America already spends enormous sums on healthcare. Yet millions remain uninsured, while others struggle to afford treatment despite having coverage. The reason lies partly in how the system was built.

A reader recently challenged me to look more closely at American healthcare spending.

He was discussing Medicare for All and doubted that Congress would ever pass it. He also argued that Americans misunderstood healthcare systems in other wealthy countries, particularly Canada.

His predictions about potential savings were ambitious. I wanted to check the figures before accepting them.

Then I opened the American government’s healthcare expenditure report.

In 2024, Medicare spending reached $1.118 trillion. Medicaid accounted for another $931.7 billion.

Together, the programmes spent about $2.05 trillion.

Yet the U.S. Census Bureau reported that 26.7 million Americans remained uninsured throughout 2025.

These figures come from different years and measure different things. The spending totals cover two public insurance programmes, while the Census figure measures people without coverage.

Still, they raise a question worth investigating.

How can a country finance such large healthcare programmes without ensuring that every resident has health insurance?

The answer is not simply that America spends too little.

Much depends on who qualifies for coverage and how much medical care costs.

America Spends More Than $5 Trillion on Healthcare

The Centers for Medicare & Medicaid Services reported that total American healthcare expenditure reached $5.3 trillion in 2024.

That represented 18% of the country’s gross domestic product.

Medicare accounted for $1.118 trillion, while Medicaid expenditure reached $931.7 billion.

These are national programme expenditures, not amounts paid entirely from federal tax revenue. Medicare also receives premiums and other financing, while Medicaid draws substantial funding from state governments.

Private health insurance spending reached $1.645 trillion.

Americans paid another $556.6 billion directly out of pocket.

The categories describe sources of payment within the national healthcare accounts. They are not separate healthcare systems, and figures from different accounting tables cannot always be added together.

The scale of spending is remarkable.

America has advanced hospitals and some of the world’s most specialised medical facilities. Yet access to treatment often depends on a person’s insurance arrangements.

According to the Census Bureau’s September 2026 report, 26.7 million people, or 7.9% of the population, had no health insurance during the entire calendar year 2025.

The figure does not include everyone who experienced a short gap in coverage.

Some uninsured Americans work in jobs that provide no affordable insurance. Others cannot meet the eligibility rules for public programmes.

A person may also qualify for subsidised coverage without successfully enrolling.

The spending total tells us how much money flows through American healthcare.

It does not tell us whether every person can obtain treatment without serious financial risk.

Medicare Was Built for Older Americans, Not Everyone

On July 30, 1965, President Lyndon Johnson signed the legislation establishing Medicare and Medicaid.

The National Archives records how Congress created two separate programmes.

Medicare mainly served people aged 65 and older.

Medicaid provided health coverage for eligible people with limited incomes.

Congress later expanded both programmes. Today, certain younger people with disabilities or specified medical conditions can also qualify for Medicare.

Medicaid covers additional groups and pays for substantial long-term care services.

The programmes have helped millions obtain medical treatment they might otherwise have struggled to afford.

But they were never intended to insure every American.

Consider a 40-year-old worker whose employer does not offer affordable healthcare.

He cannot enrol in Medicare merely because private insurance costs too much.

His eligibility depends on other arrangements, including Medicaid or coverage purchased through an insurance marketplace.

A trillion-dollar Medicare budget cannot solve that problem because the programme serves a defined population.

The spending has a purpose fixed by law.

Understanding that history makes the present system easier to explain. America did not build one universal insurance programme and gradually expand its benefits.

It developed separate arrangements for different groups.

Your State Can Determine Whether You Qualify

Medicaid provides a clear example of how those arrangements create gaps.

The Affordable Care Act allowed states to expand Medicaid eligibility to more low-income adults.

Most states adopted the expansion.

Ten had still not done so as of November 2026, according to KFF’s state tracking.

A July 2026 KFF analysis estimated that 1.2 million uninsured adults fell into a coverage gap in those states.

Their incomes were too high to qualify for Medicaid under their state’s rules but too low to receive Affordable Care Act marketplace subsidies.

That sounds almost contradictory.

A person can be too poor for one insurance arrangement and earn too much for another.

It happens because the Affordable Care Act originally assumed that Medicaid expansion would operate nationwide.

The Supreme Court later made expansion effectively optional for states.

The result is a system in which two people with similar earnings may face very different insurance options depending on where they live.

State governments have reasons for making different choices about Medicaid. They consider budget costs and how federal funding might change.

But the consequences reach individual households.

The national Medicaid expenditure figure cannot tell us whether a low-income adult in Texas or Florida qualifies for coverage.

We have to examine the state’s eligibility rules.

Public Money Also Supports Employer Insurance

The government finances healthcare in ways that are less visible than Medicare and Medicaid payments.

One of the largest involves employer-sponsored insurance.

Many Americans obtain health coverage through their jobs. Employers usually pay part of the premium, while employees contribute the rest.

The tax system provides substantial support.

Employer contributions toward qualifying health insurance are generally excluded from employees’ taxable income and payroll taxes.

That reduces federal revenue.

In July 2026, the Congressional Budget Office estimated that federal subsidies for employment-based coverage would total $7.2 trillion over the 2026 to 2036 period.

The estimate covers eleven years. It is not an annual spending figure or a direct payment of that amount to employers.

It includes the value of federal tax advantages and reflects projected future coverage.

I think this deserves more attention in the American debate.

Public support for healthcare does not begin and end with government insurance programmes.

A worker who receives employer-sponsored coverage benefits from a system supported by tax policy.

Someone without access to such a plan may have to seek coverage elsewhere.

The benefits also differ across households.

Workers with more generous employer insurance can receive considerable tax advantages, while people with lower earnings may have less access to those benefits.

There is another complication.

Workers can become reluctant to leave jobs because they fear losing health insurance.

I examined this problem in Why 23 Million Americans Feel They Cannot Leave Their Jobs.

A person thinking about retirement or self-employment must consider how to replace employer coverage.

That is a substantial influence on working life.

The government helps finance the arrangement, but the worker’s access to insurance can remain tied to a particular job.

An Insurance Card Does Not Guarantee Affordable Treatment

The number of uninsured Americans tells only part of the story.

Many people have insurance but still struggle with medical expenses.

The Commonwealth Fund’s October 2026 survey found that 46% of adults aged 19 to 64 had inadequate health coverage.

The researchers divided that group into different categories.

Eleven percent were uninsured at the time covered by the survey measure. Another 12% had experienced a coverage gap during the year.

The remaining 23% were underinsured.

These adults had insurance, but their deductibles or other out-of-pocket expenses were high relative to their incomes.

The survey involved 9,360 American adults, with the main working-age analysis based on 7,362 respondents.

Its findings should not be confused with the Census Bureau’s full-year uninsured figure. The studies use different definitions and survey methods.

The Commonwealth Fund also found that 50% of working-age adults had delayed or avoided needed healthcare because of its cost.

Imagine having health insurance and still postponing a medical appointment because you cannot afford the bill.

For many Americans, the difficulty is not obtaining an insurance card.

It is paying for care after the insurance has been purchased.

The pressure is part of a wider household budget problem I examined in Why a $100,000 Salary No Longer Guarantees a Comfortable American Life.

In 2026, the situation became more difficult for some people buying coverage through Affordable Care Act marketplaces.

A KFF analysis published in May found that the average deductible for plans selected through these marketplaces rose from $2,759 in 2025 to $3,786 in 2026.

The average increased partly because more people selected plans with lower premiums and higher deductibles after enhanced premium tax credits expired.

That change matters when people need treatment.

A lower monthly premium may provide some immediate relief, but the patient can face a much larger bill before insurance pays for many services.

Americans Pay More for Medical Services

Insurance arrangements explain much of the coverage problem.

They do not explain the entire spending problem.

For that, we need to look at prices.

The OECD’s Health at a Glance 2025 report estimated American healthcare expenditure at $14,885 per person in 2024, adjusted for purchasing power.

The OECD average was $5,967.

These internationally adjusted figures differ from the CMS national accounts. They are designed to compare purchasing power across countries, not to reproduce America’s domestic spending total.

Even allowing for those differences, the comparison is revealing.

America spent roughly two and a half times the OECD average per person.

Does it use vastly more medical services?

The evidence suggests otherwise.

A September 2025 Peterson-KFF analysis found that Americans generally use fewer healthcare services than people in comparable wealthy countries.

Higher prices explain much of the spending difference.

Hospital treatment is particularly expensive. Many physician services and prescription medicines also cost more.

The distinction changes the discussion about healthcare reform.

If the government simply expands insurance coverage while leaving prices untouched, more people may obtain treatment, but the total cost could remain very high.

Reducing prices would require different decisions.

Hospitals need enough revenue to maintain services and pay their staff. Doctors must be compensated for their work.

Insurers and healthcare providers negotiate payment rates, while manufacturers set prices for medical products subject to varying legal and market constraints.

Changing those arrangements would affect the revenue received by healthcare businesses.

Some payment reductions could improve affordability. Others might affect services if implemented without regard to provider costs.

Any reform would have to examine both effects.

Medicare Already Pays Private Insurance Companies

The public-versus-private healthcare debate can become misleading.

Medicare is a government programme, but private companies provide insurance coverage to a large share of its beneficiaries.

Under Medicare Advantage, the federal government pays private insurers to deliver covered benefits.

According to KFF’s June 2026 analysis, 55% of eligible Medicare beneficiaries were enrolled in Medicare Advantage plans.

That represented approximately 35.2 million people.

The plans can offer benefits beyond those available through traditional Medicare, although they may also use provider networks or require prior authorisation for certain services.

There is a significant financial question.

The Medicare Payment Advisory Commission estimated that Medicare would pay private Medicare Advantage plans about 14% more per enrollee in 2026 than it would spend covering comparable beneficiaries through traditional Medicare.

KFF estimates that the difference represents approximately $76 billion in additional federal spending during 2026.

The estimate is not proof that every Medicare Advantage plan overcharges.

It reflects the combined effects of payment rules and differences in how beneficiaries are represented in the payment system.

Supporters of Medicare Advantage emphasise consumer choice and supplemental benefits.

Critics question the additional spending and restrictions that some patients face.

The important point is that public financing and private administration already operate together within Medicare.

America does not face a simple choice between government healthcare and private healthcare.

Both are deeply connected.

The harder question concerns what taxpayers receive for the payments made on their behalf.

Would Canada’s System Cost Less?

The reader who prompted this article argued that America could save substantial sums by adopting a healthcare system similar to Canada’s.

Canada provides an interesting comparison, although its arrangements are not as simple as American political arguments sometimes suggest.

As Health Canada explains, eligible residents receive publicly financed insurance for medically necessary hospital services and physician care.

Provincial and territorial governments administer their own plans within national legal standards.

But not every medical service receives identical coverage.

Prescription medicines outside hospitals and some other services may involve separate public programmes or private insurance.

Canada also faces difficulties with access to certain services and waiting times.

I would not suggest that replacing American insurance arrangements with Canada’s model would automatically add four years to average life expectancy.

The reader’s prediction goes beyond what a simple comparison can demonstrate.

Life expectancy depends on healthcare, but also on causes of death that insurance reform alone cannot remove.

Canada’s system nevertheless raises a useful question.

Why do Americans rely on such a complicated collection of insurance arrangements when other wealthy countries provide broader guarantees of basic medical coverage?

A reform need not copy Canada exactly to address that question.

Germany, for example, uses a different insurance structure with statutory health insurance covering most residents.

The existence of different models shows that universal coverage does not require every country to organise its healthcare financing in precisely the same way.

Would Medicare for All Reduce the Federal Deficit?

The reader also predicted that a Canadian-style system could reduce America’s federal budget deficit by nearly $700 billion every year.

That is a claim I cannot accept without a detailed economic model.

A universal public insurance programme might replace some private premiums with taxes.

It could also reduce certain administrative costs or gain greater leverage over prices.

But shifting payments from private insurers to the federal government would increase federal expenditure unless the reform included offsetting measures.

A country can reduce total healthcare spending while increasing the share financed through taxes.

Those are different fiscal outcomes.

Medicare for All proposals therefore need more than a promise that universal coverage would be cheaper.

Their supporters must explain how much the government would pay healthcare providers and how taxes would change.

They must also explain which existing private insurance costs would disappear and which expenses households would continue to face.

Opponents should examine the same details rather than assuming that every increase in public expenditure represents an equal increase in total national healthcare costs.

The financing choices would affect workers differently, depending on their existing premiums and tax situations.

There is no single savings figure that tells us how every household would fare.

New Rules Could Create More Coverage Gaps

America’s insurance arrangements are still changing.

The enhanced Affordable Care Act premium tax credits expired at the end of 2025, increasing net premiums for many marketplace customers during 2026.

The 2025 federal budget reconciliation law also introduced new Medicaid eligibility requirements.

Certain adults covered through Medicaid expansion will have to satisfy work or qualifying activity requirements beginning January 1, 2027, although some states have implemented requirements earlier and others may receive delays.

Exemptions apply to specified groups.

Supporters argue that these rules promote programme accountability and encourage employment or qualifying activities.

Critics warn that eligible people may lose coverage because they cannot complete the required paperwork or demonstrate compliance.

The consequences will depend partly on how states implement the law.

The Congressional Budget Office’s July 2026 projections estimate that the number of uninsured Americans could rise to 37 million by 2036, partly because of recent legislative changes.

That is a forecast based on current law and modelling assumptions, not an observed future outcome.

It also uses an average-month insurance measure, unlike the Census Bureau’s full-calendar-year uninsured count.

The two figures should not be treated as directly comparable.

What concerns me is the direction of the policy choices.

America is spending more on healthcare, while some changes to eligibility and financial assistance may make insurance harder to maintain.

The effects will become clearer as new data emerge.

What Is America Paying For?

I began this investigation with a comment about Medicare for All.

The reader argued that American healthcare was already extraordinarily expensive and that other countries offered lessons worth studying.

He was right to question the cost of the existing system.

But I would separate the claims about spending from the more ambitious predictions about savings and longer lives.

The numbers tell us something specific.

Medicare and Medicaid spent about $2.05 trillion in 2024 because they provide services to defined groups of people.

The federal government also supports private insurance through the tax system. Many Americans receive coverage through employment, while others depend on state eligibility decisions.

At the same time, high healthcare prices place pressure on taxpayers and privately insured families.

Expanding coverage would address one problem. Controlling the cost of care would address another.

Both deserve detailed examination.

When politicians discuss healthcare reform, I want to know which people would gain coverage and what they would pay.

I also want to know how hospitals would be financed under the proposed arrangements.

Those answers require more work than comparing one country’s total healthcare spending with another’s.

In my earlier article, Who Decides What Americans Argue About During Elections?, I questioned whether campaign debates gave voters enough information to judge policy promises.

Healthcare offers a good test.

America already spends trillions. Some of that money is visible in government budgets, while other support operates through tax rules.

The issue is not whether government money belongs in American healthcare. It has been there for decades.

The question is what that public support is expected to achieve, and why affordable coverage still depends so heavily on where a person works or lives.