JANUARY

UNITED STATES
What is covered?
Services: The ACA requires all health plans offered in the individual insurance market and small-group market
(for firms with 50 or fewer employees) to cover services in 10 essential health benefit categories: ambulatory
patient services; emergency services; hospitalization; maternity and newborn care; mental health services and
substance use disorder treatment; prescription drugs; rehabilitative services and devices; laboratory services;
preventive and wellness services and chronic disease management; and pediatric services, including dental and
vision care. Each state determines the range and extent of specific services covered under each category by
selecting a benchmark plan that covers all 10 categories; most states choose one of the largest small-group
plans as the benchmark. Specific covered services vary somewhat by state.
Private insurance plans sometimes use narrow networks of providers, with limited or no coverage if patients
receive out-of-network care. Private coverage for dental care and optometry is also available—sometimes
through separate policies—as is long-term care insurance. Private health insurance is required to cover certain
preventive services (with no cost-sharing if provided in network).
Medicare provides coverage for hospitalization, physician services, and, through a voluntary supplementary
program, prescription drug coverage. The program also has eliminated cost-sharing for a number of preventive
services. Medicare offers a choice between “traditional” Medicare, which is open-network and pays
predominately on a fee-for-service basis, and Medicare Advantage, under which the federal government pays
a private insurer for a network-based plan. Medicare covers postacute care but not long-term care, while
Medicaid offers more extensive long-term care coverage (see below). In addition, Medicaid covers a broad
range of core services, including hospitalization and physician services, with certain optional benefits varying
by state.
Cost-sharing and out-of-pocket spending: Cost-sharing provisions in private health insurance plans vary
widely, with most requiring copayments for physician visits, hospital services, and prescription drugs. Highdeductible
health plans—those with a minimum annual deductible of $1,250 per individual or $2,500 per
family—can be paired with tax-advantaged health savings accounts (i.e., deposited funds are not subject to
federal income tax). The ACA includes cost-sharing subsidies for the purchase of plans through the insurance
exchanges, with the largest subsidies aimed at people with incomes below 250 percent of the federal poverty
level (FPL) (the FPL is $20,090 for a family of three, as of 2015) (ASPE, 2015b).
Medicare requires deductibles for hospital stays and ambulatory care and copayments for physician visits and
other services, while Medicaid requires minimal cost-sharing. Most public and private insurers prohibit providers
from balance billing—charging patients more than the copayment required by their insurance plan—if they have
an agreement with the payer to accept their set or negotiated payment amounts. Out-of-pocket spending
accounts for 12 percent of total health expenditures in the U.S. (OECD, 2015). The ACA caps cost-sharing for most
private insurance plans at $6,600 for individuals and $13,200 for families per year in 2015 (Healthcare.gov, 2015).
Safety nets: A variable and patchwork mix of organizations and programs deliver care for uninsured, lowincome,
and vulnerable patients in the United States, including public hospitals, local health departments, free
clinics, Medicaid, and CHIP. Under the ACA, 30 states and the District of Columbia have expanded Medicaid
coverage to cover individuals with incomes up to 138 percent of FPL (Commonwealth Fund, 2015), and
premium and cost-sharing subsidies are now available to low- and middle-income individuals through the
insurance exchanges (plan premium subsidies for incomes of 133%–400% of FPL; cost-sharing subsidies for
incomes of 100%–250% of FPL). Hospitals that provide care to a high percentage of low-income and uninsured
patients receive disproportionate share hospital (DSH) payments from Medicare and Medicaid to partially offset
their uncompensated care; however, these payments are being substantially reduced as the ACA reduces the
number of the uninsured. The federal government also funds community health centers, which provide a major
source of primary care for underserved and uninsured populations. In addition, private providers are a
significant source of charity and uncompensated care.
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The Commonwealth Fund