Medicare, Medicaid, and the ACA: Who Gets Government Health Coverage
Key takeaways
- Medicare covers nearly 70 million people 65 and older or with certain disabilities, and more than half now choose private Medicare Advantage plans.
- Medicaid and CHIP, run by states with federal money, cover about 77 million people with low incomes, including more than a third of children.
- The Affordable Care Act marketplaces covered about 23 million people in 2026, down from a record 24.2 million after extra tax credits expired.
- Other federal programs cover veterans, military families, Native Americans, and federal workers.
- The 2025 budget law adds Medicaid work requirements and more frequent eligibility checks starting by January 2027.
- Medicare's hospital trust fund is projected to run short in 2033, and federal health spending is now larger than defense spending.
Most Americans get health insurance through an employer, but government programs cover more than a third of the population and pay for nearly half of all health spending. The programs differ in who qualifies, who runs them, and how they are paid for, and they are often confused.
This guide explains each major program, how they fit together, and the changes underway in 2026 and 2027.
People without job-based coverage can buy plans on HealthCare.gov or state marketplaces, with tax credits that lower premiums based on income. Insurers cannot deny coverage or charge more for pre-existing conditions. Larger tax credits passed in 2021 expired at the end of 2025, and enrollment fell from a record 24.2 million in 2025 to about 23 million in 2026 as costs rose for many buyers. The Supreme Court has upheld the law in four major cases.
Medicaid covers about 70 million people with low incomes, including children, pregnant women, people with disabilities, and nursing home residents, and CHIP covers about 7 million children in families just above Medicaid limits. States run both within federal rules, and Washington pays most of the cost. The ACA expanded Medicaid to low-income adults, an option 40 states and D.C. have taken. The 2025 budget law requires most expansion adults to work, study, or volunteer 80 hours a month starting by January 2027 and to renew eligibility every six months.
Medicare, created in 1965, covers people 65 and older and some younger people with disabilities, nearly 70 million in all. Part A covers hospitals and is funded by payroll taxes, Part B covers doctors and is funded by premiums and general taxes, and Part D covers drugs. Since 2026 Medicare pays negotiated prices for 10 high-cost drugs, and yearly out-of-pocket drug costs are capped at 2,100 dollars. Traditional Medicare lets people see almost any doctor, but has deductibles and no overall cap on costs.
About 55 percent of eligible people chose a private Medicare Advantage plan in 2026, up from about one in five in 2007. Plans receive a set amount per enrollee, must cover all Medicare benefits, and often add dental, vision, and an out-of-pocket cap, but most use networks and prior authorization. Supporters cite choice and extra benefits, while critics, including congressional advisers, say the government overpays plans compared with traditional Medicare.
About half of Americans get coverage through an employer, a system encouraged by a tax break for employer health benefits. Government programs cover most of the rest: Medicare for older and disabled people, Medicaid and CHIP for people with low incomes, the ACA marketplaces for people who buy their own plans, and separate systems for veterans, military families, and Native Americans. About 8 percent of Americans were uninsured in 2023, a record low. Federal spending on health programs now exceeds spending on defense.
The Veterans Health Administration runs hospitals and clinics for about 9 million enrolled veterans, TRICARE covers military families, the Indian Health Service serves tribal members, and federal workers choose among private plans. Debates center on cost and coverage. Supporters of the 2025 changes say they encourage work and slow spending growth. Critics say they will leave millions uninsured. Other arguments include whether to restore the extra ACA subsidies, how to keep Medicare solvent, and whether to move toward more private choice or a larger public program.
See how these programs are paid for in Social Security and Medicare financing, retirement and disability benefits in how Social Security benefits work, or the budget picture in where your tax dollars go.