enrollment period. In some cases, Medicare beneficiaries have no choice but to be enrolled in a Medicare Advantage plan for their retiree health benefits as some employers are shifting their retirees into these plans; if they are dissatisfied with this option, they may have to give up retiree benefits altogether, although they would retain Medicare and have the option to choose traditional Medicare (potentially with a Medigap supplement).

There are several differences between Medicare Advantage and traditional Medicare. Medicare Advantage plans can establish provider networks, the size of which can vary considerably for both physicians and hospitals, depending on the plan and the county where it is offered. These provider networks may also change over the course of the year. Medicare Advantage enrollees who seek care from an out-of-network provider might be required to pay higher cost sharing or pay in full out of pocket for their care. In contrast, traditional Medicare beneficiaries can see any provider that accepts Medicare and is accepting new patients. In 2019, 89% of non-pediatric office-based physicians accepted new Medicare patients, with little change over time. Only 1% of all non-pediatric physicians formally opted out of the Medicare program in 2024.

Medicare Advantage plans also often use tools to manage utilization and costs, such as requiring enrollees to receive prior authorization before a service will be covered and requiring enrollees to obtain a referral for specialists or mental health providers. In 2024, virtually all Medicare Advantage enrollees were in plans that required prior authorization for some services, most often higher-cost services. Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023 (Figure 7). Prior authorization and referrals to specialists are used less frequently in traditional Medicare, with prior authorization generally applying to a limited set of services.

Medicare Advantage plans are required to use payments from the federal government that exceed their costs of covering Part A and B services (known as rebates) to provide supplemental benefits to enrollees, such as lower cost sharing, extra benefits not covered by traditional Medicare, or reducing the amount of Part B and/or Part D premiums. Examples of extra benefits include eyeglasses, hearing exams, preventive dental care, and gym memberships (Figure 8). (See “How Does Medicare Pay Private Plans in Medicare Advantage and Medicare Part D?” for a discussion of how Medicare pays Medicare Advantage plans.) Medicare Advantage plans must also include a cap on out-of-pocket spending, which provides protection from catastrophic medical expenses. Traditional Medicare does not have an out-of-pocket limit, though purchasing a Medigap policy effectively provides protection from catastrophic costs for beneficiaries in traditional Medicare. (See “What Does Medicare Cover and How Much Do People Pay for Medicare Benefits?” for a brief discussion of Medigap.)

Medicare Part D, Medicare’s voluntary outpatient prescription drug benefit, was established by the Medicare Modernization Act of 2003 (MMA) and launched in 2006. Before the addition of the Part D benefit, Medicare did not cover the cost of outpatient prescription drugs. Under Part D, Medicare helps cover prescription drug costs through private plans that contract with Medicare to offer the Part D benefit to enrollees, which is unlike coverage of Part A and Part B benefits under traditional Medicare, and beneficiaries must enroll in a Part D plan if they want this benefit.

A total of 54.8 million people with Medicare are currently enrolled in plans that provide the Medicare Part D drug benefit, including plans open to everyone with Medicare (stand-alone prescription drug plans, or PDPs, and Medicare Advantage drug plans, or MA-PDs) and plans for specific populations (including retirees of a former employer or union and Medicare Advantage Special Needs Plans, or SNPs). Nearly 6 in 10 Part D enrollees are in MA-PDs, as overall enrollment in Medicare Advantage plans has grown in recent years. Just over 13 million low-income beneficiaries receive extra help with their Part D plan premiums and cost sharing through the Part D Low-Income Subsidy Program (LIS).

For 2025, the average Medicare beneficiary has a choice of 14 stand-alone Part D plans and 34 Medicare Advantage drug plans. These plans vary in terms of premiums, deductibles and cost sharing, the drugs that are covered, any utilization management restrictions that apply, and pharmacy networks. People in traditional Medicare who are enrolled in a separate stand-alone Part D plan generally pay a monthly Part D premium unless they qualify for full benefits through the Part D LIS program and are enrolled in a premium-free (benchmark) plan. In 2025, the average enrollment-weighted premium for stand-alone Part D plans is $39 per month. In 2025, most stand-alone Part D plans include a deductible, averaging $491. Plans generally impose a tiered structure to define cost-sharing requirements and cost-sharing amounts charged for covered drugs, typically charging lower cost-sharing amounts for generic drugs and preferred brands and higher amounts for non-preferred and specialty drugs, and a mix of flat dollar copayments and coinsurance (based on a percentage of a drug’s list price) for covered drugs.

The standard design of the Medicare Part D benefit currently has three distinct phases, where the share of drug costs paid by Part D enrollees, Part D plans, drug manufacturers, and Medicare varies. Based on changes in the Inflation Reduction Act, these shares changed in 2024 and 2025 (Figure 9). Most notably, the Part D benefit now includes a $2,000 out-of-pocket spending cap, meaning Part D enrollees face no additional costs once their out-of-pocket costs exceed $2,000 in 2025. Previously, enrollees with high drug costs who did not receive low-income subsidies were responsible for paying 5% of their total drug costs when they reached the catastrophic coverage phase. This new out-of-pocket spending cap is projected to help an estimated 11 million Part D enrollees in 2025, including 6.1 million enrollees not receiving low-income subsidies.

The Inflation Reduction Act of 2022, signed into law by President Biden on August 16, 2022, includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government, including several changes related to the Part D benefit. These provisions include (but are not limited to) (Figure 10):

• Requiring the Secretary of the Department of Health and Human Services to negotiate the price of some Part D and Part B drugs covered under Medicare. The law that established the Part D benefit included a provision known as the “noninterference” clause, which prevented the HHS Secretary from being involved in price negotiations between drug manufacturers and pharmacies and Part D plan sponsors. In addition, the Secretary of HHS does not currently negotiate prices for drugs covered under Medicare Part B (administered by physicians). To date, Medicare has completed one round of price negotiation on 10 Part D drugs, with negotiated prices available in 2026, and selected 15 more Part D drugs for price negotiation in the second round, with negotiated prices available in 2027.
• Adding a hard cap on out-of-pocket drug spending under Part D, which phased in beginning in 2024, and was limited to $2,000 in 2025 (increasing to $2,100 in 2026). As noted above, under the original design of the Part D benefit, enrollees had catastrophic coverage for high out-of-pocket drug costs, but there was no limit on the total amount that beneficiaries paid out of pocket each year.  
• Limiting the out-of-pocket cost of insulin products to no more than $35 per month in all Part D plans and in Part B and making adult vaccines covered under Part D available for free as of 2023. Until these provisions took effect, beneficiary costs for insulin and adult vaccines were subject to varying cost-sharing amounts.
• Expanding eligibility for full benefits under the Part D Low-Income Subsidy program in 2024, eliminating the partial LIS benefit for individuals with incomes between 135% and 150% of poverty. Beneficiaries who receive full LIS benefits pay no Part D premium or deductible and only modest copayments for prescription drugs until they reach the catastrophic threshold, at which point they face no additional cost sharing.
• Requiring drug manufacturers to pay a rebate to the federal government if prices for drugs covered under Part D and Part B increase faster than the inflation rate, with the initial period for measuring Part D drug price increases running from October 2022-September 2023. Previously, Medicare had no authority to limit annual price increases for drugs covered under Part B or Part D. Year-to-year drug price increases exceeding inflation are not uncommon and affect people with both Medicare and private insurance.

In 2024, Medicare was estimated to spend $464 billion on benefits covered under Part A and Part B for beneficiaries in traditional Medicare. Medicare pays providers in traditional Medicare using various payment systems depending on the setting of care (Figure 11).

Medicare relies on a number of different approaches when determining payments to providers for Part A and Part B services delivered to beneficiaries in traditional Medicare. These providers include hospitals (for both inpatient and outpatient services), physicians, skilled nursing facilities, home health agencies, and several other types of providers. Of the $464 billion in estimated spending on Medicare benefits covered under Part A and Part B in traditional Medicare in 2024, $149 billion (32%) was for hospital inpatient services and $68 billion (15%) was for hospital outpatient services, $71 billion (15%) was for services covered under the physician fee schedule, and $176 billion (38%) was for all other Part A or Part B services for beneficiaries in traditional Medicare.

Medicare uses prospective payment systems for most providers in traditional Medicare. These systems generally require that Medicare pre-determine a base payment rate for a given unit of service (e.g., a hospital stay, an episode of care, a particular service). Then, based on certain variables, such as the provider’s geographic location and the complexity of the patient receiving the service, Medicare adjusts its payment for each unit of service provided. Medicare updates payment rates annually for most payment systems to account for inflation adjustments. 

The main features of hospital, physician, outpatient, and skilled nursing facility payment systems (altogether accounting for 69% of spending on Part A and Part B benefits in traditional Medicare) are described below:

• Inpatient hospitals (acute care): Medicare pays hospitals per beneficiary discharge using the Inpatient Prospective Payment System. The rate for each discharge corresponds to one of over 770 different categories of diagnoses – called Medicare Severity Diagnosis Related Groups (MS-DRGs), which reflect the principal diagnosis, secondary diagnoses, procedures performed, and other patient characteristics. DRGs that are likely to incur more intense levels of care and/or longer lengths of stay are assigned higher payments. Medicare’s payments to hospitals also account for a portion of hospitals’ capital and operating expenses.
• Medicare also makes additional payments to hospitals in particular situations. These include additional payments for rural or isolated hospitals that meet certain criteria. Further, Medicare makes additional payments to help offset costs incurred by hospitals that are not otherwise accounted for in the inpatient prospective payment system. These include add-on payments for treating a disproportionate share (DSH) of low-income patients, as well as for covering costs associated with care provided by medical residents, known as indirect medical education (IME). While not part of the Inpatient Prospective Payment System, Medicare also pays hospitals directly for the costs of operating residency programs, known as Graduate Medical Education (GME) payments.
• Physicians and other health professionals: Medicare reimburses physicians and other health professionals (e.g., nurse practitioners) based on the Physician Fee Schedule for over 10,000 services. Payment rates for these services are based on three components: (1) clinician work, (2) practice expenses, and (3) professional liability insurance (also known as medical malpractice insurance), which are measured in terms of “relative value units” (RVUs). Each component is adjusted to account for differences across geography and then multiplied by a conversion factor. Payment rates for individual services may be updated each year based in part on the recommendations of the AMA/Specialty Society RVS Update Committee (RUC), a volunteer committee of physicians and other professionals overseen by the American Medical Association (AMA). CMS also makes annual updates to the conversion factor based on statutory factors, as well as adjustments to preserve budget neutrality, which may result in payment cuts for physicians and other clinicians whenever the projected cost of all Physician Fee Schedule spending is expected to increase by more than $20 million for the year.
• Payment rates specified under the Physician Fee Schedule are subject to further adjustments under the Quality Payment Program, established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Clinicians can receive payment increases if they participate in qualified advanced alternative payment models (A-APMs), which bear some financial risk for the costs of patient care, while those who participate in the Merit-based Incentive Payment System (MIPS) may receive payment increases or decreases (or no change) depending on their performance on specific quality measures. (See “What Is Medicare Doing to Promote Alternative Payment Models?” for more information about alternative payment models in Medicare.)
• While not part of the Physician Fee Schedule, Medicare also pays for a limited number of drugs that physicians and other health care providers administer. For drugs administered by physicians, which are covered under Part B, Medicare reimburses providers based on a formula set at 106% of the Average Sales Price (ASP), which is the average price to all non-federal purchasers in the U.S, inclusive of rebates (other than rebates paid under the Medicaid program).

• Hospital outpatient departments: Medicare pays hospitals for ambulatory services provided in outpatient departments, using the Hospital Outpatient Prospective Payment System, based on the classification of individual services into Ambulatory Payment Classifications (APC) with similar characteristics and expected costs. Final determination of Medicare payments for outpatient department services is complex. It incorporates both individual service payments and payments “packaged” with other services, partial hospitalization payments, as well as numerous exceptions, such as payments for new technologies. Medicare payment rates for services provided in hospital outpatient departments are typically higher than for similar services provided in physicians’ offices, and evidence indicates that providers have shifted the billing of services to higher-cost settings. There is bipartisan interest in proposals to expand so-called “site-neutral” payments, meaning that Medicare would align payment rates for the same service across settings.
• Skilled Nursing Facilities (SNFs): SNFs are freestanding or hospital-based facilities that provide post-acute inpatient nursing or rehabilitation services. Medicare pays SNFs based on the Skilled Nursing Facility Prospective Payment System, and payments to SNFs are determined using a base payment rate, adjusted for geographic differences in labor costs, case mix, and, in some cases, length of stay. Daily rates consider six care components – nursing, physical therapy, occupational therapy, speech–language pathology services, nontherapy ancillary services and supplies, and non–case mix (room and board services).

Medicare Advantage. Medicare pays firms offering Medicare Advantage plans a set monthly amount per enrollee. The payment is determined through an annual process in which plans submit “bids” for how much they estimate it will cost to provide benefits covered under Medicare Parts A and B for an average beneficiary. The bid is compared to a county “benchmark”, which is the maximum amount the federal government will pay for a Medicare Advantage enrollee and is a percentage of estimated spending in traditional Medicare in the same county, ranging from 95 percent in high-cost counties to 115 percent in low-cost counties. When the bid is below the benchmark in a given county, plans receive a portion of the difference (the “rebate”), which they must use to lower cost sharing, pay for extra benefits, or reduce enrollees’ Part B or Part D premiums. Payments to plans are risk adjusted, based on the health status and other characteristics of enrollees, including age, sex, and Medicaid enrollment. In addition, Medicare adopted a quality bonus program that increases the benchmark for plans that receive at least four out of five stars under the quality rating system, which increases plan payments.

Generally, Medicare pays more to private Medicare Advantage plans for enrollees than their costs would be in traditional Medicare. The Medicare Payment Advisory Commission (MedPAC) reports that while it costs Medicare Advantage plans 83% of what it costs traditional Medicare to pay for Medicare-covered services, plans receive payments from CMS that are 120% of spending for similar beneficiaries in traditional Medicare, on average. The higher spending stems from features of the formula used to determine payments to Medicare Advantage plans, including setting benchmarks above traditional Medicare spending in half of counties and higher benchmarks due to the quality bonus program, resulting in bonus payments of at least $12.7 billion in 2025. This amount is four times greater than spending on bonus payments in 2015 (Figure 12).

The higher spending in Medicare Advantage is also related to the impact of coding intensity, where Medicare Advantage enrollees look sicker than they would if they were in traditional Medicare, resulting in plans receiving higher risk adjustments to their monthly per person payments, translating to an estimated $84 billion in excess payments to plans in 2025.

Higher payments to Medicare Advantage plans allow them to offer extra benefits attractive to enrollees. However, these benefits come at a cost to all beneficiaries through higher Part B premiums – amounting to $13 billion in 2025 alone – and contribute to the strain on the Medicare Part A Hospital Insurance Trust Fund. (See “How Much Does Medicare Spend and How Is the Program Financed?” for additional information .)

Medicare Part D. Medicare pays Part D plans, both stand-alone prescription drug plans and Medicare Advantage plans that offer drug coverage, based on an annual competitive bidding process. Plans submit bids yearly to Medicare for their expected costs of providing the drug benefit plus administrative expenses. Plans receive a direct subsidy per enrollee, which is risk-adjusted based on the health status of their enrollees, plus reinsurance payments from Medicare for the highest-cost enrollees and adjustments for the low-income subsidy (LIS) status of their enrollees. (Unlike Medicare Advantage, there is no quality bonus program that provides higher payments to Part D plans with higher Part D quality ratings.) Risk-sharing arrangements with the federal government (“risk corridors”) limit plans’ potential total losses or gains.

Under reinsurance, Medicare subsidizes 20% of total drug spending incurred by Part D enrollees with relatively high drug spending above the catastrophic coverage threshold, as of 2025, down from 80% in prior years, based on a provision of the Inflation Reduction Act. This provision was designed to shift more of the responsibility for catastrophic drug costs to Part D plans and drug manufacturers. Plans now pay 60% of total drug costs above the catastrophic threshold, up from 15% to 20% in prior years. (See “What Is the Medicare Part D Prescription Drug Benefit?” for more detail on plan liability under various phases of the Part D benefit and more information on changes to Part D included in the Inflation Reduction Act.) In the aggregate, Medicare’s reinsurance payments to Part D plans in 2025 are estimated to account for 18% of total Part D spending, down from close to half of total Part D spending (46%) in 2024 (Figure 13).

For 2025, Medicare’s actuaries estimate that Part D plans will receive direct subsidy payments averaging $1,855 per enrollee overall, $1,313 for enrollees receiving the LIS, and $517 in reinsurance payments for very high-cost enrollees.

While Medicare has traditionally paid providers on a fee-for-service basis, the program is implementing various alternative payment models designed to tie payments under traditional Medicare to provider performance on quality and spending. Although the overarching goals of these various models are similar—improving the quality and affordability of patient care, increasing coordination between care teams, and reducing health care costs—the specific aims vary by model.

A notable example of an alternative payment model within Medicare is the Medicare Shared Savings Program (MSSP), a permanent accountable care organization (ACO) program in traditional Medicare established by the Affordable Care Act (ACA) that offers financial incentives to providers for meeting or exceeding savings targets and quality goals. ACOs are groups of doctors, hospitals, and other health care providers who voluntarily form partnerships to collaborate and share accountability for the quality and cost of care delivered to their patients. The MSSP currently offers different participation options to ACOs, allowing these organizations to share in savings only or both savings and losses, depending on their level of experience and other factors.

ACOs have a defined patient population for the purpose of calculating annual savings or losses. Beneficiaries in traditional Medicare may choose to align themselves to an ACO (voluntary alignment) or may be assigned to a particular ACO based on where they received a plurality of their primary care services. In either case, beneficiaries are free to seek treatment from any provider who accepts Medicare and are not limited to ACO-affiliated providers. This contrasts with enrollment in Medicare Advantage, where beneficiaries are generally limited to seeing providers in their plan’s network or face higher out-of-pocket costs for seeing out-of-network providers.

In 2023, the Medicare Shared Savings Program saved Medicare an estimated $2.1 billion relative to annual spending targets. As of 2025, there are 476 MSSP ACOs nationwide, with over 643,000 participating clinicians and 10.8 million beneficiaries aligned to MSSP ACOs (Figure 14).

The ACA also established the Center for Medicare and Medicaid Innovation (CMMI, also known as the Innovation Center), an operating center within the Centers for Medicare & Medicaid Services tasked with designing and testing alternative payment models to address concerns about rising health care costs, quality of care, and inefficient spending within the Medicare, Medicaid, and CHIP programs. Since its start in 2010, CMMI has launched more than 80 models across six different categories, including accountable care models, disease-specific models, health plan models, and others (Figure 15). CMMI models are designed to be tested over a limited number of years, but Congress gave CMMI the authority to expand models nationwide permanently if they meet certain quality and savings criteria. As of the most recent estimate, six models have shown statistically significant savings, and four have met the requirements for permanent expansion into the wider Medicare program, including the Medicare Diabetes Prevention Program and the Home Health Value-Based Purchasing Model.

While the overall aims of CMMI are set in law, changes of administration have brought about changes in the strategic direction of the Innovation Center and the types of models that have been pursued, along with the reframing or termination of certain models from the previous administration. For example, the Biden administration placed a greater emphasis on health equity in CMMI models, while the second Trump administration is prioritizing evidence-based preventive care, empowering consumers with data and information to make health decisions, and promoting choice and competition in health care markets.

According to the Congressional Budget Office (CBO), the activities of CMMI increased federal spending by $5.4 billion from 2011 to 2020, which CBO attributes in part to the mixed success of many models at generating sufficient savings to offset their high upfront costs. (CBO had initially projected that CMMI would reduce federal spending by $2.8 billion in its first decade of operation.) However, evidence suggests that savings vary by model type, with the greatest savings found among state and community-based models. Further, a review of select CMMI models provides evidence of improvements in care coordination, team-based care, and other care delivery changes, even in the absence of savings. CBO projects that CMMI’s activities will come closer to the breakeven point regarding federal spending over the course of the current decade (2024-2033).

Spending. Medicare plays a significant role in the health care system, accounting for 21% of total national health spending in 2023, a quarter of spending on both hospital care and physician and clinical services, and 32% of spending on retail prescription drug sales (Figure 16).

In 2024, Medicare spending, net of income from premiums and other offsetting receipts, totaled $910 billion and accounted for 13% of the federal budget — a similar share as spending on Medicaid, the ACA, and the Children’s Health Insurance Program combined, and defense spending (Figure 17).

In 2025, Medicare benefit payments are estimated to total $1.1 trillion, up from $632 billion in 2015 (including spending for Part A, Part B, and Part D benefits in both traditional Medicare and Medicare Advantage). Medicare spending per person has also grown, increasing from $5,800 to $16,700 between 2000 and 2023 – or 4.7% average annual growth over the 23-year period. In recent years, however, growth in spending per person has been lower in Medicare than in private health insurance .

Spending on Medicare Part A benefits (mainly hospital inpatient services) has decreased as a share of total Medicare spending over time as care has shifted from inpatient to outpatient settings, leading to an increase in spending on Part B benefits (including physician services, outpatient services, and physician-administered drugs). Spending on Part B services now accounts for the largest share of Medicare benefit spending (50% in 2024) (Figure 18). Moving forward, Medicare spending on physician services and other services covered under Part B is expected to grow to more than half of total Medicare spending by 2034, while spending on hospital care and other services covered under Part A is projected to decrease further as a share of the total.

Payments to Medicare Advantage plans for Part A and Part B benefits tripled as a share of total Medicare spending between 2014 and 2024, from $156 billion to $462 billion, partly due to steady enrollment growth in Medicare Advantage plans. Growth in spending on Medicare Advantage also reflects that Medicare pays more to private Medicare Advantage plans for enrollees than their costs in traditional Medicare, on average. (See “How Does Medicare Pay Private Plans in Medicare Advantage and Medicare Part D?” for additional information.) These higher payments have contributed to growth in spending on Medicare Advantage and overall Medicare spending. In 2024, half of all Medicare program spending for Part A and Part B benefits was for Medicare Advantage plans, up from just under 30% in 2014. Between 2024 and 2034, Medicare Advantage payments are projected to total close to $9 trillion, $2.5 trillion more than spending under traditional Medicare (Figure 19).

Financing. Medicare funding, which totaled $1.1 trillion in 2024, comes primarily from governmnet contributions (44%), payroll tax revenues (35%), and premiums paid by beneficiaries (15%). Other sources include taxes on Social Security benefits, payments from states, and interest.

The different parts of Medicare are funded in varying ways, and revenue sources dedicated to one part of the program cannot be used to pay for another part (Figure 20).

• Part A, which covers inpatient hospital stays, skilled nursing facility (SNF) stays, some home health visits, and hospice care, is financed primarily through a 2.9% tax on earnings paid by employers and employees (1.45% each). Higher-income taxpayers (more than $200,000 per individual and $250,000 per couple) pay a higher payroll tax on earnings (2.35%). Payroll taxes accounted for 88% of Part A revenue in 2024.
• Part B, which covers physician visits, outpatient services, preventive services, and some home health visits, is financed primarily through a combination of government contributions (72% in 2024) and beneficiary premiums (26%) (and 2% from interest and other sources). The standard Part B premium that most Medicare beneficiaries pay is calculated as 25% of annual Part B spending, while beneficiaries with annual incomes over $106,000 per individual or $212,000 per couple pay a higher, income-related Part B premium reflecting a larger share of total Part B spending, ranging from 35% to 85%.
• Part D, which covers outpatient prescription drugs, is financed primarily by government contributions (75%) and beneficiary premiums (13%), with an additional 12% of revenues coming from state payments for beneficiaries enrolled in both Medicare and Medicaid. Higher-income enrollees pay a larger share of the cost of Part D coverage, as they do for Part B.
• The Medicare Advantage program (sometimes referred to as Part C) does not have its own separate revenue sources. Funds for Part A benefits provided by Medicare Advantage plans are drawn from the Medicare HI trust fund. Funds for Part B and Part D benefits are drawn from the Supplementary Medical Insurance (SMI) trust fund. Beneficiaries enrolled in Medicare Advantage plans pay the Part B premium and may pay an additional premium if required by their plan. In 2025, 76% of Medicare Advantage enrollees pay no additional premium.

Measuring the level of reserves in the Medicare Hospital Insurance trust fund, out of which Part A benefits are paid, is a common way of measuring Medicare’s financial status. Each year, Medicare’s actuaries provide an estimate of the year when the reserves are projected to be fully depleted. In 2025, the Medicare Trustees projected sufficient funds would be available to pay for Part A benefits in full until 2033, 8 years from now – three years earlier than the 2024 projection. At that point, in the absence of Congressional action, Medicare will be able to pay 89% of costs covered under Part A using payroll tax revenues. At the same time, the Congressional Budget Office has recently updated its projection of the Part A trust fund, extending the year of trust fund depletion to 2052, based on changes in its projections of Part A spending and revenues and a change in CBO’s modeling related to graduate medical education payments. OACT projects both lower income and higher spending under Part A than CBO, as well as faster Part A spending growth, which helps to account for the difference in the projected HI trust fund depletion dates.

Since 2010, the projected year of trust fund reserve depletion, based on projections by Medicare’s actuaries, has ranged from 5 years out (in 2021) to 19 years out (in 2010) (Figure 21).

The level of reserves in the Part A Trust Fund is affected by growth in the economy, which affects revenue from payroll tax contributions, health care spending and utilization trends, and demographic trends: an increasing number of beneficiaries as the population ages, especially between 2010 and 2030 when the baby boom generation reaches Medicare eligibility age, and a declining ratio of workers per beneficiary making payroll tax contributions. 

Part B and Part D do not have financing challenges similar to Part A, because both are funded by beneficiary premiums and government contributions that are set annually to match expected outlays. However, future increases in spending under Part B and Part D will require increases in government (and taxpayer) funding and higher premiums paid by beneficiaries.

Looking to the future, Medicare faces a number of challenges from the perspective of beneficiaries, health care providers and private plans, and the federal budget. These include:

• How best to address the fiscal challenges arising from an aging population and increasing health care costs through spending reductions and/or revenue increases.
• Whether and how to improve coverage for Medicare beneficiaries, including an out-of-pocket limit in traditional Medicare, enhanced financial support for lower-income beneficiaries, and additional benefits, such as dental and vision.
• How to control spending while ensuring fair and adequate payments to hospitals, physicians and other providers, and Medicare Advantage plans, including whether and how to reduce overpayments to Medicare Advantage plans.
• How to address the implications for traditional Medicare of the predominant role that Medicare Advantage now plays in covering Medicare beneficiaries.

Any potential changes to Medicare to address these challenges could have implications for federal spending and taxpayers, the solvency of the Medicare Hospital Insurance trust fund, total health care spending, the affordability of health care for Medicare’s growing number of beneficiaries, many of whom have limited incomes, and access to high-quality medical care.

• What to Know about Medicare Spending and Financing
• A Current Snapshot of the Medicare Part D Prescription Drug Benefit
• Medicare Advantage in 2025: Enrollment Update and Key Trends 
• Key Facts About Medicare Part D Enrollment, Premiums, and Cost Sharing in 2025 
• What to Know about the Medicare Open Enrollment Period and Medicare Coverage Options
• Explaining the Prescription Drug Provisions in the Inflation Reduction Act
• A Snapshot of Sources of Coverage Among Medicare Beneficiaries
• Medicare Advantage Quality Bonus Payments Will Total at Least $12.7 Billion in 2025
• FAQs about the Inflation Reduction Act’s Medicare Drug Price Negotiation Program
• How Many Physicians Have Opted Out of the Medicare Program?
• The Facts About Medicare Spending
• Medicare Part D in 2025: A First Look at Prescription Drug Plan Availability, Premiums, and Cost Sharing
• Medicare Advantage 2025 Spotlight: A First Look at Plan Offerings 
• Income and Assets of Medicare Beneficiaries
• What to Know About How Medicare Pays Physicians 
• Medicare Advantage Insurers Made Nearly 50 Million Prior Authorization Determinations in 2023 
• Implementation Dates for 2025 Reconciliation Law 
• Health Provisions in the 2025 Reconciliation Law 

Cubanski, J., Freed, M., Ochieng, N., Cottrill, A., Fuglesten Biniek, J., & Neuman, T., Medicare 101. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-medicare/ (date accessed).

Medicaid is the primary program providing comprehensive coverage of health and long-term care to about 80 million low-income people in the United States. Medicaid accounts for nearly one-fifth of health care spending (and over half of spending for long-term care) and a large share of state budgets. Medicaid is jointly financed by states and the federal government but administered by states within broad federal rules. Because states have the flexibility to determine what populations and services to cover, how to deliver care, and how much to reimburse providers, there is significant variation across states in program spending and the share of people covered by the program.  Changes to Medicaid and the Affordable Care Act included in the tax and spending budget reconciliation law enacted in July 2025 are expected to reduce federal Medicaid spending by $911 billion over 10 years and reduce the number of people with health insurance by 10 million (three-quarters of which stems from the cuts to Medicaid).

Medicaid is the primary program providing comprehensive coverage of health care and long-term care to about 80 million low-income people in the United States. Medicaid accounts for nearly one-fifth of health care spending (and half of spending for long-term care) and a large share of state budgets (Figure 1).

Subject to federal standards, states administer Medicaid programs and have flexibility to determine what populations and services to cover, how to deliver care, and how much to reimburse providers. States can obtain Section 1115 waivers to test and implement approaches that differ from what is required by federal statute if the Secretary of Health and Human Services (HHS) determines the waivers would advance program objectives. Because of this flexibility, there is significant variation across state Medicaid programs, and, as a result, the share of state residents covered by the program (Figure 2).

Title XIX of the Social Security Act and a large body of federal regulations and sub-regulatory guidance govern the program, defining federal Medicaid requirements and states’ options and authorities. At the federal level, the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS) administers Medicaid and oversees states’ programs. States may choose to participate in Medicaid, but if they do, they must comply with core federal requirements. Not all states opted to participate in Medicaid immediately after its enactment in 1965, but by the 1980s, all states had opted in. Medicaid coverage was historically tied to cash assistance—either Aid to Families with Dependent Children (AFDC) or federal Supplemental Security Income (SSI). Over time, Congress expanded federal minimum requirements and provided new coverage requirements and options for states, especially for children, pregnant women, and people with disabilities. In 1996, legislation replaced Aid to Families with Dependent Children with Temporary Assistance to Needy Families (TANF) and severed the link between Medicaid eligibility and cash assistance for children, pregnant women, and low-income parents. The Children’s Health Insurance Program (CHIP) was established in 1997 to cover low-income children above the cut-off for Medicaid with an enhanced federal match rate (Figure 3).

In 2010, the Affordable Care Act (ACA) expanded Medicaid to nearly all nonelderly adults with income up to 138% FPL ($21,597 annually for an individual in 2025) through a new coverage pathway for parents with incomes above states’ mandatory eligibility levels for parents/caretakers and adults without dependent children who had traditionally been excluded from Medicaid coverage. However, the ACA Medicaid expansion coverage is effectively optional for states because of a 2012 Supreme Court ruling. As of July 2025, 41 states, including Washington, D.C., have expanded Medicaid (Figure 4). States receive a higher rate of federal matching funding for people who are enrolled through the expansion coverage pathway. Under the ACA, all states were also required to modernize and streamline Medicaid eligibility and enrollment processes to help individuals obtain and maintain coverage.

The COVID-19 pandemic profoundly affected Medicaid spending and enrollment. At the start of the pandemic, Congress enacted legislation that included a requirement that Medicaid programs keep people continuously enrolled in exchange for enhanced federal funding. As a result, Medicaid/CHIP enrollment grew substantially, and the uninsured rate dropped. The unwinding of these provisions started on April 1, 2023, and millions were disenrolled from Medicaid; however, Medicaid enrollment remains higher than prior to the start of the pandemic in February 2020.

Passage of the tax and spending reconciliation budget bill in July 2025 included significant changes to Medicaid that are expected to reduce federal Medicaid funding and reduce Medicaid enrollment over the next 10 years relative to what would have been expected under current law. For the first time, the law conditions Medicaid eligibility for Medicaid expansion enrollees on meeting work and reporting requirements.  These work requirements, which will go into effect on January 1, 2027, or sooner at state option, represent the largest source of federal Medicaid funding reductions and the largest source of enrollment declines in the law. The law makes other changes. Beyond work requirements, the largest cuts to Medicaid stem from provisions that would: reduce and limit provider taxes, a mechanism that nearly all states use to finance the state share of Medicaid; reduce the payments states require managed care organizations to make to health care providers (“state-directed payments”); delaying enforcement of certain provisions in the Biden administration’s rules simplifying Medicaid eligibility and renewal processes; and increasing frequencies of eligibility redeterminations for expansion enrollees. Combined, those changes and work requirements account for nearly 90% of the expected cuts in federal spending according to the Congressional Budget Office (CBO).

States are guaranteed federal matching dollars without a cap for qualified services provided to eligible enrollees. The match rate for most Medicaid enrollees is determined by a formula in the law that provides a match of at least 50% and provides a higher federal match rate for states with lower per capita income (Figure 5). States may receive a higher match rate for certain services and populations. The ACA expansion group is financed with a 90% federal match rate, so states pay 10%, and the American Rescue Plan Act included an additional temporary fiscal incentive to states that newly adopt the Medicaid expansion; however, the tax and spending law eliminated the incentive, effective January 1, 2026. In FY 2023, Medicaid spending totaled $880 billion of which 69% was federal spending. Medicaid spending growth typically accelerates during economic downturns as enrollment increases. Spending growth also peaked after the implementation of the ACA and, more recently, due to enrollment growth tied to the pandemic-related continuous enrollment provision.

Overall, Medicaid accounts for a large share of most states’ budgets and is often central to state fiscal decisions; however, state spending on Medicaid is second to state spending on elementary and secondary education, and the program is also the largest source of federal revenue for states. In state fiscal year 2023, Medicaid accounted for 30% of total state expenditures, 15% of expenditures from state funds (general funds and other funds), and 57% of expenditures from federal funds received by the state.

Social Security, Medicare , and Medicaid are the three main entitlement programs, accounting for 41% of all federal outlays in FFY 2024. Of these three programs, Medicaid is the smallest in terms of federal outlays, though it covers more people than Medicare or Social Security. Overall, federal spending on domestic and global health programs and services accounted for 29% of net federal outlays in FFY 2023, including spending on Medicare (13%), Medicaid and CHIP (10%), and other health spending (6%). Dating back to the 1980s, there have been efforts to limit federal financing for Medicaid either through a block grant to states or through a cap on spending per enrollee as a way to help reduce federal spending. Such efforts could shift costs to states, forcing them to make tough choices about whether to pay for the federal cuts, which would require higher taxes or reductions in non-Medicaid state spending, or to reduce Medicaid spending by limiting Medicaid eligibility, covering fewer benefits, or paying less to providers. Although early discussions over the tax and spending law included proposals that would have reduced the federal Medicaid match rate and imposed a cap on per-enrollee spending, these changes to Medicaid financing were not included in the final version of the bill that passed.

Medicaid is an entitlement, meaning individuals who meet eligibility requirements are guaranteed coverage. The federal government sets minimum eligibility standards, but states may expand coverage beyond these minimum requirements.  Federal minimum eligibility levels for children and pregnant individuals are set at 133% of the federal poverty level (FPL) with a mandatory 5 percentage point income disregard or effectively 138% FPL ($36,777 for a family of 3 in 2025); however, median eligibility levels for these groups were 255% FPL for children and 213% FPL for pregnant individuals as of January 2025. As a result of the ACA, the median coverage level for parents and adults without dependent children is 138% FPL, but for states that have not adopted the ACA expansion, the median eligibility for parents was 33% FPL. In non-expansion states, adults without dependent coverage are not eligible for Medicaid coverage and those with incomes below the FPL fall into the coverage gap.

Medicaid coverage is also available to certain individuals who qualify on the basis of being age 65 and older or having a disability. These coverage categories are referred to as “non-MAGI” pathways because they do not use the Modified Adjusted Gross Income (MAGI) financial methodology that applies to pathways for pregnant people, parents, and children with low incomes. In addition to considering advanced age, disability status, and income, many non-MAGI pathways also have asset limits. Medicaid generally covers individuals who qualify for Supplemental Security Income (SSI), but nearly all other non-MAGI pathways are optional, resulting in substantial state variation.  Each group has different rules about income and assets, making eligibility complex (Figure 6).

Medicaid coverage is limited for immigrants, and except for emergency services, Medicaid coverage is not available for undocumented immigrants. A number of states, however, use state funds to provide coverage to all or some undocumented immigrants.

While Medicaid covers 1 in 5 people living in the United States, Medicaid is a particularly significant source of coverage for certain populations. In 2023, Medicaid covered 4 in 10 children, 8 in 10 children in poverty,  1 in 6 nonelderly adults, and 6 in 10 nonelderly people in poverty. Relative to White children and adults, Medicaid covers a higher share of Black, Hispanic, and American Indian or Alaska Native (AIAN) children and adults. Medicaid covers over 1 in 3 people with disabilities overall (4 in 10 people with disabilities ages 19-64), who are defined as having one or more difficulty related to hearing, vision, cognition, ambulation, self-care, or independent living (Figure 7).

Medicaid provides coverage for a number of special populations.  For example, Medicaid covers 41% of all births in the United States, 42% of children with special health care needs, 5 in 8 nursing home residents, 29% of non-elderly adults with any mental illness, and 40% of non-elderly adults with HIV. Medicaid pays Medicare premiums and often provides wraparound coverage for services not covered by Medicare (like most long-term care) for nearly 1 in 5 Medicare beneficiaries (13 million).  Medicaid is a key source of coverage for individuals experiencing homelessness and those transitioning out of carceral settings, particularly in states that have adopted the Medicaid expansion.

Among the non-elderly covered by Medicaid, nearly half are children under age 19, 6 in 10 are people of color, 57% are female, and three-quarters are in a family with a full- or part-time worker. Even though most adult Medicaid enrollees are working, many do not have an offer of employer-sponsored coverage, or it is not affordable.

Medicaid covers a broad range of services to address the diverse needs of the populations it serves. In addition to covering the services required by federal Medicaid law, all states elect to cover at least some services that are not mandatory (Figure 8). All states cover prescription drugs, and most states cover physical therapy, eyeglasses, and dental care. Medicaid provides comprehensive benefits for children, known as Early Periodic Screening Diagnosis and Treatment (EPSDT) services. EPSDT is especially important for children with disabilities because it allows children access to a broader set of benefits to address complex health needs than what is traditionally covered by private insurance. Unlike commercial health insurance and Medicare, Medicaid also covers non-emergency medical transportation, which helps enrollees get to appointments, and long-term care, including nursing home care and many home care services (also known as home and community-based services, or HCBS). Coverage for long-term care is mandatory for nursing facilities, but most coverage of home care is optional. In recent years, states have expanded coverage of behavioral health services and benefits to help enrollees address social determinants of health (SDOH) like nutrition or housing.

Most people age 65 and older and many people under age 65 with disabilities have Medicare, but Medicare does not cover most LTC; instead, Medicaid is the primary payer for LTC. LTC encompasses the broad range of paid and unpaid medical and personal care services that assist with activities of daily living (such as eating, bathing, and dressing) and instrumental activities of daily living (such as preparing meals, managing medication, and housekeeping). They are provided to people who need such services because of aging, chronic illness, or disability. These services include nursing facility care, adult daycare programs, home health aide services, personal care services, transportation, and supported employment. They may be provided over several weeks, months, or years, depending on an individual’s health care coverage and level of need. There have been longstanding challenges finding enough workers to provide LTC for all people who need such services, and the COVID-19 pandemic exacerbated those issues considerably. As the population ages and advances in medicine and technology enable people with serious disabilities to live longer, the number of people in need of LTC is expected to grow.

In 2024, the median annual costs of care in the U.S. were $127,750 for a private room in a nursing home, $70,800 for an assisted living facility, and $77,792 for a home health aide. Medicare provides home health and skilled nursing facility care under specific circumstances, but the Medicare benefit is considered “post-acute” care and generally not available for people needing services on an ongoing basis. Medicaid plays a key role in access to LTC for people who qualify because LTC costs are difficult for most people to afford when paying out-of-pocket. In some cases, people only qualify for Medicaid after exhausting their savings on the costs of LTC. In 2023, Medicaid paid 61% of the $459 billion spent on LTC in the U.S. (Figure 9).

LTC may be provided in various settings broadly categorized as institutional or non-institutional. Institutional settings include nursing facilities and intermediate care facilities for people with intellectual disabilities. Services provided in non-institutional settings are known as home care (also known as home and community-based services, or HCBS), and these settings may include a person’s home, adult day care centers, assisted living settings, and group homes. Federal Medicaid statutes require states to cover institutional LTC and home health, but nearly all home care is optional. Even without a mandate to cover home care, Medicaid LTC spending has shifted from institutional to non-institutional settings over time. In 2023, most spending for LTC in the U.S. was for home care (Figure 9). That shift reflects beneficiary preferences for receiving care in non-institutional settings and requirements for states to provide services in the least restrictive setting possible stemming from the Olmstead decision. In 2023, there were 6.3 million people who used Medicaid LTC, of which 4.9 million (77%) used home care and 1.4 million (23%) used institutional care (Figure 10). While overall, over three-quarters of people who used Medicaid LTC exclusively used home care services, the share varied across states (Figure 10).  To qualify for coverage of LTC under Medicaid, people must meet state-specific eligibility requirements regarding their levels of income, wealth, and functional limitations.

Managed care is the dominant delivery system for Medicaid enrollees with 75% of Medicaid beneficiaries enrolled in comprehensive managed care organizations (MCOs). Medicaid MCOs provide comprehensive acute care and, in some cases, LTC to Medicaid beneficiaries and are paid a set per member per month payment for these services. In FFY 2023, payments to managed care and health plans accounted for the largest share (55%) of Medicaid spending, with capitated payments to comprehensive MCOs accounting for 52% of Medicaid spending and payments to other Medicaid managed care (e.g., primary care case management (PCCM) arrangements or specialty plans) accounting for another 3% (Figure 11). Smaller shares of total Medicaid spending in FFY 2023 were for fee-for-service acute care (21%), fee-for-service LTC (19%), Medicaid spending for Medicare premiums on behalf of enrollees who also have Medicare (3%), and disproportionate share hospital (DSH) payments (2%).

Medicaid spending is driven by multiple factors, including the number and mix of enrollees, their use of health care and long-term care, the prices of Medicaid services, and state policy choices about benefits, provider payment rates, and other program factors. During economic downturns, enrollment in Medicaid grows, increasing state Medicaid costs while state tax revenues are declining. Due to the federal match, as spending increases during economic downturns, so does federal funding. During the pandemic-induced recession and the two economic downturns prior to the pandemic, Congress enacted legislation that temporarily increased the federal share of Medicaid spending to provide increased support for states to help fund Medicaid. High enrollment growth rates, tied first to the Great Recession, then ACA implementation, and later the pandemic, were the primary drivers of total Medicaid spending growth over the last two decades (Figure 12).

People eligible based on being age 65 or older or based on a disability comprise about 1in 5 enrollees but account for more than half of Medicaid spending, reflecting high health care needs and in many cases, use of LTC (Figure 13).

Across the states, spending per full-benefit enrollee ranged from a low of $4,780 in Alabama to $12,295 in the District of Columbia in 2023. Variation in spending across the states reflects considerable flexibility for states to design and administer their own programs – including what benefits are covered and how much providers are paid — and variation in the health and population characteristics of state residents. Within each state, there is also substantial variation in the average costs for each eligibility group, and within each eligibility group, per-enrollee costs may vary significantly, particularly for individuals eligible based on disability (Figure 14).

In 2023, people who used Medicaid LTC comprised 6% of Medicaid enrollment but 36% of federal and state Medicaid spending (Figure 15). High per-person Medicaid spending among enrollees who use LTC likely reflects the generally high cost of LTC and more extensive health needs among such groups that lead to higher use of other health care services and drugs as well.

As of July 2024, 42 states (including Washington, D.C.) contract with comprehensive, risk-based managed care plans – often administered by private insurance companies – to provide care to at least some of their Medicaid beneficiaries (Figure 16). Medicaid MCOs provide comprehensive acute care (i.e., most physician and hospital services) and, in some cases, LTC to Medicaid beneficiaries and are paid a set per member per month payment for these services. Medicaid MCOs represent a mix of private for-profit, private non-profit, and government plans. States have increased their reliance on MCOs with the aim of improving access to certain services, enhancing care coordination and management, and making future costs more predictable. While the shift to MCOs has increased budget predictability for states, the evidence about the impact of managed care on access to care, costs, and outcomes is both limited and mixed. Children and adults are more likely to be enrolled in MCOs than adults aged 65 and older and people eligible because of a disability; however, states are increasingly including beneficiaries with complex needs in MCOs. States are also increasingly leveraging Medicaid MCOs to help identify and address social determinants of health and to reduce health disparities.

A large body of research shows that Medicaid enrollees have substantially better access to care than people who are uninsured (who are also primarily low-income) and are less likely to postpone or go without needed care due to cost. Key measures of access to care and satisfaction with care among Medicaid enrollees are generally comparable to rates for people with private insurance (Figure 17). Given Medicaid enrollees have low incomes, federal rules include protections to limit out-of-pocket costs that can help improve access.  A 2023 KFF Survey of Consumer Experiences with Health Insurance found Medicaid enrollees report fewer cost-related problems compared to those with Marketplace or employer coverage. While most Medicaid enrollees will continue to be protected against large out-of-pocket costs, the tax and spending law newly requires states to impose cost sharing of up to $35 on certain services on Medicaid expansion adults who have incomes 100% – 138% FPL.

Longstanding research shows that Medicaid eligibility during childhood is associated with positive effects on health (including reduced avoidable hospitalizations and mortality) and impacts beyond health, such as improved long-run educational attainment. Early and updated research findings show that state Medicaid expansions to low-income adults are associated with increased access to care, increased economic security, improved self-reported health status, and other outcomes including increased early-stage cancer diagnosis rates, lower mortality rates for certain conditions (e.g., cancer, cardiovascular disease, liver disease), decreased maternal mortality, improved treatment management for conditions (e.g., diabetes, HIV), and improved outcomes related to substance use disorders. Gaps in access to certain providers (e.g., psychiatrists and dentists) are an ongoing challenge in Medicaid that may reflect system-wide problems, but may be exacerbated by provider shortages in low-income communities, Medicaid’s lower physician payment rates, and lower Medicaid physician participation compared with private insurance. In 2021, MACPAC found physicians were less likely to accept new Medicaid patients (74%) than those with Medicare (88%) or private insurance (96%), but these rates may vary by state, provider type, and setting. Medicaid acceptance was much higher where physicians practiced in community health centers, mental health centers, non-federal government clinics, and family clinics compared to the average for all settings. Provider participation rates may contribute to findings that Medicaid enrollees may experience more difficulty obtaining health care than those with private insurance.  A 2023 KFF Survey of Consumers found Medicaid enrollees report more problems with prior authorization and provider availability compared to people with other insurance types.

Section 1115 demonstration waivers offer states the ability to test new approaches in Medicaid that differ from what is required by federal statute, if CMS determines that such proposals are “likely to assist in promoting the objectives of the Medicaid program.” Nearly all states have at least one active Section 1115 waiver and some states have multiple 1115 waivers. Section 1115 waivers have been used over time and generally reflect priorities identified by the states as well as changing priorities from one presidential administration to another (Figure 18). Waivers have been used to expand coverage or benefits, change policies for existing Medicaid populations (e.g., testing premiums or other eligibility requirements), modify delivery systems, restructure financing or authorize new payments (e.g., supplemental payments or incentive-based payments), as well as make other program changes. 

Activity from the first Trump administration and the Biden administration tested how 1115 waivers can be used to advance administrative priorities and also tested the balance between states’ flexibility and discretion by the federal government. The first Trump administration’s Section 1115 waiver policy emphasized work requirements and other eligibility restrictions, payment for institutional behavioral health services, and capped financing. The Biden administration withdrew waiver approvals with work requirements, phased out approval of premium requirements, and instead encouraged states to propose waivers that expand coverage, reduce health disparities, advance “whole-person care,” and improve access to behavioral health care. Areas of focus during the Biden administration included leveraging Medicaid to address health-related social needs (including housing instability, homelessness, nutrition insecurity) and to provide health care to individuals transitioning from incarceration back into the community. Several states also received approval to provide multi-year continuous Medicaid coverage for children. Recent actions from the new Trump administration could signal efforts to curtail waivers related to social determinants of health, continuous eligibility and to limit 1115 waiver financing tools and flexibility. In addition, several states are seeking approval for work requirements waivers. Although the tax and spending reconciliation law now includes a national work requirement, some states may continue to pursue waivers to implement work requirements prior to January 1, 2027 when the national requirement goes into effect.

Various types of waivers and other emergency authorities can also be used to respond to emergencies. These authorities can help expand Medicaid capacity and focus on specific services, providers, or groups of enrollees that may be particularly impacted. During the COVID-19 pandemic, all 50 states and Washington, D.C. received approval to make changes using emergency authorities to facilitate access to care by expanding telehealth, eligibility, benefits and help address workforce issues for home- and community-based services.

Looking to the future, Medicaid faces a number of challenges, including: 

• How will the new work requirements, eligibility and cost sharing changes affect Medicaid enrollment and access to care, particularly for adults covered through the Medicaid expansion?
• What impact will the Medicaid changes have on the number of people without health insurance?
• How will states respond to federal Medicaid spending cuts and limits on their ability to use provider taxes to help finance the non-federal share of Medicaid spending?
• How will the cuts in Medicaid spending and enrollment affect health care providers (including rural providers) and the broader health care system? To what extent will a new temporary rural health fund totaling $50 billion blunt some of the effects of the cuts?
• Will administrative actions and federal funding cuts for Medicaid as well as broader federal changes in immigration policy affect Medicaid payment rates for long-term care and the long-term care workforce?
• Will Congress move to reverse some of the Medicaid cuts before they go into effect?

Policy changes to Medicaid have implications for the roughly 80 million people who rely on the program for health coverage, state and federal budgets and spending, and health care providers, including nursing facilities and home care providers. As the source of nearly one fifth of total health care spending, these changes will also have implications for the broader health care system. Changes in Medicaid enrollment will also affect overall coverage trends. Declines in Medicaid enrollment can be expected to increase the number of people who are uninsured, jeopardizing improvements in the affordability of and access to care for potentially millions of people.  

• 10 Things to Know About Medicaid
• Medicaid: What to Watch in 2025 | KFF
• Medicaid Financing: The Basics
• 10 Things to Know About Medicaid Managed Care
• 10 Things About Long-Term Services and Supports (LTSS)
• 50-State Medicaid Budget Survey Archives
• 50-State Medicaid Eligibility Survey Archives
• 50-State Survey Archives: Medicaid HCBS and Eligibility Based on Disability or Age 65+
• Status of State Medicaid Expansion Decisions: Interactive Map
• Medicaid Waiver Tracker: Approved and Pending Section 1115 Waivers by State
• Allocating CBO’s Estimates of Federal Medicaid Spending Reductions Across the States: Enacted Reconciliation Package | KFF
• Health Provisions in the 2025 Federal Budget Reconciliation Law
• Implementation Dates for 2025 Budget Reconciliation Law

Rudowitz, R., Tolbert, J., Burns, A., Hinton, E., Chidambaram, P., & Mudumala, A., Medicaid 101. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-medicaid/ (date accessed)

Health and health care disparities refer to preventable differences in health and health care among groups that stem from broader social and economic factors. Despite the recognition of disparities for decades and overall improvements in population health over time, many disparities persist, and in some cases, have widened over time. Disparities limit the overall health of the nation and result in unnecessary costs. This chapter provides an overview of what health and health care disparities are, the factors that drive them, the status of racial and ethnic health and health care disparities today, how recent federal actions may impact disparities, and future considerations. The information and data included in this chapter are current as of July 2025.

In the wake of the COVID-19 pandemic and racial reckoning following the murders of George Floyd and others, the federal government as well as many states and private entities increased efforts focused on addressing health disparities. Since taking office, the Trump administration has taken a range of actions to eliminate federal diversity and disparities-related initiatives, restructured and eliminated federal staff and offices that played key roles in identifying and addressing disparities, and implemented policies focused on restricting immigration and increasing interior enforcement to support mass deportation of immigrants. Moreover, the 2025 federal budget reconciliation law makes large cutbacks to federal spending for Medicaid and the Affordable Care Act’s (ACA’s) provisions. These actions will likely lead to widening disparities in health and health care going forward.

Health and health care disparities refer to preventable differences in health and health care among groups that stem from broader social and economic factors. There are multiple definitions of health disparities. The Centers for Disease Control and Prevention (CDC) defines health disparities as “preventable differences that populations experience in the burden of disease, injury, violence, or opportunities.” A health care disparity typically refers to differences between groups in health insurance coverage, affordability, access to and use of care, and quality of care. The terms “health inequality” and “inequity” also are used to describe differences that stem from systemic and unjust or inequitable social and economic policies. Racism, which the CDC previously defined as a system that includes structural, institutional, interpersonal, and internalized racism that assigns value and determine opportunities based on the way people look or the color of their skin, results in conditions that unfairly advantage some and disadvantage others. Racism and discrimination at all levels, intentional or not, contribute to differences in experiences across many aspects of everyday life as well as in health care settings, which can negatively impact people’s health and well-being.

Reflecting the intersectional nature of people’s identities, some individuals experience disparities across multiple dimensions beyond race and ethnicity such as citizenship, sexual orientation and gender identity, and disability status.  Disparities also occur within subgroups of broader racial and ethnic groups, such as gender, ethnic identity, immigration status, and English proficiency. For example, a KFF survey shows that Black women report more pervasive negative experiences in health care settings compared to other groups. These groups are not mutually exclusive and often intersect in meaningful ways.  The Healthcare Research and Quality Act of 1999, which established an Office of Priority Populations within the Agency for Healthcare Research and Quality (AHRQ) identifies designated priority populations, including “low-income populations, racial/ethnic minorities, maternal health, women, children/adolescents, elderly, and individuals with special health care needs.” The National Institute on Minority Health and Health Disparities, established under the Minority Health and Health Disparities Research and Education Act also has designated populations with health disparities, including “racial and/or ethnic minority populations, low socioeconomic status, underserved rural populations, people with disabilities, and sexual minority groups.”

Health equity generally refers to individuals achieving their highest level of health through the elimination of disparities in health and health care. The CDC describes health equity as when everyone has a fair and just opportunity to be as healthy as possible. The World Health Organization (WHO) states that “health equity is achieved when everyone can attain their full potential for health and well-being.” The WHO defines equity as the absence of unfair and avoidable differences among groups, regardless of their identity, where they live, and other social and economic factors. The terms health equity and equality both refer to efforts to achieve better health outcomes and access to health care services for all groups. While health equality refers to providing all people with the same resources and opportunities, it does not account for people’s different underlying needs or circumstances that may affect their ability to achieve optimal health outcomes and health care access.

The U.S. has a long history of policies and events that have resulted in stark differences in access to resources, opportunities, and power that contribute to racial and ethnic disparities in health today. Dating back to slavery and colonization of the Americas, people of color have been subject to abuse and mistreatment, including medical exploitation and experimentation, family separation, and efforts to eliminate cultural practices and languages. Historical discriminatory policies, such as redlining, have lasting effects today, leading to residential segregation of Black and Hispanic people into urban neighborhoods with more limited resources and increased health risks, including climate-related risks. Within medicine, disproven beliefs about biological differences by race persist today and have led to race permeating clinical decision making and treatment in multiple ways, including through providers’ attitudes and implicit biases, disease stereotyping and clinical nomenclature, and its use in clinical algorithms, tools, and treatment guidelines. Similarly, historical anti-immigrant policies have excluded and discriminated against certain groups, contributing to “othering” and “perpetual foreigner” stereotypes, particularly among Asian immigrants, with a resurgence in anti-Asian rhetoric amid the COVID-19 pandemic. Policies, such as the 1996 Welfare Reform Law, have restricted access to public assistance programs, including health coverage, contributing to persistent disparities in health coverage and care for immigrants today, who are disproportionately Hispanic or Asian.

Underlying inequities in social and economic factors that reflect historical and contemporary policies drive racial and ethnic disparities in health (Figure 1). Though health care is essential to health, studies suggest that social and economic factors, often referred to as  social determinants of health, are the primary drivers of health outcomes. These include factors such as access to housing, food, and economic and educational opportunities. Hispanic, Black, AIAN, and NHPI people fare worse compared to White people across many social and economic factors. Experiences for Asian people are mixed, although some subgroups of Asian people fare worse compared to White people. Asian immigrants face certain additional challenges.

Experiences with unfair treatment and discrimination negatively impact health and well-being. Despite growing calls to address racism in the wake of the COVID-19 pandemic and the accompanying racial reckoning, many adults continue to experience unfair treatment and discrimination in their daily lives and in health care settings. A 2023 KFF survey finds that at least half of AIAN (58%), Black (54%), Hispanic adults (50%), and about 4 in 10 Asian adults (42%) say they experienced at least one type of discrimination in daily life in the past year. These experiences include receiving poorer service than others at restaurants or stores; people acting as if they are afraid of them or as if they aren’t smart; being threatened or harassed; or being criticized for speaking a language other than English. Consistent with other research, which shows that racism has negative effects on mental health and results in certain negative physical health outcomes, among those with discrimination experiences, 4 in 10 (40%) say they “always” or “often” felt anxious in the past year, compared to 14% of adults who rarely or never experience such discrimination (Figure 2). Similarly, those with experiences of discrimination in their daily life are more than three times as likely as others to say they always or often felt lonely (26% vs. 7%) or depressed (25% vs. 7%) in the past year.

Racism and discrimination also negatively affect people’s health care experiences. KFF survey data also show that Black, Hispanic, AIAN, and Asian adults report higher levels of unfair treatment when seeking health care than their White counterparts and are more likely to report having certain negative experiences with a health care provider because of their race and ethnicity (Figure 3). About a quarter of adults who experienced unfair treatment, a negative experience with a provider, or a language access challenge say it led to worse health, being less likely to seek care, and/or switching providers. Similarly, as of 2023, one in four (25%) immigrant adults said that they were treated unfairly by a health care provider in the U.S., including nearly four in ten (38%) Black immigrant adults.

Addressing disparities in health and health care is important not only from an equity standpoint but also for improving the nation’s overall health and economic prosperity. Racial and ethnic health and health care disparities result in higher rates of illness and death across a wide range of health conditions, limiting the overall health of the nation. Research further finds that health disparities are costly, resulting in excess medical care costs and lost productivity, as well as additional economic losses due to premature deaths each year.

It is increasingly important to address health disparities as the population becomes more diverse and stark income inequalities persist (Figure 4). The population has become increasingly racially diverse, reflecting shifting immigration patterns, a growing multiracial population, as well as adjustments to how the U.S. Census Bureau measures race and ethnicity. The U.S. Census Bureau projects that people of color will account for over half (52%) of the population in 2050, with the largest growth occurring among people who identify as Asian or Hispanic. Income inequality within the U.S. has also widened over time. As of 2023, the top 10% of households in the U.S. had incomes above $216,000 compared with incomes at or below $17,100 among the lowest 10% of households.

Major recognition of health disparities began nearly four decades ago. In 1985, the Report of the Secretary’s Task Force on Black and Minority Health (commonly known as the Heckler Report) documented persistent health disparities that accounted for 60,000 excess deaths each year and synthesized ways to advance health equity. The Heckler Report led to the creation of the Office of Minority Health within the Department of Health and Human Services (HHS) (which was reportedly shut down by the Trump administration as part of the HHS staff restructuring and reductions) and influenced federal recognition of and investment in many aspects of health equity. In 2003, the Institute of Medicine’s Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care report was issued, which identified systemic racism as a major cause of health disparities in the United States.

Despite the recognition and documentation of disparities for decades and overall improvements in population health over time, many disparities persist, and in some cases, have widened over time .Analysis across a broad range of health measures finds that Black and AIAN people fare worse than their White counterparts across half or more of these measures. Data for Hispanic people are more mixed relative to White people, with them faring better on some measures but worse on others. In the aggregate, Asian people fare the same or better than White people on many measures of health, although this finding masks disparities among subgroups of the population. Data gaps limit the ability to examine disparities among NHPI people; where data are available, they point to disparities, particularly for certain subgroups of this population. Overall, Black, Hispanic, and AIAN people fare worse compared to White people across many measures of health outcomes including:

• AIAN and Black people had a shorter life expectancy at birth compared to White people based on provisional data from 2022. Life expectancy for Black people was about five years shorter than White people (72.8 vs. 77.5), and nearly ten years shorter for AIAN people (67.9).
• AIAN, Hispanic, and Black people experienced larger declines in life expectancy than White people between 2019 and 2021, largely reflecting an increase in excess deaths due to COVID-19.
• NHPI people had the highest age adjusted mortality rates for diabetes among all racial and ethnic groups at 49.6 per 100,000 deaths. The age-adjusted mortality rates for diabetes for AIAN (41.5 per 100,000) and Black people (39.1 per 100,000) were about twice as high as the rate for White people (19.8 per 100,000); Hispanic people (26.5 per 100,000) also had a higher diabetes death rate compared to White people in 2023. Although Black people did not have higher cancer incidence rates than White people overall and across most types of cancer, they had the highest overall cancer-related mortality rate as of 2022. Black people (165 per 100,000 deaths) were more likely to die from cancer than White people (148.4 per 100,000), and NHPI people had a slightly lower overall cancer-related mortality rate (141.4) to White people in 2022.
• Black infants were more than two times as likely to die as White infants (10.9 vs. 4.5 per 1,000 live births) as of 2023. AIAN infants (9.1 per 1,000) were roughly twice as likely to die as White infants (Figure 5). Hispanic infants (4.9 per 1,000) also had a slightly higher mortality rate than White infants in 2023.
• AIAN (118.7 per 100,000), NHPI (111.7 per 100,000), and Black (69.3 per 100,000) women also had the highest rates of pregnancy-related mortality in 2021

There are also ongoing racial and ethnic disparities in health coverage and access to care.  Despite large gains in coverage across groups since the ACA coverage expansions were implemented in 2014, as of 2022, nonelderly AIAN, Hispanic, Black, and NHPI people were more likely to be uninsured compared to their White counterparts (Figure 6). There are also large coverage disparities by immigration status, with a 2023 KFF/LA Times Survey of Immigrants showing that about one in five (18%) lawfully present immigrant adults and half (50%) of likely undocumented immigrant adults reported being uninsured as compared to less than one in ten citizens. In addition, Hispanic, Black, Asian, AIAN, and NHPI adults are more likely than White adults to report not having a personal health care provider, and Hispanic, Black, AIAN, and NHPI adults are more likely than White adults to report not seeing a doctor in the past 12 months because of cost.

In the wake of the COVID-19 pandemic and racial reckoning following the murders of George Floyd and others, the federal government as well as many states and private entities increased efforts focused on addressing health disparities. This increased focus led to the development of programs and initiatives focused on mitigating disparities, including efforts to address disparities in maternal and infant health, cancer, and chronic disease, as well as other efforts, such as increasing diversity in clinical trials for development of new drugs and devices. Research efforts also increased to understand disparities, the factors driving them, and effective interventions to mitigate them.

The Biden administration issued a series of executive orders and other efforts to advance health equity.  These included orders that outlined equity as a priority for the federal government, equity as a central part of the pandemic response and recovery efforts, and also directed federal agencies to develop Equity Action Plans. HHS’ equity action plan outlined a series of strategies that included efforts to improve access and address barriers to quality and affordable health care; prioritize behavioral health for underserved populations; and improve maternal health outcomes for rural, Tribal, and underserved racial and ethnic groups. HHS also enacted its climate action plan, including establishing the Office of Climate Change and Health Equity to address the impacts of climate change on health outcomes and health equity.  The administration released a Blueprint for Addressing the Maternal Health Crisis, a whole government approach to combatting maternal mortality and morbidity with a focus on reducing disparities in maternal health outcomes and improving overall pregnancy, birth, and postpartum outcomes. Federal efforts were also made to increase the availability of disaggregated data for smaller population groups, including AIAN and NHPI people, to understand and address the health and heath care disparities they face. During his term, President Biden reversed public charge regulations from the Trump administration’s first term to reduce fears about participating in programs, including Medicaid and the Children’s Health Insurance Program.

As one of his first actions in office, President Trump signed executive orders revoking federal diversity, equity, inclusion, and accessibility (DEIA) related programs and actions in the federal government and among federal contractors and grantees.  In implementing President Trump’s executive orders, the administration has taken significantly broader actions beyond eliminating DEI programs to eliminate priorities, actions, information, data, and funding related to concepts of diversity or disparities among federal agencies as well as federal contractors and grantees.The Office of Personnel Management directed agencies and departments to take down all outward facing media that “inculcate or promote” “gender ideology,” as well as to remove all public facing DEI related websites and content. This resulted in the temporary shutdown of websites and removal of key health datasets. While some web pages and datasets began returning in several days, they included a warning message that they were being modified to comply with President Trump’s executive orders and some materials, such as codebooks and questionnaires, did not immediately return. The administration also directed departments and agencies to pause grants provided to federal contractors to identify and review programs and activities for consistency with the President’s policies. Reports indicate that the administration flagged over 100 words that federal agencies should limit or avoid to comply with the President’s policies, including disparities, diversity, equity, and race; that the CDC ordered the withdrawal of papers pending publication to ensure language compliance; and that research grants were terminated to comply with new restrictions. As part of efforts to eliminate diversity and disparities related initiatives the administration also eliminated environmental justice actions and programs

The administration also eliminated about 10,000 employees from HHS, including many of those focused on addressing disparities as part of a restructuring effort. The HHS Office of Minority Health, CDC’s Office of Health Equity, the Office of Women’s Health, and the Office for Civil Rights are among the offices facing partial or complete cuts. The impact of these cuts is compounded by the loss of population-specific initiatives and offices. The administration’s proposed budget cuts to the Indian Health Services (IHS) and HHS include $900 million in cuts to the IHS budget and eliminating advanced appropriations.  In addition to eliminating staff directly working on disparities, other cuts were made that will have important implications for disparities. The restructuring cut jobs from the CDC’s National Center for Chronic Disease Prevention and Health Promotion, which has resulted in the termination of programs focused on diabetes, obesity, dementia, and kidney disease, which disproportionately affect people of color. The HHS restructuring has also impacted federal maternal and infant health programs, including layoffs of most staff at the CDC’s Division of Reproductive Health, which serves to provide data, research, and assistance to states “on issues related to reproductive health, maternal health, and infant health.” These staff cuts are accompanied by the suspension of the Pregnancy Risk Assessment Monitoring System, which has documented disparities in maternal mortality and morbidity for 38 years.

The actions to eliminate diversity and disparities related initiatives will likely lead to widening disparities, reversing recent efforts to advance health equity. Elimination of focused efforts to address health disparities will potentially further exacerbate disparities, contributing to worsening overall health and unnecessary health care costs. Focused plans and initiatives to mitigate health disparities seek to address the underlying inequities that drive disparities and meet the needs and preferences of diverse populations. In the absence of focused efforts, disparities will likely widen because the underlying inequities that contribute to them persist. Additionally, the elimination of information, data, and research will inhibit the ability to identify disparities and understand the factors driving them. Data are essential for identifying where disparities exist, directing efforts and resources to address disparities as they are identified, measuring progress toward achieving greater equity, and establishing accountability for achieving progress. Without adequate data and research, disparities may remain unseen and unaddressed.

The Trump administration has also made immigration policy changes focused on restricting entry at the border and increasing interior enforcement efforts to support mass deportation, which may contribute to widening disparities among immigrant families. Research suggests that these policies negatively affect the health and well-being of immigrant families, including citizen children living in these families. KFF survey data from 2025 show that immigrants’ worries about detention or deportation have risen sharply since 2023, even among lawfully present immigrants and naturalized citizens, and many say these worries are affecting their health. Moreover, accompanying KFF focus groups  found that immigration policies and actions undertaken by the Trump administration have led to increased fears, uncertainty, and financial hardships among immigrant families across immigration statuses that have had negative effects on their daily lives, health, and well-being, including negative mental health impacts on them and their children. Efforts to restrict immigration not only impact the health and well-being of immigrant families, but can also negatively impact the U.S. economy and workforce, given the role immigrants play, particularly in certain industries such as health care, construction, and agriculture.

Under the recently passed budget reconciliation law there are large cuts to federal spending for Medicaid and the ACA, which will likely lead to widening racial and ethnic disparities in health coverage and, in turn, exacerbate disparities in access to care. Medicaid is a major source of coverage for people of color, helping to fill gaps in employer sponsored coverage, particularly for children (Figure 7). The ACA’s coverage expansions through Medicaid and the Marketplaces contributed to large gains in health coverage across racial and ethnic groups and reduced racial disparities in coverage. The law includes substantial cuts to federal Medicaid spending and changes to the ACA, which the Congressional Budget Office projects will increase the number of uninsured by about 10 million by 2034. The law includes provisions that eliminate eligibility for Medicaid, subsidized ACA Marketplace, and Medicare coverage for many lawfully present immigrants. In addition to reductions in the legislation, the scheduled expiration of tax credits for Marketplace coverage in 2025 and recent Trump administration regulatory changes that make it harder to sign up for ACA coverage are expected to further increase the growth in the uninsured by millions.  Coverage losses, particularly in Medicaid, would widen racial and ethnic disparities in coverage given that larger shares of people of color are covered by the program. In turn, widening disparities in coverage would likely contribute to gaps in access to care and ultimately health outcomes.

Looking to the future, racial and ethnic disparities in health and health care remain a persistent problem, particularly as longstanding efforts to recognize and address them are being dismantled. These disparities are rooted in the ongoing impacts of racism and discrimination, which contribute to structural inequities in access to resources, opportunities, and health care as well as bias within health systems and daily life. As efforts to advance health equity face increasing challenges some key issues include:

How to mitigate bias and disparate treatment in the medical system, amid the growing use of AI and data-driven tools in health care and perpetuation of disproven beliefs about biologic differences by race.

How rollbacks to federal disparities initiatives and DEI programs will impact long term efforts to address disparities in health.

How to close racial and ethnic gaps and prevent further widening of disparities in health coverage and access to care amid efforts to cut Medicaid and other public programs.

What data and research will remain available to identify and understand disparities and develop interventions to address them.

How uneven impacts of climate change and climate-related health risks may impact disparities amid the rollbacks of federal environmental justice efforts.

• Survey on Racism, Discrimination and Health: Experiences and Impacts Across Racial and Ethnic Groups
• Health and Health Care Experiences of Immigrants: The 2023 KFF/LA Times Survey of Immigrants
• Disparities in Health and Health Care: 5 Key Questions and Answers
• Key Data on Health and Health Care by Race and Ethnicity
• Health Coverage by Race and Ethnicity, 2010-2022
• What is Driving Widening Racial Disparities in Life Expectancy?
• Racial Disparities in Maternal and Infant Health: Current Status and Efforts to Address Them
• Key Facts on Health Coverage of Immigrants
• Climate Change and Health Equity: Key Questions and Answers
• Medicaid and Racial Health Equity
• How History Has Shaped Racial and Ethnic Health Disparities: A Timeline of Policies and Events

Ndugga, N., Pillai, D., Hill, L., & Artiga, S., Race, Inequality, and Health. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-race-inequality-and-health/ (date accessed).

Health care costs in the United States generally grow faster than inflation. The U.S. far exceeds other large and wealthy nations in per capita health spending, and health care represents a much larger share of the economy in the U.S. than in peer nations. Despite substantial spending, the U.S. health system grapples with disparities and gaps in coverage. Elevated health care expenditure in the U.S. does not consistently translate into superior health outcomes. Rising health care costs instead contribute to Americans facing difficulties affording medical care and drugs, even among those with insurance.

Many people are familiar with the high and rising cost of health care in the United States from seeing how much they spend on their own health insurance premiums and out-of-pocket costs. In addition to these very visible health costs, there are also tax dollars that go to fund public programs and the amounts employers spend toward their employees’ health insurance premiums. Total national health expenditures include spending by both public programs and private health plans, as well as out-of-pocket health spending. Total health expenditures represent the amount spent on health care (such as doctor visits, hospital stays, and prescription drugs) and related activities (such as insurer overhead and profits, health research and infrastructure, and public health).

Total Health Spending Reached $4.9 Trillion in 2022

Health spending in the U.S. has risen sharply over the last several decades. The official data on national health expenditures from the Centers for Medicare and Medicaid Services (CMS) show health spending totaled $74.1 billion in 1970. By 2000, health expenditures had reached about $1.4 trillion, and in 2023 the amount spent on health had more than tripled to $4.9 trillion. In the first year of the COVID-19 pandemic, health spending accelerated by 10.4% from 2019 to 2020, even as the use of health care dropped, driven largely by public health spending and financial relief provided to health care providers. Most recently, health spending grew 7.5% from 2022 to 2023, faster than the previous year’s 4.6% increase from 2021 to 2022. Health spending is expected to continue to grow at a similar pace for the foreseeable future.

In the chart above, spending is shown in terms of both nominal dollar values (not inflation-adjusted) and constant 2023 dollars (inflation-adjusted based on the personal consumption expenditures, or PCE, index). Inflation in the health sector increased slightly faster than across the general economy in 2023.

Currently, health care represents about 18% of the U.S. economy (measured as a share of gross domestic product, or GDP). In other words, almost 1 out of every 5 dollars spent in the U.S. goes toward health care. Back in 1960, health spending represented just 5% of GDP, meaning 1 in every 20 dollars in the U.S. economy was spent on health care. 

Out-of-pocket costs have also risen over time. Out-of-pocket costs represent the amount of money spent by individuals on health care that is not paid for by a health insurance plan or public program like Medicare or Medicaid. This includes cost-sharing, the most common forms of which are deductibles (an amount that must be paid before most services are covered by the plan), copayments (fixed dollar amounts), and coinsurance (a percentage of the charge for services). (i.e., copays, deductibles, coinsurance), as well as health spending by uninsured people or spending by insured people for care that is not covered at all by health insurance. Out-of-pocket spending does not include the amount spent on a person’s monthly health insurance premium.

Out-of-pocket spending per person was $115 in 1970 (or, adjusted for inflation, $703). By 2023, out-of-pocket spending had reached $1,514 per person. Despite this rise in out-of-pocket spending, health insurance now covers a larger share of total health spending (73%) than it did in 1970 (27%), in part because more people have gained coverage, especially public coverage, but also because health insurance spending per enrollee has grown.

Over the last several decades, health spending has been driven higher by a number of factors, including but not limited to an aging population, rising rates of chronic conditions, advancements in medicine and new technologies, higher prices, and expansions of health insurance coverage. While there are always differences across countries, many of these factors driving health costs upward in the U.S. are also driving health costs growth in peer nations. For example, while the U.S. population is indeed aging and that is driving health costs up, many large and wealthy nations have even more rapidly aging populations.

Other factors may explain the United States’ relatively high health spending compared to its peers. The U.S. health system is fragmented, with many private and public payers, and with regulation of these payers split between states and the federal government. However, these features are not entirely unique to the U.S., either. Indeed, some other countries with much lower health spending have multiple private payers or differences in public programs across states or provinces.  The U.S. is also not alone in having a mainly fee-for-service payment system.

The U.S. health insurance system is largely voluntary, whereas peer countries’ health systems are almost entirely compulsory. Additionally, the U.S. federal and state governments have generally done less to directly regulate or negotiate prices paid for medical services or prescription drugs than have governments of similarly large and wealthy nations. The U.S. often pays higher prices for the same brand-name prescription drugs, hospital procedures, and physician care than similarly large and wealthy countries do.

There are other factors, largely outside the control of the health system that are also likely at play, such as socioeconomic conditions (like income inequality and other social determinants of health), and differences in so-called lifestyle factors (like diet, drug use, or physical activity) that could contribute both to higher spending and worse outcomes.

Breaking total national health spending into its components can reveal the major drivers of health costs and where cost containment efforts could be most effective. The charts below show various ways of examining the key contributors to health spending. For example, the National Health Expenditure Accounts show trends in how health spending varies by type of service (e.g., hospital care vs. retail prescription drugs) or by source of funds (e.g., private health plans vs. public programs). An alternative and relatively new approach to understanding health spending is to break out total health spending into the share that goes to treat certain diseases (e.g., heart disease, cancer). Finally, health spending can also be better understood by looking at trends in prices (e.g., the dollar amount for a hospital stay) and utilization (e.g., the number of hospital stays). 

Hospital and Physician Services Represent Half of Total Health Spending

Most health spending in the U.S. and in peer countries is on hospital and physician care, followed by prescription drugs. In the U.S., hospital spending represented close to a third (31.2%) of overall health spending in 2023, and physicians/clinics represented 20.1% of total spending. In comparison to other large and wealthy countries, the U.S.’s higher spending on inpatient and outpatient care explains the vast majority of higher spending on health care overall.

Spending Has Grown for Hospitals, Physicians, and Drugs

During the 1970s, growth in hospital expenditures outpaced other services, while prescriptions and physician and clinic services saw faster spending growth during the 1980s and 1990s. From 2020 to 2023, retail prescription drugs experienced the fastest growth in spending at 8.6%, following 3.3% average annual growth from 2010 to 2020. Average spending growth for hospitals and physicians/clinics between 2020 and 2022 was 6.2% and 6.3%, respectively.

On a Per-Enrollee Basis, Private Insurance Spending Has Typically Grown Much Faster Than Medicare and Medicaid Spending

Per enrollee spending by private insurance grew by 80.4% from 2008 to 2023 – much faster than both Medicare and Medicaid spending growth per enrollee (50.3% and 30.3%, respectively). Private insurance often pays higher prices for health care compared to prices paid by Medicare and Medicaid.

Per enrollee spending by Medicaid rose by 7.9% in 2023 from the previous year, and also continued to increase in private insurance and Medicare (5.9% and 7.1% respectively). Medicare and private insurance per-enrollee spending continued to grow faster between 2021 and 2023 after slower growth in 2020. Medicaid per-enrollee spending had previously declined in 2021 as total enrollment grew, particularly among children and non-elderly adults, who generally have lower per-enrollee spending.

A Substantial Share of Health Spending Goes Toward the Treatment of Circulatory and Musculoskeletal Conditions

An alternative way of examining the components of health spending is to use the Bureau of Economic Analysis (BEA)’s Health Care Satellite Account, which estimates spending and price growth by disease category (e.g., cancer, infectious disease). This approach differs from the official categorization of health spending by service type (e.g., provider services). Essentially, the new satellite account redefines the “commodity” in healthcare as the treatment for specific diseases, rather than a hospital stay or a physician visit. BEA researchers found that the largest categories of medical services spending include the treatment of circulatory diseases (10.4% of health spending in 2021), musculoskeletal conditions (9.4%) and infectious diseases (9%). Another large share of health spending (15.1%) is for “ill-defined conditions,” which can include routine check-ups and follow-up care that is not easily designated for a particular illness.

Health Spending is a Function of Prices and Use

Health services spending is generally a function of prices (e.g., the dollar amount charged for a hospital stay) and utilization (e.g., the number of hospital stays).

People and health plans in the U.S. often pay higher prices for the same prescription drugs or hospital procedures than people in other large and wealthy nations do. In terms of utilization, there is not much evidence that people in the U.S. use more health care. In fact, Americans generally have shorter average hospital stays and fewer physician visits per capita. Therefore, a large part of the difference in health spending between the U.S. and its peers can be explained by higher prices, more so than higher utilization.

Over time, within the U.S., prices and utilization have driven health cost growth to varying degrees. In the 1980s and early 1990s, growth in health care prices far exceeded growth in use. Faster growth in health prices in the U.S. during this time drove the divergence in per capita health spending between the U.S. and other large, wealthy OECD countries. While health care prices have grown more moderately in recent decades, prices in the U.S. for health services continue to exceed what other countries pay.

More recently, the COVID-19 pandemic led to fluctuations in health care use. Early in the pandemic, many health services, such as elective surgeries, were postponed or cancelled and many elected to not get care to avoid infections at health care sites. In 2021, health services use increased by 9% from the previous year, but subsequent years showed slightly lower growth rates (2024 health services use increased 5.6% from 2023). This increase in health care use in 2021 followed a sharp decrease in health utilization in 2020. Health care prices increased moderately – between 2 and 3% – between 2020 and 2024, but changing market conditions since the pandemic and policies enacted in 2025 are likely to increase health costs at an increasing rate.

A small portion of the population accounts for a large share of health spending in a given year. Although we tend to focus on averages, a small number of people spend around the average since individual health needs vary over the life course. Some portions of the population (older adults and those with serious or chronic illnesses) require more and higher-cost health services than those who are younger, healthier, or otherwise in need of fewer or less costly services.

Older People and People with Significant Health Needs Account for Most Health Expenditures

While there are people with high spending at all ages, overall, people 55 and over accounted for 54% of total health spending in 2022, despite making up only 31% of the population. In contrast, people under age 35 made up 44% of the population but were responsible for only 23% of spending.

People with significant health needs account for a large portion of total health spending. People reporting fair or poor health status account for 11% of the population and 27% of the total health spending.

A Small Share of the Population Incurs Most of Health Spending

In 2022, the top 5% of people with the highest health spending accounted for half of total health spending and had an average of $67,300 in health expenditures annually; people with health spending in the top 1% have average spending of over $147,000 per year. At the other end of the spectrum, the 50% of the population with total health spending below or equal to the 50th percentile accounted for only 3% of all health spending; the average spending for this group was $374.

Out-of-pocket spending on health services is concentrated similarly to overall health spending. In this chart, out-of-pocket spending includes direct payments to providers and cost-sharing, including deductibles, copays, and coinsurance, but does not include monthly premium payments or contributions towards health coverage. Out-of-pocket health spending is similarly concentrated among high-health-need individuals. A small portion of the population accounts for a substantial share of total out-of-pocket health spending in a year.

In 2022, people in the top 1% of out-of-pocket spending paid about $23,700 out-of-pocket for health services on average per year, and people in the top 10% spent an average of $6,126 out-of-pocket per year. People who are in the bottom 50% of out-of-pocket spending spent an average of $24 out of pocket.

In addition to being expensive for the nation as a whole, health care is often also expensive for individuals. High health costs can particularly pose a hardship for people who are in worse health and those with lower incomes. However, challenges affording health care are not limited to certain groups; these challenges are pervasive across the U.S. Even people with private health insurance through their employers are often exposed to high and rising deductibles, and therefore also face affordability challenges. A substantial share of the population does not have enough savings or other liquid assets to afford a high deductible or out-of-pocket maximum common in private health plans.

When health care is unaffordable, it can lead to cost-related access barriers, like forgoing or delaying needed medical care. For those who still receive unaffordable health care, this care can lead to medical debt and other forms of financial instability. Some people experience both types of affordability challenges, missing some needed care while also incurring medical debt for other care.

Half of Adults Say it is Difficult to Afford Health Care Costs

Almost half of U.S. adults say it is difficult to afford health care costs, and one in four say they or a family member in their household had problems paying for health care in the past 12 months. Younger adults, those with lower incomes, adults in fair or poor health, and the uninsured are particularly likely to report problems affording health care in the past year.

Among those under age 65, uninsured adults are more likely to say affording health care costs is difficult (82%) compared to those with health insurance coverage (44%).

Those who are covered by health insurance are not immune to the burden of health care costs. About 4 in 10 insured adults worry about affording their monthly health insurance premium, and 62% worry about affording their deductible before health insurance kicks in. Indeed, large shares of adults with employer-sponsored insurance (ESI) and those with Marketplace coverage rate their insurance as “fair” or “poor” when it comes to their monthly premium and out-of-pocket costs to see a doctor.

1 in 3 Adults Report Putting Off Health Care Because of Cost

Cost-related barriers to accessing health care are more common for some demographic groups than others. For example, people who are Hispanic, lower-income, in worse health, and/or uninsured tend to have higher rates of self-reported cost-related access barriers.

One-quarter of adults say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost, according to KFF polling. Women are more likely than men to say they have skipped or postponed getting health care they needed because of the cost (38% vs. 32%). Adults ages 65 and older, most of whom are eligible for health care coverage through Medicare, are much less likely than younger age groups to say they have not gotten health care they needed because of cost. Three in four uninsured adults (75%) say they have skipped or postponed getting health care they needed due to cost. Insured people are not immune from cost-related barriers to accessing care and more than one in three adults with insurance (37%) report not getting health care they needed due to cost.

Despite the vast majority of the United States population having health insurance, medical debt is not uncommon. Different ways of measuring medical debt result in different estimates of prevalence, but regardless of the method, there is consensus that medical debt is a persistent and pervasive problem in the United States, including for people with insurance.

One way to examine medical debt is through credit reporting, but medical debt is often disguised as other forms of debt when people pay for medical bills on their credit cards or choose to pay off their medical bills while falling behind on other payments.

Another way to measure medical debt is with surveys, which can allow respondents to describe their debt with more detail or nuance. Questions about medical debt and other financial matters can be difficult to compare across surveys. For example, it is not always clear whether respondents are answering about their personal experiences or about their broader family or household. Surveys may also differ in the way they define medical debt or describe what forms of debt to include. 

The KFF Health Care Debt Survey asked respondents to think about money that they currently owe for their own health or dental care or someone else’s, such as a family member or dependent. The KFF Health Care Debt Survey finds that 41% of adults currently have some form of debt caused by their own or a family member’s medical or dental bills.

The  U.S. Survey of Income and Program Participation (SIPP)  asks whether money was owed for a medical bill and not paid in full during the past year for each person in the sample household. SIPP results, therefore, can be looked at on the individual level or for an overall household. This survey shows that about 1 in 12 adults have medical debt they owe for themselves or their family’s medical care in the past year.

Regardless of the survey used to examine medical debt, common themes emerge when looking at differences across demographic groups: adults who are Black, uninsured, lower-income, and in worse health are more likely to have medical debt. People with incomes under $40,000 are significantly more likely than people with higher incomes to go into debt to cover an unexpected medical bill, and people with disabilities are also much more likely to have significant medical debt, which, in addition to the burden of medical costs, could also reflect inadequate supplemental income for people who are unable to work due to disability or illness.

Nationally, Medical Debt Totals at Least $200 Billion

The Consumer Financial Protection Bureau (CFPB) estimates that $88 billion in medical debt is reflected on Americans’ credit reports. However, credit reports may not capture all forms of medical debt. For example, medical debt disguised as credit card debt or money owed to family or friends may not be captured. Surveys may capture medical debt that is not visible on credit reports or is otherwise disguised as another form of debt. The 2023 Survey of Income and Program Participation suggests that total medical debt owed was at least $200 billion at the end of 2023.

Medical Debt is Associated with Financial Vulnerability Across a Range of Indicators

The National Financial Capability Survey (NFCS) is a triennial survey sponsored by the FINRA Foundation that provides information on the financial security, experiences, and vulnerabilities of people and households.

People with medical debt are much more likely to have other forms of financial distress than those without medical debt. Indicators of financial vulnerability — such as spending more money than one’s income, having no “rainy day” fund, or agreeing with the statement “I am just getting by financially” — are more common among adults with medical debt than those without. Additionally, people with medical debt are more likely to overdraw their checking account, have a credit card balance that exposes them to interest payments, take a cash advance on their credit card, or have been contacted by debt collectors. Adults with medical debt are much more likely to use payday loans or other costly loans than those without medical debt.

Each year, actuaries from the Centers for Medicare and Medicaid Services (CMS) project future spending on health. With health care utilization returning to pre-pandemic levels and price inflation in the health sector continuing to outpace general economic inflation, per-person health spending increased 7% in 2023. Annual per capita health spending is projected to grow at an annual rate of 5% per capita on average from 2023 to 2032.

An aging population, labor pressure driving higher prices, and new high-cost prescription drugs coming to market are expected to contribute to a growth in health spending. Health spending was 17.6% of the U.S. economy in 2023 and is expected to reach 19.7% by 2032.

The pandemic has had direct and indirect effects on the health system that can make projections difficult. COVID-19 has led to new costs for vaccination, testing, and treatment and has also caused other shifts in health utilization and spending. Some people avoided medical settings out of concern of contracting COVID and thus missed or delayed routine care or cancer screenings earlier in the pandemic, for example, which could lead to pent-up demand, worsening health conditions, or more complex disease management going forward. Increased use of telemedicine could also shift spending patterns in the future. Further, the recent broad-based inflation trends in the economy and health sector employment trends also add to the uncertainty of these projections.

Federal Government Infusion of Public Health Funding Has Subsided Since Early in the COVID-19 Pandemic

Total national health spending includes spending on direct patient care, as well as spending on public health or prevention. After a sharp increase in federal funding in 2020 driven by the national response to the COVID-19 pandemic, spending on public health has fallen, decreasing by over 58% between 2022 and 2023. Meanwhile, state and local public health spending grew 5%, in line with previous years. Overall public health spending is expected to continue to decline over the next couple of years.

Signed in July 2025, the tax and budget reconciliation law (formerly known as the “One Big Beautiful Bill Act”) includes provisions for addressing federal spending on Medicaid and Affordable Care Act exchanges. The Congressional Budget Office (CBO) expects the law to decrease spending on Medicaid and the Affordable Care Act (ACA) Marketplaces by over $1 trillion and lead to 10 million more uninsured people through 2034.

Additional policy issues that will shape future health spending and affordability include:

• Evolution of State Cost Controls: States implementing measures to control health cost growth, including those potentially supported by the Biden Administration’s new AHEAD model, may prompt further experimentation; however, states can only regulate a subset of private health insurance plans.
• Price Transparency Requirements: Federal price transparency requirements aim to illuminate prices paid to hospitals and providers. There remain challenges with the quality of the data, though CMS continues to request suggestions for improved guidelines. As for a budgetary impact, CBO predicted minimal impact on health sector prices.
• Prescription Drug Pricing: The Trump administration’s 2025 executive order called on pharmaceutical manufacturers to match most-favored-nation prices (MFN, the lowest price offered in other developed nations). The effects of this order on prescription drug prices in the U.S. remain uncertain. Additionally, the Inflation Reduction Act of 2022, targeting Medicare drug spending through government negotiation of drug prices, is expected to reduce Medicare costs, but potential far-reaching effects are still unclear. While CBO expects minimal effects on the availability of new treatments, there is considerable uncertainty surrounding those estimates.
• Expansion of Virtual Care: The COVID-19-induced rise in telehealth, with expanded reimbursement and access, has uncertain impacts on care coordination, quality, health outcomes, and costs.
• Market Dynamics and Anticompetitive Practices: Consolidation among providers, insurers, and drug manufacturers has elevated health care prices, leading to regulatory actions against anticompetitive practices, aiming to protect consumers from rising costs.
• Provider Payment Reforms: Bipartisan efforts in site-neutral payment reform, addressing concerns about higher payments in outpatient settings, have led to Medicare implementing site-neutral payments in some settings and additional legislative proposals. However, challenges in provider charging practices and facility fees persist.
• Value-Based Payment Models: The proliferation of value-based care aims to transfer some of the cost risks from payers to providers, but concerns remain about the effectiveness of these approaches, limited quality improvement, administrative burdens, and reduced physician participation incentives. 
• Changes in Coverage: Despite reduced uninsured rates through continuous Medicaid enrollment and expanded Affordable Care Act Marketplace subsidies during the pandemic, affordability challenges persist among the insured. Renewed disenrollments from Medicaid and the expiration of Marketplace subsidies after 2025 may increase uninsured rates and affordability issues.
• Addressing Medical Debt: Ongoing efforts to address medical debt involve buying medical debt for forgiveness and regulatory actions. However, the root causes of high health costs and underinsurance remain untouched by most efforts to mitigate the negative effects of medical debt.

• National Health Spending Explorer – Peterson-KFF Health System Tracker
• How has U.S. spending on healthcare changed over time? – Peterson-KFF Health System Tracker
• How much is health spending expected to grow? – Peterson-KFF Health System Tracker
• What are the recent and forecasted trends in prescription drug spending? – Peterson-KFF Health System Tracker
• How does medical inflation compare to inflation in the rest of the economy? – Peterson-KFF Health System Tracker
• How many people have enough money to afford private insurance cost sharing? – Peterson-KFF Health System Tracker
• Americans’ Challenges with Health Care Costs | KFF
• How does cost affect access to healthcare? – Peterson-KFF Health System Tracker
• The burden of medical debt in the United States – Peterson-KFF Health System Tracker
• Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills | KFF

Amin, K., Cox, C., Ortaliza, J. & Wager, E., Health Care Costs and Affordability. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-health-care-costs-and-affordability/ (date accessed).

The federal government is not the only place health policy is made in the U.S., but it is by far the most influential. Of the $4.9 trillion the U.S. spent on health in 2023, the federal government was responsible for roughly a third of all health services. The payment and coverage policies set for the Medicare program, in particular, often serve as a model for the private sector. Many health programs at the state and local levels are also impacted by federal health policy, either through direct spending or rules and requirements. Federal health policy is primarily guided by Congress, but carried out by the executive branch, predominantly by the Department of Health and Human Services. 

No one is “in charge” of the fragmented U.S. health system, but the federal government probably has the most influence, a role that has grown over the last 75 years. Today the federal government pays for care, provides it, regulates it, and sponsors biomedical research and medical training.  

The federal government pays for health coverage for well over 100 million Americans through Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), the Veterans’ Health Administration, the Indian Health Service, and the Affordable Care Act (ACA).  It also pays to help provide insurance coverage for tens of millions who are active-duty and retired military and for civilian federal workers.

Federal taxpayers also underwrite billions of dollars in health research, mainly through the National Institutes of Health (NIH) and the Agency for Healthcare Research and Quality (AHRQ).

Federal public health policy is spearheaded by the Centers for Disease Control and Prevention. Its portfolio includes tracking not just infectious disease outbreaks in the U.S. and worldwide, but also conducting and sponsoring public health research and tracking national health statistics. 

The Health Resources and Services Administration (HRSA) funds critical health programs for underserved Americans (including Community Health Centers) and runs workforce education programs to bring more health services to places without enough health care providers. 

Meanwhile, in addition to overseeing the nation’s largest health programs, the Centers for Medicare and Medicaid Services (CMS) also operates the federal insurance Marketplaces created by the ACA and enforces rules made by the law for private insurance policies. 

While the federal government exercises significant authority over medical care and its practice and distribution, state and local governments still have key roles to play.  

States oversee the licensing of health care professionals, distribution of health care resources, and regulation of health insurance plans that are not underwritten by employers themselves. State and local governments share responsibility for most public health activities and often operate safety-net facilities in areas with shortages of medical resources. 

All three branches of the federal government – Congress, the executive branch, and the judiciary – play important roles in health policy. 

Congress makes laws that create new programs or modify existing ones. It also conducts “oversight” of how the executive branch implements the laws Congress has passed. Congress also sets the budget for “discretionary” and “mandatory” health programs (see below) and provides those dollar amounts. 

The executive branch carries out the laws made by Congress and operates the federal health programs, often filling in details Congress has left out through rules and regulations. Federal workers in the health arena may provide direct patient care, regulate how others provide care, set payment rates and policies, conduct medical or health systems research, regulate products sold by the private sector, and manage the billions of dollars the federal government spends on the health-industrial complex.  

Historically, the judiciary has had the smallest role in health policy, but has played a pivotal role in recent cases. It passes judgment on how or whether certain laws or policies can be carried out and settles disputes between the federal government, individuals, states, and private companies over how health care is regulated and delivered.  Recent significant decisions from the Supreme Court have affected the legality and availability of abortion and other reproductive health services and the constitutionality of major portions of the ACA.

The Executive Branch – The White House

Although most of the executive branch’s health policies are implemented by the Department of Health and Human Services (and to a smaller extent, the Departments of Labor and Justice), over the past several decades the White House itself has taken on a more prominent role in policy formation. The White House Office of Management and Budget not only coordinates the annual funding requests for the entire executive branch, but it also reviews and approves proposed regulations, Congressional testimony, and policy recommendations from the various departments. The White House also has its own policy support agencies – including the National Security Council, the National Economic Council, the Domestic Policy Council, and the Council of Economic Advisors – that augment what the President receives from other portions of the executive branch.

Most federal health policy is made through the Department of Health and Human Services. Exceptions include the Veterans Health Administration, run by the Department of Veterans Affairs; TRICARE, the health insurance program for active-duty military members and dependents, run by the Defense Department; and the Federal Employees Health Benefits Program (FEHB), which provides health insurance for civilian federal workers and families and is run by the independent agency the Office of Personnel Management.  

The health-related agencies within HHS are roughly divided into the resource delivery, research, regulatory, and training agencies that comprise the U.S. Public Health Service and the health insurance programs run by the Centers for Medicare and Medicaid Services (CMS). 

Ten of the 13 operating divisions of HHS are part of the U.S. Public Health Service, which also plays a role in U.S. global health programs. They are: 

• The Administration for Strategic Preparedness and Response (ASPR) 
• The Advanced Research Projects Agency for Health (ARPA-H)
  • The Agency for Healthcare Research and Quality (AHRQ) 
  • The Agency for Toxic Substances and Disease Registry (ATSDR) 
  • The Centers for Disease Control and Prevention (CDC) 
  • The Food and Drug Administration (FDA) 
  • The Health Resources and Services Administration (HRSA) 
  • The Indian Health Service (IHS) 
  • The National Institutes of Health (NIH) 
  • The Substance Abuse and Mental Health Services Administration (SAMHSA) 

The Centers for Medicare and Medicaid Services (CMS) is by far the largest operating division of HHS. It oversees not just the Medicare and Medicaid programs, but also the federal Children’s Health Insurance Program (CHIP) and the health insurance portions of the Affordable Care Act. Together, the programs under the auspices of CMS account for nearly a quarter of all federal spending in fiscal 2023, cost an estimated $1.5 trillion in fiscal 2023, and served more than 170 million Americans – more than half the population.

The current Trump administration has proposed a major restructuring of the health agencies under HHS, including creation of a new “Administration for a Healthy America.” As of September 2025, that restructuring has been blocked by court action.  However, a data analysis conducted by the news organization ProPublica found that as of August 2025, more than 20,500 workers – about 18 percent of the department’s workforce – had been laid off or left their jobs.

How Congress oversees the federal health care-industrial complex is almost as byzantine as the U.S. health system itself. Jurisdiction and responsibility for various health agencies and policies is divided among more than two dozen committees in the House and Senate (Tables 1 and 2). 

In each chamber, however, three major committees deal with most health issues.  

In the House, the Ways and Means Committee, which sets tax policy, oversees Part A of Medicare (because it is funded by the Social Security payroll tax) and shares jurisdiction over other parts of the Medicare program with the Energy and Commerce Committee. Ways and Means also oversees tax subsidies and credits for the Affordable Care Act and tax policy for most employer-provided insurance.  

The Energy and Commerce Committee has sole jurisdiction over the Medicaid program in the House and shares jurisdiction over Medicare Parts B, C, and D with Ways and Means. Energy and Commerce also oversees the U.S. Public Health Service, whose agencies include the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention.  

While Ways and Means and Energy and Commerce are in charge of the policymaking for most of the federal government’s health programs, the actual amounts allocated for many of those programs are determined by the House Appropriations Committee through the annual Labor-Health and Human Services-Education and Related Agencies spending bill.  

In the Senate, responsibility for health programs is divided somewhat differently. The Senate Finance Committee, which, like House Ways and Means, is in charge of tax policy, oversees all of Medicare and Medicaid and most of the ACA.  

The Senate counterpart to the House Energy and Commerce Committee is the Senate Health, Education, Labor and Pensions Committee, which has jurisdiction over the Public Health Service (but not Medicare or Medicaid).  

The Senate Appropriations Committee, like the one in the House, sets actual spending for discretionary programs as part of its annual Labor-HHS-Education spending bill. 

Under Article 1 of the U.S. Constitution, Congress is granted the exclusive power to “lay and collect Taxes, Duties, Imposts and Excises, and to pay the Debts and provide for the common Defence and General Welfare of the United States.”  

In 1974, lawmakers passed the Congressional Budget and Impoundment Control Act in an effort to standardize the annual process for deciding tax and spending policy for each federal fiscal year and to prevent the executive branch from making spending policy reserved to Congress. Among other things, it created the House and Senate Budget Committees and set timetables for each step of the budget process.  

Perhaps most significantly, the 1974 Budget Act also created the Congressional Budget Office (CBO). This non-partisan agency has come to play a pivotal role in not just the budget process, but in the lawmaking process in general. The CBO issues economic forecasts, policy options, and other analytical reports, but it most significantly produces estimates of how much individual legislation would cost or save the federal government. Those estimates can and do often determine if legislation passes or fails.

The annual budget process is supposed to begin the first Monday in February, when the President is to present his proposed budget for the fiscal year that begins the following Oct. 1. This is one of the few deadlines in the Budget Act that is usually met. 

After that, the action moves to Congress. The House and Senate Budget Committees each write their own “Budget Resolution,” a spending blueprint for the year that includes annual totals for mandatory and discretionary spending. Because mandatory spending (roughly two-thirds of the budget) is automatic unless changed by Congress, the budget resolution may also include “reconciliation instructions” to the committees that oversee those programs (also known as “authorizing” committees) to make changes to bring the cost of the mandatory programs in line with the terms of the budget resolution. The discretionary total will eventually be divided by the House and Senate Appropriations Committees between the 12 subcommittees, each responsible for a single annual spending (appropriations) bill. Most of those bills cover multiple agencies – the appropriations bill for the Department of Health and Human Services, for example, also includes funding for the Departments of Labor and Education.  

After the budget resolution is approved by each chamber’s Budget Committee, it goes to the House and Senate floor, respectively, for debate. Assuming the resolutions are approved, a “conference committee” comprised of members from each chamber is tasked with working out the differences between the respective versions. A final compromise budget resolution is supposed to be approved by both chambers by April 15 of each year. (This rarely happens.) Because the final product is a resolution rather than a bill, the budget does not go to the President to sign or veto.  

The annual appropriations process kicks off May 15, when the House may start considering the 12 annual spending bills for the fiscal year that begins Oct. 1. By tradition, spending bills originate in the House, although sometimes, if the House is delayed in acting, the Senate will take up its own version of an appropriation first. The House is supposed to complete action on all 12 spending bills by June 30, in order to provide enough time to let the Senate act, and for a conference committee to negotiate a final version that each chamber can approve by October 1. 

That October 1 deadline is the only one with consequences if it is not met. Unless an appropriations bill for each federal agency is passed by Congress and signed by the President by the start of the fiscal year, that agency must shut down all “non-essential” activities funded by discretionary spending until funding is approved. Because Congress rarely passes all 12 of the appropriations bills by the start of the fiscal year (the last time was in 1996, for fiscal year 1997), it can buy extra time by passing a “continuing resolution” (CR) that keeps money flowing, usually at the previous fiscal year’s level. CRs can last as little as a day and as much as the full fiscal year and may cover all of the federal government (if none of the regular appropriations are done) or just the departments for the unfinished bills. Congress may, and frequently does, pass multiple CRs while it works to complete the appropriations process. 

While each appropriations bill is supposed to be considered individually, to save time (and sometimes to win needed votes), a few, several, or all the bills may be packaged into a single “omnibus” measure. Bills that package only a handful of appropriations bills are cheekily known as “minibuses.”  

Meanwhile, if the budget resolution includes reconciliation instructions, that process proceeds on a separate track. The committees in charge of the programs requiring alterations each vote on and report their proposals to the respective budget committees, which assemble all of the changes into a single bill. At this point, the budget committees’ role is purely ministerial; it may not change any of the provisions approved by the authorizing committees.  

Reconciliation legislation is frequently the vehicle for significant health policy changes, partly because Medicare and Medicaid are mandatory programs. Reconciliation bills are subject to special rules, notably on the Senate floor, which include debate time limitations (no filibusters) and restrictions on amendments. Reconciliation bills also may not contain provisions that do not pertain directly to taxing or spending. 

Unlike the appropriations bills, nothing happens if Congress does not meet the Budget Act’s deadline to finish the reconciliation process, June 15. In fact, in more than a few cases, Congress has not completed work on reconciliation bills until the calendar year AFTER they were begun.   

Congress writes the nation’s laws, but it cannot account for every detail in legislation. So, it often leaves key decisions about how to interpret and enforce those laws to the various executive departments. Those departments write (and often rewrite) rules and regulations according to a very stringent process laid out by the 1946 Administrative Procedure Act (APA). The APA is intended to keep the executive branch’s decision-making transparent and to allow public input into how laws are interpreted and enforced.

Most federal regulations use the APA’s “informal rulemaking” process, also known as “notice and comment rulemaking,” which consists of four main parts: 

• Publication of a “Notice of Proposed Rulemaking (NPRM)” in the Federal Register, a daily publication of executive branch activities. 
• Solicitation to the public to submit written comments for a specific period of time (usually from 30 to 90 days). 
• Agency consideration of public reaction to the proposed rule; and, finally 
• Publication of a final rule, with an explanation including how the agency took the public comments into account and what changes, if any, were made from the proposed rule. Final rules also include an effective date, which can be no less than 30 days but may be more than a year in the future. 

In situations where time is of the essence, federal agencies may truncate that process by issuing “interim final rules,” which can take effect even before the public is given a chance to comment. Such rules may or may not be revised later.  

Not all federal interpretation of laws uses the APA’s specified regulatory process. Federal officials also distribute guidance, agency opinions, or “statements of policy.” 

Given how fragmented health policy is in both Congress and the executive branch, it should not be a surprise that major changes are difficult and rare.  

Add to that an electorate divided over whether the federal government should be more involved or less involved in the health sector, and huge lobbying clout from various interest groups whose members make a lot of money from the current operation of the system, and you have a prescription for inertia. 

Sometimes change does happen suddenly, however. In 2025, Republicans in control of the House, Senate, and White House narrowly passed a budget reconciliation bill that is projected to make deep cuts to the Medicaid program as well as add new barriers for people to maintain or enroll in health insurance under the ACA.

Another potential wildcard—in June of 2024, the Supreme Court overturned a 40-year-old precedent, known as “Chevron deference,” that gave the benefit of the doubt in interpreting ambiguous laws passed by Congress to federal agencies rather than judges. Overturning Chevron will likely make it easier for outsiders to challenge federal agency actions, but it will be some time before the full ramifications become clear.   

Another problem is that when a new health policy can dodge the minefield of obstacles to become law, it almost by definition represents a compromise that may help it win enough votes for passage, but is more likely to complicate an already byzantine system further. 

Unless the health system completely breaks down, it seems unlikely that federal policymakers will be able to move the needle very far in either a conservative or a liberal direction, although the second Trump administration is attempting to circumvent Congress entirely to remake federal health agencies and how they work. Whether that will withstand review by the courts remains to be seen.

• FAQs on Health Spending, the Federal Budget, and Budget Enforcement Tools
• Medicare 101
• Medicaid 101
• The Affordable Care Act 101
• Employer-Sponsored Health Insurance
• The Regulation of Private Insurance
• U.S. Public Health
• The U.S. Government and Global Health
• The U.S. Congress and Global Health: A Primer

Rovner, J., Congress, the Executive Branch, and Health Policy. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-congress-and-the-executive-branch-and-health-policy/ (date accessed).

Health policy and politics are inextricably linked. Policy is about what the government can do to shift the financing, delivery, and quality of health care, so who controls the government has the power to shape those policies.

Elections, therefore, always have consequences for the direction of health policy – who is the president and in control of the executive branch, which party has the majority in the House and the Senate with the ability to steer legislation, and who has control in state houses. When political power in Washington is divided, legislating on health care often comes to a standstill, though the president still has significant discretion over health policy through administrative actions. And, stalemates at the federal level often spur greater action by states.

Health care issues often, but not always, play a dominant role in political campaigns. Health care is a personal issue, so it often resonates with voters. The affordability of health care, in particular, is typically a top concern for voters, along with other pocketbook issues, and, at over 17% of the economy, health care has many industry stakeholders who seek influence through lobbying and campaign contributions. At the same time, individual policy issues are rarely decisive in elections.

Health “reform” – a somewhat squishy term generally understood to mean proposals that significantly transform the financing, coverage, and delivery of health care – has a long history of playing a major role in elections.

Harry Truman campaigned on universal health insurance in 1948, but his plan went nowhere in the face of opposition from the American Medical Association and other groups. While falling short of universal coverage, the creation of Medicare and Medicaid in 1965 under Lyndon Johnson dramatically reduced the number of uninsured people. President Johnson signed the Medicare and Medicaid legislation at the Truman Library in Missouri, with Truman himself looking on.

Later, Bill Clinton campaigned on health reform in 1992, and proposed the sweeping Health Security Act in the first year of his presidency. That plan went down to defeat in Congress amidst opposition from nearly all segments of the health care industry, and the controversy over it has been cited by many as a factor in Democrats losing control of both the House and the Senate in the 1994 midterm elections.

For many years after the defeat of the Clinton health plan, Democrats were hesitant to push major health reforms. Then, in the 2008 campaign, Barack Obama campaigned once again on health reform, and proposed a plan that eventually became the Affordable Care Act (ACA). The ACA ultimately passed Congress in 2010 with only Democratic votes, after many twists and turns in the legislative process. The major provisions of the ACA were not slated to take effect until 2014, and opposition quickly galvanized against the requirement to have insurance or pay a tax penalty (the “individual mandate”) and in response to criticism that the legislation contained so-called “death panels” (which it did not). Republicans took control of the House and gained a substantial number of seats in the Senate during the 2010 midterm elections, fueled partly by opposition to the ACA.

The ACA took full effect in 2014, with millions gaining coverage, but more people viewed the law unfavorably than favorably, and repeal became a Republican rallying cry in the 2016 campaign. After the election of Donald Trump, a high-profile effort to repeal the law was ultimately defeated following a public backlash. The ACA repeal debate was a good example of the trade-offs inherent in all health policies. Republicans sought to reduce federal spending and regulation, but the result would have been fewer people covered and weakened protections for people with pre-existing conditions. KFF polling showed that the ACA repeal effort led to increased public support for the law, which persists today.

While President Trump failed in his first term to repeal the ACA, his administration repealed the individual mandate penalty, reduced federal funding for consumer assistance (navigators) by 84% and outreach by 90%, and expanded short-term insurance plans that can exclude coverage of preexisting conditions.

In a strange policy twist, the Trump administration ended payments to ACA insurers to compensate them for a requirement to provide reduced cost sharing for low-income patients. But, insurers responded by increasing premiums, which in turn increased federal premium subsidies and federal spending, likely strengthening the ACA.

Between President Trump’s presidential terms, the Biden administration restored outreach funding and signed legislation increasing the premium tax credits that help ACA Marketplace enrollees pay their premiums, leading to record enrollment and historically low uninsured rates.

The increased premium tax credits are set to expire at the end of 2025 unless Congress and President Trump take action. If these tax credits do expire, people purchasing subsidized coverage will face significant increases in their monthly premium payments and some may become priced out of the market.

President Trump’s second term has already brought federal policy changes that will significantly alter ACA Marketplace operations, consumer protections, and premium tax credit eligibility. Key changes in the 2025 budget reconciliation law, such as ending auto-renewals, removing repayment limits for tax credits when income rises, and tightening eligibility verification, are projected by the Congressional Budget Office (CBO) to result in 2 million people becoming uninsured.

Since its establishment in 1965, Medicaid has evolved as states took up the optional joint federal-state program to the point that in the 1980s all 50 states were participating. Due to the nature of its federal and state management, there has been a give-and-take over the flexibility of and spending for the program, but it has generally expanded in its coverage of key population groups.

With the passage of the ACA, Medicaid experienced its largest federal policy coverage expansion with the addition of what was ultimately a state option to cover adults with incomes up to 138% of the federal poverty level in exchange for enhanced federal funding for the coverage. Much like the take-up of the original Medicaid program, states have gradually adopted the expansion so that only 10 states, mainly concentrated in the South, remain holdouts. However, recent federal actions may alter the expansion landscape.

Until 2025, the most serious attempt by federal policymakers to make cuts to the Medicaid program was during the 2017 failed attempt to repeal the ACA. Medicaid changes in the legislation included a rollback of enhanced federal matching funds for the Medicaid expansion and a per-enrollee cap of federal funds for most Medicaid enrollees. The 2025 budget reconciliation law includes the largest enacted cuts in Medicaid’s history, instituting Medicaid work requirements, tightening eligibility checks and reducing or capping types of provider funding. The CBO estimates that 7.5 million people will become uninsured due to the Medicaid provisions of the law. However, several of the Medicaid provisions will not be implemented until after the 2026 midterm elections.

One persistent feature of health care as an election issue is that it is fundamentally an economic issue for the country and for individuals. If you are uninsured, you not only experience access issues, but also the high cost of health care treatment. If you have health insurance, you worry about annual premium changes, deductibles, and cost-sharing related to health care services and prescription drugs whose prices continue to rise.

President Trump has often spotlighted the high price of prescription drugs, criticizing both the pharmaceutical industry and pharmacy benefit managers. Although he kept the issue of drug prices on the political agenda as president, in the end, his first administration accomplished little to restrain them. 

President Biden signed the Inflation Reduction Act, which requires the federal government to negotiate the prices of certain drugs in Medicare, which was previously banned. How aggressively the prescription drug negotiation program proceeds during the second Trump administration is an open question. While President Trump has issued an executive order calling for a “most favored nation” policy for drug pricing, with prices in the U.S. matching the currently lower prices in other countries, it remains unclear how drug companies will respond to the call and whether there will be any enforcement mechanism.

A feature of the second Trump administration has been the push to remake the executive branch of the federal government to reflect his priorities at a scale that hasn’t occurred in the recent past. Secretary of Health and Human Services (HHS), Robert F. Kennedy, Jr., announced a plan to restructure the department in March 2025 that would reduce the workforce substantially, create the new agency Administration for a Healthy America, reorganize and consolidate divisions and relocate offices.

HHS Secretary Kennedy is also leading the Make America Healthy Again (MAHA) Commission and making substantial changes to the vaccine approval process by remaking the roster for the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices and having CDC change recommendations for who should receive the COVID-19 vaccine.

These changes to the federal health care infrastructure could impact the accessibility of vaccines and other preventive services, as well as undermine the confidence the public has in the government, particularly its scientific agencies.

Ultimately, irrespective of the issues that get debated during the campaign, the outcome of federal elections – who controls the White House and Congress – has significant implications for the future direction of health care.

However, even with changes in party control of the federal government, generally incremental movement to the left or the right is the norm. Sweeping changes in health policy, such as the creation of Medicare and Medicaid or passage of the ACA, are rare in the U.S. political system and are usually preceded by one-party control of Congress and the presidency. More fundamental changes in health care financing and coverage, such as Medicare for All, face long odds. This is the case even though most of the public favors Medicare for All, though attitudes shift significantly after hearing messages about its potential impacts.

It has historically been politically difficult to take benefits away from people once they have them. That, and the fact that seniors are a strong voting bloc, has been why Social Security and Medicare have been considered political “third rails.” While Medicare and Social Security were largely untouched in the Republican tax and spending law passed in 2025, the law made substantial cuts to the ACA and Medicaid, and millions more people are projected to become uninsured in what will be the biggest rollback in federal support for health coverage ever. Looking toward the 2026 midterm election and beyond, changes to both the ACA and Medicaid, as well as fundamental changes to the health care infrastructure and public health policies of the federal government, may emerge as major campaign issues.

• Explaining the Muddle on ACA Tax Credits
• KFF Health Tracking Poll: ACA Enhanced Subsidies
• Make American Health Care Affordable Again
• We’ve Never Seen Health Care Cuts This Big
• Health Provisions in the 2025 Federal Budget Reconciliation Law
• ACIP, CDC, and Insurance Coverage of Vaccines in the United States

Levitt, L. & Singh, R., The Politics of Health Care and the 2024 Election. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/elections/health-policy-101-the-politics-of-health-care-and-elections/ (date accessed).

On March 23, 2010, President Obama signed the Affordable Care Act (ACA) into law, marking a significant overhaul of the U.S. health care system. Prior to the ACA, high rates of uninsurance were prevalent due to unaffordability and exclusions based on preexisting conditions. Additionally, some insured people faced extremely high out-of-pocket (OOP) costs and coverage limits. The ACA aimed to address these issues, though it did not eliminate all of them.

The ACA affects virtually all aspects of the health system, including insurers, providers, state governments, employers, taxpayers, and consumers. The law built on the existing health insurance system, making changes to Medicare, Medicaid, and employer-sponsored coverage. A fundamental change was the introduction of regulated health insurance exchange markets, or Marketplaces, which offer financial assistance for ACA-compliant coverage to those without traditional insurance sources. This chapter has a special focus on these Marketplaces that are integral to the ACA’s framework.

A key goal of the ACA was to expand health insurance coverage. It did so by expanding Medicaid to people with incomes up to 138% of the federal poverty level (the poverty level in the continental U.S. is $15,650 for a single individual in 2025); creating new health insurance exchange markets through which individuals can purchase coverage and receive financial help to afford premiums and cost sharing, in addition to separate exchange markets through which small businesses can purchase coverage; and requiring employers that do not offer affordable coverage to pay penalties, with exceptions for small employers. In the years leading up to the passage of the ACA, about 14-16% of people in the United States were uninsured (across all ages). By 2023, the uninsured rate had fallen to a record low of 7.7%. Most of the gains in insurance coverage have come from the ACA’s expansion of Medicaid, followed by the creation of the exchange markets.

For people with private health insurance, the ACA also includes several consumer protections and market rules (discussed in more detail in the chapter on regulation of private insurance). For example, the ACA prohibits health plans from denying people coverage, charging them higher premiums, as well as rescinding or imposing exclusions to coverage due to preexisting health conditions. The ACA also prohibits annual and lifetime limits on the dollar amount of coverage and restricts the amount of out-of-pocket costs individuals and families may incur each year for in-network care. Additionally, the law requires most health plans to cover preventive health services with no out-of-pocket costs. Health insurers must also issue rebates to enrollees and businesses each year if they fail to meet Medical Loss Ratio standards. Moreover, people with private coverage can keep their young adult children on their health plan up to age 26.

The ACA imposes additional new regulations on private health plans sold to individuals and small businesses. These rules significantly limit the ways in which health plans can charge higher premiums. ACA-compliant health plans sold on the individual and small group markets can only vary premiums based on location, family size, tobacco use, and age (with older adults being charged no more than three times younger adults). This means that people with preexisting conditions cannot be charged higher premiums, nor can insurers charge higher rates based on gender or other factors. The ACA requires individual and small group insurers planning to increase premiums significantly to justify those rate increases publicly and also included grants for states to improve their rate review programs. The ACA also created risk programs in the individual and small group markets to mitigate adverse selection and to reduce health insurers’ incentives to avoid attracting sicker enrollees.

While Medicaid expansion is one of the most impactful provisions of the ACA, the law changed Medicaid in other ways too. For example, people gaining coverage through the Medicaid expansion are guaranteed a benchmark benefit package that covers essential health benefits. Furthermore, the ACA required state Medicaid programs to cover preventive services without cost sharing. The law also increased Medicaid payments to primary care providers, provided new options for states to cover in-home and community-based care, increased Medicaid drug rebates, and extended those rebates to Medicaid managed care plans.

The ACA also made a number of changes to Medicare. Notably, the ACA phased out the Medicare Part D prescription drug benefit coverage gap (colloquially known as the “donut hole”) and provides preventive benefits for Medicare enrollees without cost sharing. The ACA also includes several changes aimed at reducing the growth in Medicare spending. For example, the ACA includes reductions in the growth of Medicare payments to hospitals and other providers, and to Medicare Advantage plans. The law also created an Innovation Center within the Centers for Medicare and Medicaid Services (CMS) tasked with developing and testing new health care payment and delivery models and established the Medicare Shared Savings Program, a permanent accountable care organization (ACO) program in traditional Medicare that offers financial incentives to providers for meeting or exceeding savings targets and quality goals.

Finally, the ACA includes many other provisions that do not relate directly to health coverage. For example, the ACA authorizes the Food and Drug Administration to approve generic versions of biologic drugs. There are also provisions that aim to reduce waste and fraud, expand the health care workforce, increase data collection and reporting on health disparities, and improve public health preparedness.

When passed, the ACA was designed to be budget neutral, with health insurance subsidies and expansions of public programs financed through a variety of taxes and fees on individuals, employers, insurers, and certain businesses in the health sector, as well as savings from the Medicare program. As discussed in more detail below, some of these taxes or fees have since been repealed or reduced to zero dollars, including the individual mandate penalty, the medical device tax, and the so-called “Cadillac Tax,” which would have imposed an excise tax on high-cost employer health plans. Additionally, at times, a tax on health insurance carriers has been temporarily put on hold.

Health Insurance Marketplaces (also known as exchanges) are organizations set up to create more organized and competitive markets for individuals and families buying their own health insurance. The Marketplaces offer a choice of different health plans, certify plans that participate, and provide information and in-person assistance to help consumers understand their options and apply for coverage. Premium and cost-sharing subsidies based on income are available through the Marketplace to make coverage more affordable for individuals and families. People with very low incomes can also find out if they are eligible for coverage through Medicaid and CHIP while shopping on the Marketplace.

Some small businesses can buy coverage for their employees through separate exchanges called Small Business Health Options Program (SHOP) Marketplace plans, but this chapter focuses primarily on the Marketplaces for individuals and families.

There is a health insurance Marketplace in every state for individuals and families and for small businesses. Some enrollment websites are operated by the state government or quasi-governmental bodies at the state level and have a special state name (such as Covered California or The Maryland Health Benefit Exchange). In 28 states where the federal government runs the enrollment website, it is called HealthCare.gov. As of early 2025, three state-based Marketplaces (Arkansas, Illinois, and Oregon) use the federal platform.

The Marketplaces exist alongside other coverage that is also sold to individuals or small businesses. The Marketplaces for individuals and families are part of what is called the “individual insurance market,” which also includes ACA-compliant and non-compliant insurance sold off the Marketplace (also called off-exchange coverage). Similarly, the “small group insurance market” includes the SHOP Marketplace plans as well as other ACA-compliant and non-compliant coverage sold to small businesses.

While many Americans are allowed to purchase unsubsidized coverage on the ACA Marketplaces, these markets primarily exist to fill a gap in coverage options for people who cannot get insurance through work or public programs. Some people who sign up for Marketplace coverage are unemployed or between jobs, while others are students, self-employed or work at businesses that do not offer coverage (e.g., very small companies) or offer coverage that is deemed unaffordable.

To receive the premium tax credit for coverage starting in 2025, a Marketplace enrollee must meet the following criteria:

• Have a household income at least equal to the Federal Poverty Level (FPL), which for the 2025 benefit year will be determined based on 2024 poverty guidelines.
• Not have access to affordable coverage through an employer (including a family member’s employer).
• Not be eligible for coverage through Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).
• Have U.S. citizenship or proof of legal residency (lawfully present immigrants whose household income is below 100 percent FPL can also be eligible for tax subsidies through the Marketplace if they meet all other eligibility requirements, though this exception is set to end starting in 2026).
• If married, must file taxes jointly.

Employer coverage: If a person’s employer offers health coverage but that coverage is deemed unaffordable or of insufficient value, the employee and/or their family may be able to receive subsidies to buy Marketplace coverage. Employer coverage is considered affordable if the required premium contribution is no more than 9.02 percent of household income in 2025. The Marketplace will look at both the required employee contribution for self-only and (if applicable) for family coverage. If the required employee contribution for self-only coverage is affordable, but the required employee contribution for family coverage is more than 9.02 percent of household income, the dependents can purchase subsidized exchange coverage while the employee stays on employer coverage.

The employer’s coverage must also meet a minimum value standard that requires the plan to provide substantial coverage for physician services and for inpatient hospital care with an actuarial value of at least 60 percent (meaning the plan pays for an average of at least 60 percent of all enrollees’ combined health spending, similar to a bronze plan). The plan must also have an annual OOP limit on cost sharing of no more than $9,200 for self-only coverage and $18,400 for family coverage in 2025.

People offered employer-sponsored coverage that fails to meet either the affordability threshold or minimum value requirements can qualify for Marketplace subsidies if they meet the other criteria listed above.

Eligibility for Medicaid: In states that have expanded Medicaid under the ACA, adults with income up to 138 percent FPL are generally eligible for Medicaid and, therefore, are ineligible for Marketplace subsidies. In the states that have not adopted the Medicaid expansion, adults with income as low as 100 percent of FPL can qualify for Marketplace subsidies, but those with lower incomes are not eligible for tax credits and generally not eligible for Medicaid unless they meet other state eligibility criteria.

Starting in 2026, federal policy changes will restrict premium tax credit eligibility for legal immigrants who are ineligible for Medicaid due to their alien status. An exception to the rule restricting tax credit eligibility for adults with income below the FPL was previously made for certain lawfully present immigrants. Other federal rules restrict Medicaid eligibility for lawfully present immigrants, other than pregnant women, refugees, and asylees, until they have resided in the U.S. for at least five years. Prior to the implementation of this policy change, immigrants who would otherwise have been eligible for Medicaid but had not yet completed their five-year waiting period instead qualified for tax credits through the Marketplace. If an individual in this circumstance has an income below 100 percent of FPL, for the purposes of tax credit eligibility, their income would have been treated as though it was equal to the FPL. Immigrants who are not lawfully present are ineligible to enroll in health insurance through the Marketplace, receive tax credits through the Marketplace, or enroll in non-emergency Medicaid and CHIP. In November 2024, the Biden administration published new rules that deemed Deferred Action for Childhood Arrivals (DACA) recipients as lawfully present, making them eligible for subsidized ACA Marketplace coverage. However, finalized Marketplace Integrity and Affordability rules undo this change.

The ACA requires all qualified health benefits plans to cover essential health benefits, including those offered through the Marketplaces and those offered in the individual and small group markets off-exchange. Grandfathered individual and employer-sponsored plans (which existed before the ACA was passed) and non-compliant plans (which include short-term plans) do not have to cover essential health benefits.

The law specifies that the essential health benefits package must include at least 10 categories of items and services: ambulatory patient services; emergency services; hospitalization; pregnancy, maternity, and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. It also requires that the scope of benefits be equal to that of a “typical employer plan.”

These categories are broad and subject to interpretation. For example, there could be limits on the number of physical therapy services an enrollee receives in a year. For more specific guidance on how to interpret these requirements, the federal government allows states to select a “benchmark” health plan (often one that was already offered to small businesses) as a standard.

Essential health benefits are a minimum standard. Plans can offer additional health benefits, like vision, dental, and medical management programs (for example, for weight loss). The ACA prohibits abortion coverage from being required as part of the essential health benefits package. The premium subsidy does not cover non-essential health benefits, meaning that people enrolling in a plan with non-essential benefits may have to pay a portion of the premium for these additional benefits.

Although plans must cover essential health benefits, they are allowed to apply cost sharing (deductibles, copayments, and coinsurance). This means enrollees may still face some out-of-pocket costs when receiving these services. However, preventive health services are required to be covered without cost sharing. Examples of preventive health services include vaccinations, cancer screenings, and birth control.

There are two types of financial assistance available to Marketplace enrollees. The first type, called the premium tax credit (or premium subsidy), reduces enrollees’ monthly payments for insurance coverage. The second type of financial assistance, the cost-sharing reduction (CSR), reduces enrollees’ deductibles and other out-of-pocket costs when they go to the doctor or have a hospital stay. To receive either type of financial assistance, qualifying individuals and families must enroll in a plan offered through a health insurance Marketplace. In addition to the federal subsidies discussed here, some states that operate their own exchange markets offer additional state-funded subsidies that further lower premium payments and/or deductibles or other forms of cost sharing.

Premium Subsidies

Premium tax credits can be applied to Marketplace plans in any of four “metal” levels of coverage: bronze, silver, gold, and platinum. Bronze plans tend to have the lowest premiums but have the highest deductibles and other cost sharing, leaving the enrollee to pay more out-of-pocket when they receive covered health care services, while platinum plans have the highest premiums but very low out-of-pocket costs. There are also catastrophic plans, usually only available to younger enrollees, but the subsidy cannot be used to purchase one of these plans.

The premium tax credit works by limiting the amount an individual must contribute toward the premium for the “benchmark” plan – or the second-lowest cost silver plan available to the individual in their Marketplace. This “required individual contribution” is set on a sliding income scale. In 2025, for individuals with income up to 150 percent FPL, the required contribution is zero, while at an income of 400 percent FPL or above, the required contribution is 8.5 percent of household income. 

These contribution amounts were set by the American Rescue Plan Act (ARPA) in 2021 and temporarily extended by the Inflation Reduction Act (IRA) through the end of 2025. Prior to the ARPA, the required contribution percentages ranged from about two percent of household income for people with income at the FPL to nearly 10 percent for people with income from 300 to 400 percent of FPL. Before the ARPA was passed, people with incomes above 400 percent of FPL were not eligible for premium tax credits. If Congress does not act to extend the IRA enhanced premium tax credits before the end of 2025, they will expire, and the original ACA premium caps will return.

The amount of tax credit is calculated by subtracting the individual’s required contribution from the actual cost of the “benchmark” plan. So, for example, if the benchmark plan costs $6,000 annually, the required contribution for someone with an income of 150 percent FPL is zero, resulting in a premium tax credit of $6,000. If that same person’s income equals 250 percent FPL (or $37,650 in 2025), the individual contribution is four percent of $37,650, or $1,506, resulting in a premium tax credit of $4,494.

The premium tax credit can then be applied toward any other plan sold through the Marketplace (except catastrophic coverage). The amount of the tax credit remains the same, so a person who chooses to purchase a plan that is more expensive than the benchmark plan will have to pay the difference in cost. If a person chooses a less expensive plan, such as the lowest-cost silver plan or a bronze plan, the tax credit will cover a greater share of that plan’s premium and possibly even the entire cost of the premium. When the tax credit exceeds the cost of a plan, it lowers the premium to zero and any remaining tax credit amount is unused.

As mentioned above, the premium tax credit will not apply for certain components of a Marketplace plan premium. First, the tax credit cannot be applied to the portion of a person’s premium attributable to covered benefits that are not essential health benefits (EHB). For example, a plan may offer adult dental benefits, which are currently not included in the definition of EHB. In that case, the person would have to pay the portion of the premium attributable to adult dental benefits without financial assistance. In addition, the ACA requires that premium tax credits may not be applied to the portion of premium attributable to “non-Hyde” abortion benefits. Marketplace plans that cover abortion are required to charge a separate minimum $1 monthly premium to cover the cost of this benefit; this means a consumer who is otherwise eligible for a fully subsidized, zero-premium policy would still need to pay $1 per month for a policy that covers abortion benefits. Finally, if the person smokes cigarettes and is charged a higher premium for smoking, the premium tax credit is not applied to the portion of the premium that is the tobacco surcharge.

Cost-Sharing Reductions

The second form of financial assistance available to Marketplace enrollees is a cost-sharing reduction. Cost-sharing reductions lower enrollees’ out-of-pocket cost due to deductibles, copayments, and coinsurance when they use covered health care services. People who are eligible to receive a premium tax credit and have household incomes from 100 to 250 percent of FPL are eligible for cost-sharing reductions.

Unlike the premium tax credit (which can be applied toward any metal level of coverage), cost-sharing reductions (CSR) are only offered through silver plans. For eligible individuals, cost-sharing reductions are applied to a silver plan, essentially making deductibles and other cost sharing under that plan more similar to that under a gold or platinum plan. Individuals with income between 100 and 250 percent FPL can continue to apply their premium tax credit to any metal level plan, but they can only receive the cost-sharing subsidies if they pick a silver-level plan.

Cost-sharing reductions are determined on a sliding scale based on income. The most generous cost-sharing reductions are available for people with income between 100 and 150 percent FPL. For these enrollees, silver plans that otherwise typically have higher cost sharing are modified to be more similar to a platinum plan by substantially reducing the silver plan deductibles, copays, and other cost sharing. For example, in 2025, the average annual deductible under a silver plan with no cost-sharing reduction is nearly $5,000, while the average annual deductible under a platinum plan is $0. Silver plans with the most generous level of cost-sharing reductions are sometimes called CSR 94 silver plans; these plans have 94 percent actuarial value (which represents the average share of health spending paid by the health plan) compared to 70 percent actuarial value for a silver plan with no cost-sharing reductions.

Somewhat less generous cost-sharing reductions are available for people with income greater than 150 and up to 200 percent FPL. These reduce cost sharing under silver plans to 87 percent actuarial value (CSR 87 plans). In 2025, the average annual deductible under a CSR 87 silver plan was about $700.

For people with income greater than 200 and up to 250 percent FPL, cost-sharing reductions are available to modestly reduce deductibles and copays to 73 percent actuarial value (sometimes called CSR 73 plans). In 2025, the average annual deductible under a CSR 73 silver plan was about $3,600.

Insurers have flexibility in how they set deductibles and copays to achieve the actuarial value under Marketplace plans, including CSR plans, so actual deductibles may vary from these averages. The ACA also requires maximum annual out-of-pocket spending limits on cost sharing under Marketplace plans, with reduced limits for CSR plans. In 2025, the maximum OOP limit is $9,200 for an individual and $18,400 for a family for all QHPs. Lower maximum OOP limits are permitted under cost-sharing reduction plans.

Cost-sharing reductions work differently for Native American and Alaska Native members of federally recognized tribes. For these individuals, cost-sharing reductions are available at higher incomes and can be applied to metal levels other than silver plans.

Since it was first signed into law, the ACA has undergone many changes through regulation, legislation, and legal challenges. Some provisions never got off the ground, and others were repealed, while more recent changes have expanded and enhanced other provisions. This section summarizes some of the most significant changes to the law.

Medicaid Expansion: The ACA originally expanded Medicaid to all non-Medicare eligible individuals under age 65 with incomes up to 138% of the FPL. A Supreme Court ruling on the constitutionality of the ACA upheld the Medicaid expansion, but limited the ability of HHS to enforce it, thereby making the decision to expand Medicaid effectively optional for states. As of the beginning of 2025, 40 states and the District of Columbia had expanded Medicaid. Additionally, while not taking up Medicaid expansion under the ACA, Wisconsin did increase Medicaid eligibility to 100% of the FPL, which is where ACA Marketplace subsidy eligibility begins. In the remaining states that have not expanded Medicaid, an estimated 1.4 million people fall into the so-called Medicaid coverage gap, meaning their incomes are too high to qualify for Medicaid but too low to qualify for ACA Marketplace subsidies. The federal government covers 90% of the cost of Medicaid expansion.

Individual Mandate: The ACA also originally included an “individual mandate” or requirement for most people to maintain health insurance. In health insurance systems designed to protect people with pre-existing conditions and guarantee availability of coverage regardless of health status, countervailing measures are also needed to ensure people do not wait until they are sick to sign up for coverage, as doing so would drive up premiums. The ACA included a variety of these countervailing measures, with both “carrots” (e.g., premium tax credits and cost-sharing reductions) and “sticks” (e.g., the individual mandate penalty and limited enrollment opportunities) to encourage healthy as well as sick people to enroll in health insurance coverage.

American citizens and U.S. residents without qualifying health coverage had to pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5% of household income. The penalty was set to increase annually by the cost-of-living adjustment. Exemptions were granted for financial hardship, religious objections, American Indians, those without coverage for less than three months, undocumented immigrants, incarcerated individuals, those for whom the lowest cost plan option exceeds 8% of an individual’s income, and those with incomes below the tax filing threshold.

Despite the popularity of the ACA’s protections for people with pre-existing conditions, the individual mandate was politically controversial and consistently viewed negatively by a substantial share of the public. In early 2017, under President Trump, the Internal Revenue Service (IRS) stopped enforcing the individual mandate penalty. After several attempts to repeal and replace the ACA stalled out in the summer of 2017, Congress reduced the individual mandate penalty to $0, effective in 2019, as part of tax reform legislation passed in December 2017.

Cost-Sharing Reduction Payments: The ACA originally included two types of payments to insurers participating in the ACA Marketplace. First, insurers received advanced payments of the premium tax credit to subsidize monthly premiums for people buying their own coverage on the Marketplace. Second, insurers were required to reduce cost sharing (i.e., deductibles, copayments, and/or coinsurance) for low-income enrollees and the federal government was required to reimburse insurers for these cost-sharing reductions (CSRs). However, the funds for the payment of cost-sharing reductions were never appropriated. The Trump administration ended federal CSR payments to insurers weeks before ACA Marketplace Open Enrollment for 2018 coverage began. In response to this, most states allowed insurers to compensate for the lack of government payments by raising premiums. At the time, the Congressional Budget Office (CBO) estimated termination of CSR payments to insurers would increase the federal deficit by $194 billion over 10 years, because of these higher premiums and corresponding increased premium tax credit subsidies. Although the CSR payments have ceased, cost-sharing reduction plans continue to be available to low-income Marketplace enrollees.

Enhanced and Expanded ACA Marketplace Premium Tax Credits: Another controversial aspect of the ACA was the so-called “subsidy cliff,” where people with incomes over 400% of the FPL were ineligible for financial assistance on the Marketplace and, therefore, would have to pay a large share of their household income for unsubsidized health coverage. As a result, many middle-income people were being priced out of ACA coverage. The March 2021 COVID-19 relief legislation, the American Rescue Plan Act (ARPA), extended eligibility for ACA health insurance subsidies to people with incomes over 400% of FPL buying their health coverage on the Marketplace. The ARPA also increased the amount of financial assistance for people with lower incomes who were already eligible under the ACA, making many low-income people newly eligible for free or nearly free coverage. Both provisions were temporary, lasting for two years, but the Inflation Reduction Act extends those subsidies through the end of 2025.

Family Glitch: Financial assistance to buy health insurance on the Affordable Care Act (ACA) Marketplaces is primarily available for people who cannot get coverage through a public program or their employer. Some exceptions are made, however, including for people whose employer coverage offer is deemed unaffordable or of insufficient value. For example, people can qualify for ACA Marketplace subsidies if their employer requires them to spend more than about 8-9% (indexed each year) of their household income on the company’s health plan premium. For many years, this affordability threshold was based on the cost of the employee’s self-only coverage, not the premium required to cover any dependents. In other words, an employee whose contribution for self-only coverage was less than the threshold was deemed to have an affordable offer, which means that the employee and their family members were ineligible for financial assistance on the Marketplace, even if the cost of adding dependents to the employer-sponsored plan would far exceed the approximately 8-9% of the family’s income. This definition of “affordable” employer coverage has come to be known as the “family glitch,” which affected an estimated 5.1 million people. Under a Biden administration federal regulation, the worker’s required premium contributions for self-only coverage and for family coverage will be compared to the affordability threshold of approximately 8-9% of household income. If the cost of self-only coverage is affordable, but the cost for family coverage is not, the worker will stay on employer coverage while their family members can apply for subsidized exchange coverage.

Public Opinion: Americans’ views of the Affordable Care Act have evolved over time. From the time the ACA passed, to when the Marketplaces first opened in 2014, and through the months leading up to President Trump’s election in 2016, public opinion of the ACA was strongly divided and often leaned more negative than positive. Many individual provisions of the ACA, such as protections for people with preexisting conditions, were popular, but the individual mandate was particularly unpopular.

News coverage during the ACA Marketplaces’ early years often centered on the rocky rollout, from the early Healthcare.gov website glitches to skyrocketing premiums in subsequent years. Coverage in later years focused on how unprofitable insurers exited the market, leaving people in some counties at risk of having no Marketplace insurer—and thus, no Marketplace through which to access health insurance subsidies.

In 2017, during his first term, President Trump and Republicans in Congress attempted to repeal or fundamentally alter the ACA. As proposals to replace the ACA became more concrete, though, public support for the ACA, particularly among Democrats and Independents, began to grow. Ultimately, the only key aspect of the law that was removed was the penalty for not purchasing health insurance—now lowered to $0 as part of the 2017 tax reform package. Following repeal efforts and the removal of the individual mandate penalty, as well as a stabilization of the ACA Marketplaces, public support for the law has continued to grow and is now solidly more positive than negative. Although this support remains divided by party lines, several Republican-led states have adopted the ACA’s Medicaid expansion through popular votes.

Following repeal efforts and the removal of the individual mandate penalty, as well as a stabilization of the ACA Marketplaces, public support for the law has continued to grow and is now solidly more positive than negative. Although this support remains divided by party lines, several Republican-led states have adopted the ACA’s Medicaid expansion through popular votes.

After volatile initial years, the ACA Marketplaces have become more stable—a pattern which can be seen across a variety of measures, including enrollment, premiums and insurer participation.  

Enrollment

ACA Marketplace enrollment has more than tripled since its launch in 2014. The number of people who enrolled and effectuated their Marketplace coverage in early 2024 reached 20.8 million, surpassing prior record-setting years in 2021, 2022, and 2023. The recent enrollment growth was likely primarily driven by the enhanced tax credits in the American Rescue Plan Act and the Inflation Reduction Act, as well as the Biden administration’s decision to direct more resources toward marketing, outreach, and enrollment assistance, reversing substantial reductions in funding by the Trump administration.

The ARPA’s subsidies didn’t simply bring people from off-Marketplace plans to the Marketplace; they also helped increase overall individual market enrollment. Enrollment grew to 25.2 million in early 2025, which is an increase of about 81% from early 2020.

With passage of enhanced tax credits in the American Rescue Plan Act (ARPA), combined with boosted outreach and an extended enrollment period, 2021 marked the first year since 2015 when individual market enrollment increased relative to the year prior. Individual market enrollment grew about 5% from 13.9 million in the first quarter of 2020 to 14.7 million in the first quarter of 2021.

In the early years of the rollout of the ACA Marketplaces, on-exchange enrollment was comparable to off-exchange enrollment, meaning that the Marketplaces represented about half of overall individual market enrollment. Some off-exchange enrollment was represented by people in ACA-compliant coverage (similar to that offered on-exchange, but without subsidies), while other individual market enrollees were signed up for non-compliant coverage, like “grandmothered” or short-term plans.

Non-compliant short-term plans often do not include certain benefits or coverage for pre-existing conditions and can impose a dollar limit on insurance coverage. For example, many short-term plans do not cover maternity care, prescription drugs, or mental health or substance use treatment, and most impose a dollar limit on covered services or drugs. In 2024, the Biden administration finalized a rule that reverses the Trump administration’s expansion of short-term plans. The share of individual market enrollment in ACA-compliant plans has increased to 93% in mid-2022 compared to 71% in mid-2015. 

Premiums

ACA Marketplace premiums have risen substantially over time. When insurers entered the ACA Marketplaces in 2014, most were operating with virtually no experience participating in an individual market like this (e.g., with subsidies, preexisting condition protections, and an individual mandate). Insurers also had to submit premiums almost a year in advance for review and approval by state regulators. Even 2015 premiums were submitted in early 2014, meaning insurers did not have much experience in the market on which to base their premium and claim projections. Eventually, though, it became clear that they were underpriced and unprofitable, so in 2016, many insurers began to raise premiums. By 2017, the temporary reinsurance and risk corridors programs had phased out, leading to another market correction. In 2018, with the discontinuation of cost-sharing reduction payments, insurers raised premiums yet again, though most insurers concentrated these premium increases on silver plans (a practice known as “silver loading”). More recently, though, as the markets have stabilized and as the pandemic led to a temporary reduction in health care utilization, premiums have at times fallen or at least grown at a slower pace. Heading into 2025, ACA Marketplace benchmark premiums rose by about 4% on average, driven primarily by inflation and increased utilization of specialty drugs.

Deductibles and other cost sharing

Generally, deductibles have also risen since the ACA Marketplaces were first launched in 2014. Bronze plans, which typically have the highest deductibles among ACA Marketplace plans, have an average deductible of $7,186 in 2025, compared to $5,113 in 2014. However, as discussed above, many ACA Marketplace enrollees are low income and therefore qualify for cost-sharing reductions if they purchase a silver plan. For the most generous cost-sharing reduction plans, which are available to people with incomes just above the FPL, the average deductible is $87 in 2025, compared to $183 in 2014.  

Insurer participation

Insurer participation in 2025 is more robust than in recent years, surpassing record high levels of participation set in 2023 and 2024.

Insurer participation on the ACA Marketplaces fell dramatically in 2017 with the exit of UnitedHealthcare from most states. In 2018, with President Trump’s announcement that cost-sharing reduction payments would cease and the corresponding attempts to repeal the ACA in Congress, many more insurers exited or scaled back their participation. Though all counties in the country continued to have at least one ACA Marketplace insurer, there had initially been concern that there could have been counties left without any insurer, thus leaving residents in those counties without access to ACA subsidies.

However, in subsequent years, with premium increases and changes in strategies, it became apparent that the ACA Marketplaces could be quite profitable and many insurers entered or expanded their footprints.

The ACA has faced both support and opposition over time, and its fate has been subject to numerous political and legal debates, including efforts to repeal and replace the law and to overturn it in whole or in part in several court cases. Future changes in presidential administrations and shifts in the composition of Congress will likely continue to impact the implementation and stability of the ACA.

Key issues to watch include:

Federal Policy Changes: Federal policy changes finalized and passed in the summer of 2025 will change how the ACA Marketplaces will operate in the coming years. Combined, the finalized Marketplace Integrity and Affordability final rule as well as the budget reconciliation legislation will make several changes to consumer protections, ACA Marketplace coverage and premium tax credit eligibility, as well as verification processes. Implementation dates of specific policies vary, but some are set to begin in August of 2025. Changes include effectively ending auto-renewals, removing repayment limits on the premium tax credit, and implementing new eligibility verification procedures.  The CBO estimates that an additional  10 million people would become uninsured due to the impact of the budget reconciliation legislation, with about 2 million becoming uninsured due to changes to the ACA Marketplaces.

Enhanced Premium Tax Credits: Currently, the enhanced premium tax credits in the ACA Marketplaces are set to expire at the end of 2025. If these tax credits are allowed to expire, people purchasing subsidized coverage will face significant increases in their monthly premium payments and some may become priced out of the market. Some action has been taken ahead of a potential expiration. In preparation for the possibility of enhanced tax credits expiring, some states are working on ways to fund state subsidies that keep the cost of ACA Marketplace coverage affordable. The CBO previously projected that an additional 4.2 million people would become uninsured by 2034 if the enhanced premium tax credits expire.

State Actions: In recent years, some states have moved off the federal platform (Healthcare.gov) to implement their own enrollment websites. Additionally, more states have expanded Medicaid. Some states have sought 1332 waivers under the ACA to implement reinsurance programs, expand coverage to undocumented residents (though federal policy changes discussed above will undo these efforts), and create public options.

Consumer Protections: The ACA includes various consumer protections that continue to evolve through the regulatory process. For example, proposed and finalized rulemaking has focused on improving network adequacy, simplifying the shopping process, and reexamining essential health benefits. Planned federal policy changes will undo some of the consumer protection processes currently in place. In response to claims of mass fraudulent enrollment, the finalized Marketplace Integrity and Affordability Rule was issued in June 2025. In it, CMS issued rules permitting coverage denials for outstanding premium payments from prior coverage and eliminated the automatic 60-day extension to resolve income discrepancies.

Funding Cuts: In February 2025, CMS announced that it would be reducing funding for its navigator program down from $100 million to $10 million starting next year. This is equal tothe amount awarded to navigators in 2018-2020 during President Trump’s first administration.

Health Costs and Affordability: Though the ACA has made insurance coverage more accessible and affordable for millions of people, health costs in the United States continue to be high and many people with insurance nonetheless face cost-related barriers to care.

• KFF Subsidy Calculator
• How Much More Would People Pay in Premiums if the ACA’s Enhanced Subsidies Expired?
• Explaining Health Care Reform: Questions About Health Insurance Subsidies
• Implementation Dates for 2025 Budget Reconciliation Law
• Health Provisions in the 2025 Federal Budget Reconciliation Law
• Health Reform FAQs
• Inflation Reduction Act Subsidies  
• Ten Things to Watch for 2025 ACA Open Enrollment
• State Health Facts – ACA state data
• Enrollment Growth in the ACA Marketplaces
• Deductibles in ACA Marketplaces

Ortaliza, J., McGough, M., & Cox, C., The Affordable Care Act 101. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-the-affordable-care-act/ (date accessed).

While there is currently no standard, agreed-upon definition of global health, the National Academy of Medicine (formerly Institute of Medicine) defines global health as having “the goal of improving health for all people in all nations by promoting wellness and eliminating avoidable diseases, disabilities, and deaths.” A key dimension of global health is an emphasis on addressing inequities in health status between rich and poor countries and also for those who are most marginalized within countries, as well as a recognition that the health of people around the world is highly interconnected, with domestic and foreign health inextricably linked. 

The U.S. government has long been the largest donor to and implementer of global health programs in the world. These efforts have aimed to help improve the health of people in low- and middle-income countries while also contributing to broader U.S. global development goals, foreign policy priorities, and national security concerns, including helping safeguard the health of Americans. These efforts began decades ago and saw major expansion in the early part of the current century with the creation of the President’s Emergency Plan for AIDS Relief (PEPFAR) and other programs. Since the beginning of the second Trump administration, however, the U.S. global health response has undergone significant change, disruption, and retraction, and the global health landscape has been altered in fundamental ways. This has included, as part of a major review of U.S. foreign aid, the dissolution of the U.S. Agency for International Development (USAID), the main implementing agency for U.S. global health programs, the elimination of numerous programs and projects, and the transition of remaining programs to the State Department.  As part of its review, the administration is seeking to assess whether U.S. foreign aid programs are aligned with U.S. national interests.

Historically, the U.S. role in global health is multifaceted and includes a broad range of activities. Its primary roles are as a supporter of bilateral (i.e., country-to-country) efforts, directly funding implementation of global health efforts in partner countries, and as a donor to multilateral health institutions (i.e., international organizations that pool support from multiple countries for one or more areas of global health). The U.S. also engages in global health diplomacy through its relationships with other governments, multilateral institutions, non-governmental organizations, and the private sector. Specifically, the U.S. government:

• acts as a donor by providing financial and other health-related development assistance (e.g., commodities, like contraceptives or bed nets for protection from disease-carrying mosquitoes) to low- and middle-income countries;
• operates programs and delivers health services;
• provides technical assistance and other capacity-building support;
• participates in major international health organizations and coordinates health efforts with other stakeholders through global health diplomacy;
• conducts research;
• supports international responses to disasters and other emergencies; and
• partners with governments, non-governmental groups, and the private sector (Figure 1).

U.S. global health activities have targeted a variety of issues and used different intervention approaches such as:

• Health services and systems strengthening: improving basic and essential health services, systems, and infrastructure;
• Disease detection and response: supporting surveillance, prevention, and treatment of diseases, including both infectious (e.g., HIV, TB, malaria) and non-communicable diseases (e.g., cardiovascular disease, cancer);
• Population and maternal/child health: promoting maternal health; reproductive health and family planning; child nutrition, immunization, and other child survival interventions;
• Nutrition, water, and environmental health: providing non-emergency food aid and supporting dietary supplementation and food security; clean/safe water and sanitation; mitigation of environmental hazards; and
• Research and development: investigating and developing new technologies, interventions, and strategies, including vaccines, medicines, and diagnostics.

While the U.S. government’s involvement in global health currently faces an uncertain future – with a more limited scope, the dissolution of USAID, and cancelation of numerous U.S.-supported global health projects, as the Trump administration seeks to reorganize foreign aid more broadly –  the U.S. has historically supported global health through a wide array of bilateral and multilateral global health programs in countries around the world including:

HIV/PEPFAR

While the U.S. first provided funding to address the emerging global HIV epidemic in 1986, U.S. funding and attention for these efforts has grown significantly in the last two decades, particularly following President George W. Bush’s 2003 announcement of the President’s Emergency Plan for AIDS Relief (PEPFAR), the coordinated U.S. government response to global HIV. Now the largest commitment by any nation devoted to a single disease, the launch of PEPFAR led to substantially increased U.S. support for HIV prevention, treatment, and care efforts, as well as U.S. contributions to multilateral entities, including the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), the Joint United Nations Programme on HIV/AIDS (UNAIDS), and the International AIDS Vaccine Initiative (IAVI).  PEPFAR, which is housed in the Department of State, has been credited with saving 26 million lives and contributing to broader health, educational, and economic gains.  Currently, PEPFAR faces significant change. While U.S. policymakers had been increasingly looking at when and how to transition PEPFAR services and financing to country governments, the current Trump administration has sought to narrow PEPFAR’s scope and significantly accelerate this timeline. See the “Status of PEPFAR” fact sheet for more information.

Tuberculosis (TB)

Since the 1998 launch of USAID’s global TB control program, the U.S. response to global TB has expanded, particularly after 2003 when PEPFAR highlighted the U.S. government’s commitment to addressing TB. Prior to the current Trump administration, these efforts focused on diagnosis, treatment, and control of TB (including multi-drug-resistant and extensively drug-resistant TB, or MDR/XDR TB) as well as on research. The U.S. was also a donor to the Global Drug Facility of the Stop TB Partnership.  With the dissolution of USAID, remaining TB programming has been moved to the State Department and its scope has been reduced. See the “Status of U.S. Global Tuberculosis Efforts” fact sheet for more information.

Malaria/PMI

Engaged in malaria work since the 1950s, the U.S. supported expanded malaria efforts in low- and middle-income countries through the President’s Malaria Initiative (PMI), launched in 2005 and housed at and managed by USAID, as well as through research and other activities. PMI programs centered on expanding coverage of six key high-impact interventions to control or eliminate malaria, which included: diagnosis of malaria and treatment with artemisinin-based combination therapies (ACTs), entomological monitoring, intermittent preventive treatment in pregnancy (IPTp), indoor residual spraying (IRS) with insecticides, insecticide-treated mosquito nets (ITNs), and seasonal malaria chemoprevention (SMC). The U.S. has also supported the RBM Partnership to End Malaria.  Under the current administration, remaining PMI programming has been moved into the State Department. See the “Status of the President’s Malaria Initiative (PMI)” fact sheet for more information.

Maternal and Child Health (MCH)

Involved in efforts to improve MCH since the 1960s,  U.S. global MCH activities, which had been housed at and managed by USAID, aimed to bring to scale a range of high-impact interventions that mitigate maternal, newborn, and under-five deaths; prevent and address the indirect causes of such deaths (such as HIV, TB, and malaria); strengthen integration of maternal health services with family planning; improve equity of access to and use of services by vulnerable populations; and strengthen health systems. The U.S. has also been a donor to global organizations and initiatives addressing MCH, such as Gavi, the Vaccine Alliance, the United Nations Children’s Fund (UNICEF), and the Global Polio Eradication Initiative (GPEI).Under the current administration, remaining MCH programming has been moved into the State Department. See the “Status of U.S. Global Maternal and Child Health Efforts” fact sheet for more information.

Nutrition

For more than 40 years, the U.S. had been involved in nutrition efforts in low- and middle-income countries that aimed to prevent undernutrition through support for effective interventions, such as nutrition education, nutrition during pregnancy, exclusive breastfeeding, and micronutrient supplementation. Housed at and managed by USAID, U.S. global nutrition efforts were coordinated with the U.S. Feed the Future Initiative (FtF, launched in 2009), which aimed to address global hunger and food security. Currently, remaining nutrition programming has been moved to the State Department. See the “Status of U.S. Global Maternal and Child Health Efforts” fact sheet for more information.

Family Planning and Reproductive Health (FP/RH)

Engaged since the 1960s in international research on family planning and population issues as well as other FP/RH efforts (including the purchase and distribution of contraceptives in developing countries),  U.S. global FP/RH activities were designed to decrease the risk of unintended pregnancies and maternal and child mortality through effective interventions, including contraception, counseling, and post-abortion care. The U.S. also provided funding to global organizations addressing FP/RH, such as the United Nations Population Fund (UNFPA), though in some years, funding for UNFPA was withheld. The current administration has moved to end U.S. bilateral and multilateral support for family planning efforts. See the “Status of U.S. Family Planning and Reproductive Health Efforts” fact sheet for more information

Neglected Tropical Diseases (NTDs)

Having historically worked on addressing NTDs through research and surveillance, attention to and funding for U.S. global NTD efforts increased markedly in 2006 with the launch of the USAID NTD Program and the subsequent announcement of expanded efforts across the U.S. government in 2008. These efforts had focused on five NTDs (soil-transmitted helminths,  lymphatic filariasis or elephantiasis, onchocerciasis or river blindness, schistosomiasis or snail fever, and trachoma) that are responsible for the overwhelming majority of the NTD burden but can be controlled and even eliminated with low-cost and effective interventions, such as an integrated control approach targeting multiple NTDs simultaneously through mass drug administration (MDA). The future of NTD efforts is uncertain amid the current Trump administration’s foreign aid freeze and dissolution of USAID.

Global Health Security (GHS)

While the U.S. has supported global health security work for more than two decades, its involvement has expanded over time, with attention to these efforts growing significantly due to the COVID-19 pandemic. These efforts aimed to reduce the threat of emerging and re-emerging diseases by supporting preparedness, detection, and response capabilities worldwide. The U.S. had also played a key role in the development and 2014 launch of the “Global Health Security Agenda (GHSA).” Through this international partnership that now involves more than 70 countries and international organizations, the U.S. worked to help countries make measurable improvements in their GHS capabilities. The U.S. had also been a donor to the new Pandemic Fund, which seeks to provide sustained financing to help countries build their capacity to prevent, prepare for, and respond to epidemics and pandemics.  While the first U.S. global health security strategy had been developed by the first Trump administration, the current Trump administration has withdrawn this strategy, eliminated several global health security positions and some offices, and withdrawn from U.S. engagement in key international efforts. See the “Status of Global Health Security/Pandemic Preparedness” fact sheet for more information.

In FY 2025, U.S. funding appropriated by Congress for global health totaled $12.4 billion. While this funding has been appropriated to federal agencies, the current administration has withheld much of it from programming and sought to formally rescind (cancel) more than $1 billion in funding for global health, including some PEPFAR funding (Congress voted to amend the rescission package, reducing that amount to $500 million, and exempting PEPFAR and some other global health programs from cuts).  As such, funding amounts presented here for the current fiscal year may not reflect actual obligations or outlays of U.S. support. There is ongoing litigation federal court regarding these actions.

As Figure 2shows, U.S. appropriations for global health have grown significantly since the early 2000s, in large part due to funding for initiatives such as PEPFAR and PMI, but with spikes in some years due to emergency or supplemental funding for disease outbreaks such as Ebola, Zika, and COVID-19. Funding reached its highest level to date in FY 2021, largely due to the U.S. global response to the COVID-19 pandemic.

Although a large majority of the American public overestimates the share of the federal budget that is spent on foreign aid (with nearly half believing that the share is greater than 20%), U.S. foreign aid actually accounts for 1% or less of the federal budget, with U.S. funding for global health—which is part of the foreign affairs budget—accounting for an even smaller share.

U.S. Global Health Funding by Program Area

Looking across funding for the major global health program areas since FY 2006, most U.S. global health funding over time has been directed to HIV programs, accounting for approximately 50% of U.S. global health funding in most years (Figure 3). The Global Fund accounted for the next largest share over the period, followed by MCH and malaria. More recently, the U.S. has emphasized global health security more, with funding for these efforts increasing considerably during the COVID-19 pandemic and afterward. Consistent with this trend, most funding was provided to HIV efforts ($5.4 billion or 44%), followed by the Global Fund ($1.7 billion or 13%) and maternal and child health and global health security (both $1.3 billion or 10%) in FY 2025 (Figure 4).

Bilateral vs. Multilateral Aid

Most U.S. global health funding is provided bilaterally – that is, funding provided by the U.S. directly to or on behalf of a recipient country or region. In FY 2025, about 80% of the U.S. global health budget was provided through bilateral programs. The remainder (about 20%) is provided multilaterally through U.S. contributions to international institutions and organizations (see “What Multilateral Health Organizations Are Supported by the U.S.?”).

Historically, the U.S. government’s engagement in global health has been carried out and overseen by multiple executive branch departments and agencies and the legislative branch, including several congressional committees (Figure 5). The current administration has made significant changes to this infrastructure. See the “Proposed Reorganization of U.S. Global Health Programs” fact sheet for more information.

Executive Branch

In general, U.S. global health engagement has developed within two main structures of the Executive Branch of government: the foreign assistance structure, which is predominantly global development-oriented and has close links to foreign policy; and the public health structure, which has its roots in disease prevention, control, and surveillance efforts.

Most funding for and oversight of U.S. global health resides within the foreign assistance structure, including:

• Department of State (State): Established in 1789, the Department of State is the Cabinet-level foreign affairs agency of the United States. It advances U.S. objectives and interests worldwide through its primary role in developing and implementing the President’s foreign policy. Prior to the current Trump administration, it also provided policy direction to USAID, the lead federal agency for development assistance. The Trump administration has dissolved USAID and moved remaining global health activities into the Department of State. The Department of State’s Bureau for Global Health Security and Diplomacy (GHSD) coordinates the Department’s work on global health security, including HIV, and houses PEPFAR.
• U.S. Agency for International Development (USAID): Established in 1961, USAID was an independent U.S. federal government agency that received overall foreign policy guidance from the Secretary of State. Its role was to support long-term and broad-based economic growth in countries and advance U.S. foreign policy objectives by supporting activities through each of its programmatic functional bureaus (e.g., Bureau for Global Health) and regional bureaus. Most USAID global health programs had been coordinated through the Bureau for Global Health, including HIV and other infectious diseases, MCH, nutrition, FP/RH, NTDs, and global health security. USAID has now been dissolved by the current administration.  
• Millennium Challenge Corporation (MCC): Established in 2004, MCC administers the Millennium Challenge Account (MCA), a U.S. government initiative providing development assistance to eligible countries to promote economic growth and reduce poverty in low- and middle-income countries. Although MCC supports several health-related programs, health is not the main focus or purpose of its work; its design is intended to link MCC contributions for development assistance (to reduce poverty through support for economic growth) to greater responsibility by low- and middle-income countries for successfully attaining certain governance and development benchmarks. The current Trump administration had sought to close down the agency but ultimately did not do so.

Agencies within the public health structure operate global health programs directly or in conjunction with foreign assistance agencies. They are represented most prominently by several agencies within the Department of Health and Human Services (HHS), including:

• Office of Global Affairs (OGA): OGA’s primary function is global health diplomacy – particularly coordinating and maintaining engagement across HHS and the U.S. government with foreign governments and ministries of health, multilateral organizations, civil society groups, and the private sector – exchanging best practices and sharing technical knowledge to advance U.S. global health priorities and research.
• Centers for Disease Control and Prevention (CDC): With a long history of working on international health issues, prior to the current Trump administration, CDC focused on disease control and prevention and health promotion through operations, development assistance, basic and field research, technical assistance, training/exchanges, and capacity building. The current administration has eliminated many of the staff working on these issues and sought to eliminate the CDC’s global health center.
• National Institutes of Health (NIH): One of the world’s leading research entities on global health, NIH conducts biomedical and behavioral science research on diseases and disorders to enhance diagnosis, prevention, and treatment and provides technical assistance and training. Prior to the current Trump administration, all 27 of the agency’s institutes and centers engaged in global health activities, but these activities are already being curtailed or eliminated.
• Food & Drug Administration (FDA): The FDA screens pharmaceutical and biological products for safety and efficacy and helps oversee the safety of the U.S. food supply.
• Health Resources and Services Administration (HRSA): HRSA builds human and organizational capacity and promotes health systems strengthening to deliver care in PEPFAR countries.

In addition to the foreign assistance and public health service agencies, other departments and agencies involved in global health have included the Department of Defense (DoD), the Department of Agriculture (USDA), the Peace Corps, the Environmental Protection Agency (EPA), the Department of Homeland Security (DHS), the Department of Labor (DoL), the Department of Commerce (Commerce), the Office of the U.S. Trade Representative (USTR), and the National Security Council (NSC). The NSC, which sits within the White House, plays a significant role across the U.S. government, as it is responsible for coordinating and reviewing the U.S. strategy and activities related to global health security, including its international response. However, the administration has eliminated many of the staff working on these issues, and is no longer operating the White House Office of Pandemic Preparedness and Response (OPPR), which had been responsible for domestic policy coordination related to health security.

Legislative Branch

The U.S. Congress introduces, considers, and passes global health-related legislation; oversees global health efforts, specifying how funds for these programs are to be (and not to be) spent; authorizes and appropriates funding; and confirms presidential appointees to key U.S. global health positions. Major committees of the House of Representatives (House) and Senate with jurisdiction over global health efforts include: the House Committee on Foreign Affairs, Senate Committee on Foreign Relations, House Committee on Energy and Commerce, Senate Committee on Health, Education, Labor, and Pensions, and the Senate and House Appropriations Committees.

The U.S. global health response has been defined by numerous governing statutes, authorities, and policy decisions. For instance, the legislation that created PEPFAR in 2003 and its subsequent reauthorizations in 2008, 2013, 2018, and 2024 are key statutes of U.S. global health policy, as they govern its bilateral HIV response, bilateral assistance for TB and malaria, and participation in the Global Fund. Other statutory requirements that shape the implementation and scope of U.S. global health activities are those governing U.S. global FP/RH efforts, such as those directing how U.S. funds may not be spent. For instance, the Helms Amendment (1973) prohibits the use of foreign assistance to pay for the performance of abortion as a method of family planning or to motivate or coerce any person to practice abortion. The Kemp-Kasten Amendment (1985) prohibits funding any organization or program, as determined by the President, that supports or participates in the management of a program of coercive abortion or involuntary sterilization (it has been invoked at times to restrict funding to UNFPA).

While Congress has authority over many aspects of global health, the current administration has taken several actions without its direct consent (such as eliminating USAID and withholding Congressionally-directed appropriations), and has questioned the extent of Congressional authority in these areas. It is unclear if Congress will act on these issues and some of these questions are being litigated in federal court.

Prior to the current Trump administration, the U.S. provided bilateral support for U.S. global health programs in almost 80 countries, with additional countries reached through U.S. regional global health programs and U.S. contributions to multilateral organizations. Multiple factors determined where the U.S. channeled its global health support. While more U.S. support was generally directed to countries facing a higher burden of disease, it was also influenced by factors such as the presence of willing and able partner governments, a history of positive relations and goodwill with host countries, strategic and national security priorities, and funding and personnel availability. The majority of countries receiving U.S. bilateral support for global health (“partner countries”) were located in sub-Saharan Africa (35 countries), followed by the Western Hemisphere (14 countries), East Asia and Oceania (11 countries), South and Central Asia (9 countries), Europe and Eurasia (4 countries), and Middle East and North Africa (4 countries) (Figure 5). Most U.S. bilateral support for global health programs was provided in sub-Saharan Africa (84%) (Figure 6). Furthermore, the top 10 country recipients of U.S. global health funding, representing 59% of U.S. bilateral support for global health, were all in this region (Figure 7).

The U.S. typically operated more than one health program (HIV, TB, malaria, etc.) in each partner country. While in most countries, the U.S. operated programs in four or fewer global health areas, this number was generally higher in countries in sub-Saharan Africa (five or more).

In addition to its bilateral programs, the U.S. has a long history of engagement with multilateral health organizations and international institutions, beginning with its role in the development of the first such organizations, including the Pan-American Health Organization (PAHO) in the early 1900s and the World Health Organization (WHO) a few decades later. This involvement continued with, for example, the Global Fund (which the U.S. helped to launch in 2001), Gavi (launched in 2000), the GHSA (which the U.S. played a key role in developing and launching in 2014), and the Pandemic Fund (launched in 2022). Prior to the current Trump administration – which is carrying out a review of its engagement in international organization to determine the future of U.S. multilateral participation and support – U.S. support for multilateral global health efforts has taken various forms, including:

• Funding. The U.S. has often been the largest or one of the largest donors to multilateral health efforts, funding core (generally used to support essential functions and operations) and voluntary (used for specific projects or initiatives the U.S. seeks to support) contributions. About a fifth (19%) of U.S. global health funding supported U.S. contributions to multilateral health organizations (Figure 8). However, some global health support to multilateral organizations has already been reduced or eliminated by the current Trump administration, such as funding and engagement in the World Health Organization, UNFPA, and the Pandemic Fund.
• Governance. The U.S. has been active in the governance structures that oversee multilateral global health organizations and initiatives, including holding permanent or rotating seats on many of their boards.
• Technical assistance. The U.S. has offered technical assistance in support of grants to partner countries, providing additional staff capacity to international organizations (by detailing U.S. government employees to these organizations for periods of time).
• Standard setting. The U.S. has engaged in standard-setting, weighing in on global plans, treaties, and agreements to respond to a range of health issues as they are developed and considered for approval by the larger body.

The U.S. has engaged with a number of multilateral global health organizations, including health-focused specialty agencies of the United Nations (U.N.) and international financing mechanisms for global health. Key among these are eight to which Congress specifically directs funding (though the U.S. also reaches other multilateral health institutions without direct Congressional appropriations but rather through general support), of which the U.S. has been the top contributor to five (the Global Fund, PAHO, UNAIDS, UNICEF, and WHO):

U.N. Agencies

• World Health Organization (WHO): WHO, created in 1948, is the directing and coordinating authority for health within the U.N. system. WHO provides international leadership on global health matters, shaping the health research agenda, setting norms and standards, providing technical support to countries, and monitoring and assessing health trends. The U.S. has been involved in WHO since its creation, providing financial and technical support as well as participating in its governance structure. However, President Trump announced on the first day of his second term that the U.S. would withdraw as a member of WHO and halt funding to the organization.
• Pan American Health Organization (PAHO): PAHO is the oldest international health agency, founded originally as the International Sanitary Bureau in 1902. The U.S. joined PAHO as a member state in 1925. PAHO, the specialized international health agency for the Americas, “works with countries throughout the region to improve and protect people’s health” and serves as the WHO Regional Office for the Americas and as the health organization of the inter-American System.
• Joint United Nations Programme on HIV/AIDS (UNAIDS): UNAIDS, created in 1996 as the successor organization to the WHO Global Programme on AIDS (GPA), is the leading global organization for addressing HIV/AIDS. Coordinating efforts across the U.N. system, it is made up of 11 U.N. co-sponsors and guided by a Programme Coordinating Board (PCB), which is a subset of its co-sponsors and government representatives. The U.S. currently serves on the PCB.
• United Nations Children’s Fund (UNICEF): UNICEF, created in 1946, aims to improve the lives of children, particularly the most disadvantaged children and adolescents, and is one of the largest purchasers of vaccines worldwide. The U.S. was a founding member that same year.
• United Nations Population Fund (UNFPA): UNFPA, created in 1969, is the largest purchaser and distributor of contraceptives worldwide. While the U.S. helped to found UNFPA and was a leading supporter for many years, its support has fluctuated significantly and sometimes been withheld entirely over the years, due to ongoing U.S. political debates about abortion. The Trump administration has announced that it is withholding funding from UNFPA.

Non-U.N. Financing Mechanisms

• Gavi, the Vaccine Alliance (Gavi): Gavi, created in 2000, is a public-private partnership that aims to increase access to immunization in poor countries. The U.S. has been involved in Gavi since its creation through contributions, participation in Gavi’s governance, and technical assistance. The U.S. is the second largest donor to Gavi’s core programs and the top donor to Gavi’s COVAX Advance Market Commitment (COVAX AMC), a financial mechanism within COVAX that supports low- and middle-income countries through procurement and distribution of COVID-19 vaccines.
• Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund): The Global Fund, created in 2001, is an independent multilateral financing entity that supports HIV, TB, and malaria programs in low- and middle-income countries. The U.S. was involved in creating the Global Fund and maintains a permanent seat on its Board. U.S. contributions and those of other donors are pooled and then provided by the Global Fund to country-driven projects based on technical merit and need.
• TB Global Drug Facility: The Global Drug Facility, created in 2001, is a financing mechanism of the Stop TB Partnership; it provides grants to countries for TB drugs.

U.S. support for multilateral institutions overall has fluctuated over time, reflecting, in part, changing U.S. leadership views on the relative value of bilateralism versus multilateralism. As a result, U.S. engagement in and contributions to specific multilateral health organizations and institutions may change over time. For example, the U.S. under the first Trump administration did not participate in the partnership to create  COVAX (an international partnership led by the Coalition for Epidemic Preparedness Innovations [CEPI], Gavi, and WHO) to facilitate greater global access to the COVID-19 vaccine, although Congress did provide $4 billion in emergency funding to Gavi in support of COVID-19 vaccine access. Under the Biden administration, the U.S. joined the COVAX partnership.

Multilateral initiatives complement U.S. bilateral global health efforts, helping make progress toward U.S. goals in various program areas. In some cases, U.S. multilateral global health support allows the U.S. to reach a larger number of countries; it also may help to leverage additional funding and provide opportunities for improved coordination and technical consultations. Additionally, U.S. policies related to funding can greatly influence other financial support for multilaterals. For instance, since U.S. law has required that the U.S. contribution to the Global Fund cannot exceed 33% of total contributions from all donors, the U.S. contribution has leveraged other donor contributions; in effect, this requirement encouraged increased support from other donors and prevented the U.S. from becoming the predominant donor to the Global Fund.

The U.S. has been the largest donor to global health, providing over 40% of all international health assistance among major donor governments (Figure 9).

In addition, the U.S. has historically devoted more of its foreign assistance to health than any other donor government, contributing over a quarter of its foreign assistance to global health in 2023 (Figure 10). The U.S. has also been the largest government donor to several specific global health areas, including HIV and family planning. Currently, however, the Trump administration is withholding global health funds in several areas and actual spending levels are still unknown.

While the U.S. has been engaged in international health activities for over a century and has historically been the largest funder and implementer of global health programs worldwide, it is currently undergoing a fundamental shift, with a significantly reduced footprint and role.  Given the prominence of the U.S. in global health, these actions have and will influence the larger global health ecosystem and the health of those in low and middle income countries. Among the key issues to watch are:

• The future direction of U.S. leadership in and degree of commitment to global health as the Trump administration reorganizes foreign assistance more broadly and seeks to permanently alter the U.S. role.
• The status of U.S. funding for global health, particularly given the interplay between Congress and the administration on whether and how that funding gets spent and ongoing litigation in this area.
• The ability of global health implementers to continue to deliver services to those who need them, given their loss of funding and future uncertainty.
• The future role of multilateral institutions in global health, as the U.S. bilateral role is reduced, but also its support for multilateral health efforts remains unclear.
• Whether other donors (governments, foundations, the private sector) will help to fill some of the gaps left by the U.S.
• Whether the nations that have been recipients of U.S. global health support will increase their own financing and delivery of health services to their populations.

• Overview of President Trump’s Executive Actions on Global Health
• KFF Resources on the Trump Administration’s Foreign Aid Review and Global Health Aid Cuts
• KFF Global Health Fact Sheets including The U.S. Government and Global Health and Breaking Down the U.S. Global Health Budget by Program Area
• U.S. Global Health Budget Tracker
• KFF Global Health Budget Summaries
• The Outlook for PEPFAR in 2025 and Beyond
• PEPFAR Policy Resource Hub
• KFF Dashboard: Progress Toward Global HIV Targets in PEPFAR Countries
• KFF Dashboard: Progress Toward Global Malaria Targets in PMI Countries
• The U.S. Congress and Global Health: A Primer
• U.S. Global Health Legislation Tracker
• Key Global Health Positions and Officials in the U.S. Government

Oum, S., Moss, K., & Kates, J., The U.S. Government and Global Health. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-policy-101-the-u-s-government-and-global-health/ (date accessed).