Overview of the US Health Insurance Landscape

For readers who would like to familiarize themselves with the US health insurance landscape, startups looking to enter the US market and investors of US health-tech companies, this overview maybe helpful. There are two main government led health insurance programs known as Medicare and Medicaid, as well as Employer Sponsored Insurance. These are outlined below.

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Medicare

  1. Medicare is the federally led insurance program for seniors, aged 65 years and over, younger people with disabilities and people with certain chronic diseases. It covers around 18% of the US population or 59M beneficiaries. It consists of 3 parts as below.

  • Part A: Hospital Insurance - cover for inpatient hospital stays, nursing home care, hospice care, and various home care.

  • Part B:Medical Insurance- cover for physician consults, outpatient services, medical equipment and prevention services.

  • Part D:Prescription Insurance - cover for prescription drugs and certain vaccines.

Medicare beneficiaries decide between Original Medicare or Medicare Advantage health plans.

  • Original Medicare includes Parts A and B and is paid for at the time the services are needed, enabling beneficiaries to choose their provider network according to the care that is needed.

  • Medicare Advantage plans such as SCAN, include part A, part B, and often part D. Although choice of provider is restricted to the network, additional benefits are included, such as eye-tests, hearing tests and dental care, which are all paid for on an annual basis.

To make matters more complicated, Medicare beneficiaries have to pay premiums, deductibles and co-insurance to access services. Thus, up to 83% of beneficiaries have supplemental coverage. It may come as no surprise, that medical bills are the number one cause of bankruptcies in the US, with 66.5% of all bankruptcies due to medical issues.

It may come as no surprise that medical bills are the number one cause of US bankruptcies, with 66.5% of all bankruptcies due to medical issues.

Medicaid

Medicaid is the federally led and state delivered program that provides health insurance to qualifying individuals based on income. It is available to low-income families, qualified pregnant women and children, and those who receive Supplemental Security Income. The out-of-pocket costs are lower and vary according to income. The Affordable Care Act (2010) expanded eligibility for Medicaid which now covers 17% of the population, around 56M beneficiaries.

Employer Sponsored Insurance

Employer Sponsored Insurance covers 49% of the US population, which equates to around 161M people. The uninsured population is around 8% which equates to around 26M people.

This figure is set to rise, as an estimated 27M people could loose Employer Sponsored Insurance and become uninsured following job losses due to the pandemic.

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