The government’s role in healthcare in the United States is bigger than most people realize: federal, state, and local governments together pay for about 47 percent of every healthcare dollar spent in the country, and the federal government alone is the single largest payer.1Centers for Medicare & Medicaid Services. NHE Fact Sheet Paying the bills is only part of it. Government agencies also insure tens of millions of Americans directly, write the rules that govern drug safety and medical privacy, run hospitals for veterans and military families, and operate the public health systems that track outbreaks and respond to emergencies.
Paying for Coverage
Most government healthcare spending flows through insurance programs aimed at people the private market tends to leave behind: older adults, people with low incomes, children, and families who can’t afford unsubsidized premiums.
Medicare
Medicare, created under Title XVIII of the Social Security Act, covers people 65 and older, along with younger people who have a qualifying disability, end-stage renal disease, or ALS.2U.S. Department of Health & Human Services. Who Is Eligible for Medicare The program is built in four parts. Part A covers hospital stays. Part B covers doctor visits and outpatient services. Part C, known as Medicare Advantage, lets you get those benefits through a private plan instead. Part D covers prescription drugs.3Social Security Administration. Compilation of the Social Security Laws – Title XVIII
Higher earners pay more. If your modified adjusted gross income exceeds $109,000 as an individual or $218,000 on a joint return, income-related surcharges apply to both Part B and Part D premiums.4Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
Medicaid
Medicaid is a joint federal-state program covering people with low incomes. The federal government sets minimum standards and provides matching funds; each state runs its own program with some latitude on eligibility and covered services.5Social Security Administration. Medicaid Information The Affordable Care Act opened Medicaid to all adults with incomes up to 138 percent of the federal poverty level, but the Supreme Court made that expansion optional.
As of early 2025, 41 states plus Washington, D.C. have adopted the expansion; 10 have not. Roughly 1.4 million people in non-expansion states fall into a coverage gap, earning too much for traditional Medicaid but too little for marketplace subsidies, which begin at 100 percent of the poverty level.
CHIP
The Children’s Health Insurance Program, authorized under Title XXI of the Social Security Act, covers kids in families that earn too much for Medicaid but can’t afford private coverage. States receive federal matching funds at a higher rate than for regular Medicaid and can design their program as a standalone plan, a Medicaid expansion, or a combination.6Centers for Disease Control and Prevention. Children’s Health Insurance Program (CHIP)
ACA Marketplace Subsidies
The Affordable Care Act created health insurance marketplaces where individuals and families can shop for coverage and receive premium tax credits based on estimated income. The credits are refundable, so they help even if you owe little or no federal income tax, and they can be paid directly to your insurer each month to lower what you pay upfront.7Internal Revenue Service. The Premium Tax Credit – The Basics
One thing to watch: if your actual income comes in higher than your estimate, you’ll owe back the excess subsidy at tax time. Starting with tax year 2026, the repayment caps that previously limited how much you could owe were eliminated, so the full excess is due regardless of income level.8Office of the Law Revision Counsel. 26 U.S. Code 36B – Refundable Credit for Coverage Under a Qualified Health Plan
Protecting Patients
Beyond funding, federal law gives you specific rights in the moments when you’re most exposed: showing up at an emergency room, receiving an unexpected out-of-network bill, or trusting a provider with sensitive information.
Emergency Room Access
Under the Emergency Medical Treatment and Labor Act, any hospital with an emergency department that participates in Medicare must screen and stabilize anyone who walks in, regardless of ability to pay or insurance status. The hospital must provide a medical screening exam to determine whether an emergency condition exists, and if one does, it must either stabilize the patient or arrange an appropriate transfer.9Office of the Law Revision Counsel. 42 U.S. Code 1395dd – Examination and Treatment for Emergency Medical Conditions and Women in Labor The law has applied since 1986 and reaches nearly every hospital in the country, since almost all participate in Medicare.10Centers for Medicare & Medicaid Services. Emergency Medical Treatment and Labor Act (EMTALA)
Surprise Billing Protections
The No Surprises Act, effective in 2022, prohibits surprise billing in three situations: emergency care, non-emergency services delivered by out-of-network providers at an in-network facility, and air ambulance transport by out-of-network carriers.11Office of the Law Revision Counsel. 42 U.S. Code 300gg-111 – Preventing Surprise Medical Bills In these situations, you can only be charged your normal in-network cost-sharing amount. When insurers and providers disagree on what the out-of-network rate should be, they enter a 30-day negotiation, and unresolved disputes go to an independent dispute resolution process.12Centers for Medicare & Medicaid Services. Overview of Rules and Fact Sheets
Regulating the Industry
The government also writes the rulebook. That oversight touches product safety, records privacy, who can practice, and how facilities perform.
Drug and Device Safety
The Food and Drug Administration evaluates pharmaceuticals and medical devices for safety and effectiveness before they can be sold, then continues monitoring them after they hit the market, tracking adverse events and pulling products when problems emerge.13U.S. Food and Drug Administration. An Introduction to FDA Regulation of Medical Devices
Medical Privacy
The Health Insurance Portability and Accountability Act sets national standards for how healthcare providers, insurers, and clearinghouses handle your medical records and personal health information. Covered organizations must keep your data confidential, and you have the right to see your own records and request corrections. HIPAA violations carry real financial penalties that scale with the seriousness of the conduct.14Federal Register. Annual Civil Monetary Penalties Inflation Adjustment
Provider Licensing and Exclusion
State governments handle the licensing of doctors, nurses, and hospitals, checking that they meet minimum education, training, and safety standards. At the federal level, the HHS Office of Inspector General maintains an exclusion list that bars individuals and entities from participating in Medicare, Medicaid, and other federal healthcare programs. Fraud convictions, patient abuse or neglect, and felony drug offenses trigger mandatory exclusion. Losing a professional license, submitting false claims, or participating in kickbacks can trigger discretionary exclusion.15U.S. Department of Health and Human Services, Office of Inspector General. Background Information – Exclusions
Nursing Home Quality Ratings
The Centers for Medicare & Medicaid Services rates nursing homes through a Five-Star Quality Rating System, scoring facilities on health inspections, staffing (including turnover and weekend coverage), and quality measures. Ratings are public and updated regularly, giving families a concrete tool for comparing long-term care options.16Centers for Medicare & Medicaid Services. Five-Star Quality Rating System
Providing Care Directly
In some cases, the government doesn’t just pay for care or regulate it. It delivers it.
Veterans Health Administration
The VA runs one of the largest integrated health systems in the country, with more than 1,200 care locations serving nearly 9 million veterans each year.17Veterans Affairs. About VA Health Benefits Eligibility depends on things like service-connected disability status, income, and length of service. The VA owns its facilities and employs its clinicians, covering preventive visits, prescriptions, inpatient hospital care, and mental health services.
Military Healthcare
TRICARE covers active-duty service members, retirees, National Guard and Reserve members, and their families.18TRICARE. Eligibility Plan options vary by status and location and include both military treatment facilities and civilian provider networks. State and local governments also operate community health centers and public clinics in underserved areas, often providing primary care, vaccinations, and behavioral health services on a sliding-fee scale.
Public Health
Public health work protects the whole population rather than one patient at a time. It tends to be invisible when it works.
Disease Surveillance
The Centers for Disease Control and Prevention tracks roughly 120 notifiable diseases nationally, monitoring outbreaks in real time and coordinating with state and local health departments to contain them.19Centers for Disease Control and Prevention. What Is Case Surveillance The agency also conducts research, develops prevention strategies, issues clinical guidance, and provides the infrastructure local departments use to respond quickly.20Centers for Disease Control and Prevention. CDC Priorities Government-supported vaccination programs sit at the center of this work.
Emergency Preparedness
When pandemics, natural disasters, or bioterrorism threats overwhelm local capacity, the Administration for Strategic Preparedness and Response coordinates the federal medical and public health response, secures the domestic medical supply chain, and deploys federal resources where they’re needed.21U.S. Department of Health & Human Services. ASPR Home – Administration for Strategic Preparedness and Response
Controlling Prescription Drug Costs
One of the newer government roles is directly shaping prescription drug prices for Medicare. The Inflation Reduction Act, signed in 2022, gave Medicare authority to negotiate prices with drug manufacturers for the first time. The program had been explicitly barred from doing so for its entire history. The first negotiated prices apply to a set of high-cost drugs and took effect in 2026.22Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program
The same law also capped annual out-of-pocket Part D spending at $2,000 starting in 2025, a significant change for the roughly 1.5 million Medicare enrollees who previously spent more than that on medications each year.23Office of the Assistant Secretary for Planning and Evaluation. Inflation Reduction Act Research Series – Impact of the $2,000 Cap Before the cap, enrollees in the catastrophic coverage phase still owed 5 percent of drug costs with no upper limit. The cap adjusts for inflation each year going forward.