Structure of the U.S. Health Care System

Building a Smarter German-American Partnership


The United States has had a more privatized system than most European countries, with a relatively low proportion of health insurance provided by public programs. According to the Commonwealth Fund, in 2010 “56% of U.S. residents received primary coverage through private insurers,” while 27% “were covered under public programs.” The remaining 16% lacked health insurance entirely.

The two largest public health insurance programs differ in the way that they are administered and funded.

Medicare is the federal government’s insurance program for seniors and other groups.

  • Paid for by payroll taxes.
  • Distributed by the federal government to individuals over the age of 65, with disabilities, and other qualifiers.
  • Eligibility determined by federal government.
  • Federal government sets coverage and negotiates with private and public health care providers to determine eligibility.

Medicaid is a combined federal and state government means-tested health insurance program.

  • Paid for by state and federal taxes.
  • Distributed to individuals by the states within broad federal guidelines.
  • Eligibility determined by states, following some federal standards.
  • State governments set coverage within national guidelines and negotiate with private and public health care providers to determine eligibility.
  • State Children’s Health Insurance Program (SCHIP) is an expansion of Medicaid and covers children in families deemed underprivileged who do not qualify for Medicaid based on income.

Most Americans purchase health insurance from private insurance companies, usually through their employer. Private health insurance is regulated differently in every state, making generalizations about the U.S. private health insurance market as a whole difficult.


Overall, the provision of health care in the United States is a largely private, decentralized affair, with most health care providers falling under private ownership and no significant federal presence.

Health practitioners enter the market by gaining certification by a private organization, which allows them to join an existing practice, open their own practice, or practice within a hospital.

Practices and hospitals are mostly private, but some local and state governments fund publically-owned hospitals and public practices.