Before I came to the United States, I often heard two very different views about the U.S. health care system. One was the “optimistic” version: America has one of the most advanced health care systems in the world, going to the hospital can feel almost like staying at a five-star hotel, and somehow you may not have to pay anything out of pocket.
On the other hand, many people share stories about terrifying medical bills that reach tens of thousands of dollars, or insurance rules so complicated that they are hard to understand. For some, that fear is enough to delay medical care — or even choose to go back to Vietnam for treatment because it feels “safer.”
After living in the U.S. for many years, I have realized that both views can be true. Health insurance in the U.S. is not one single system that works the same way for everyone. Depending on your situation, you may get coverage through very different paths.
In this article, I’ll walk through the most common types of health insurance in the United States and explain why the same health care system can feel completely different from one person to another.
Why health insurance matters
In the U.S., hospitals are often equipped with advanced medical technology, and the cost of training and paying doctors is high. The process of getting care can also be time-consuming and rule-based. You usually need appointments, and in many cases, you start with a primary care doctor before being referred to a specialist. All of this contributes to the high cost of health care in the United States.
A single emergency room visit can cost thousands of dollars. Surgery or a longer hospital stay can easily run into the tens of thousands — or even hundreds of thousands — of dollars. That is why health insurance is one of the most important basics for anyone living in the U.S.
Common ways people get health insurance
Employer-sponsored health insurance
This is the most common type of coverage for full-time employees in the U.S. Employers usually pay part of the premium, and employees pay the rest through payroll deductions. Depending on the plan, you may also pay a deductible, copay, or coinsurance when you receive care.
Marketplace Health Insurance
The Health Insurance Marketplace is where individuals and families can buy coverage on their own if they do not have insurance through an employer and are not eligible for Medicaid or Medicare. Some states run their own Marketplace, while others use HealthCare.gov. Depending on your income, you may qualify for help paying part of your monthly premium through a Premium Tax Credit.
The Premium Tax Credit works like a tax credit for people who buy health insurance through the Marketplace. If you qualify based on income, it can lower the amount you pay each month for your insurance premium.
Medicaid
Medicaid is a public health insurance program for people with low income. It is funded by both the federal government and state governments, but each state runs its own program. Because of that, eligibility rules and benefits can vary from state to state. Medicaid often covers groups such as children, pregnant women, low-income adults, people with disabilities, and some low-income older adults.
Many states have expanded Medicaid to cover more low-income adults under federal rules, while some states still have stricter requirements.
Children’s Health Insurance Program (CHIP)
CHIP provides health coverage for children in families whose income is too high to qualify for Medicaid but who may still struggle to afford private insurance. The name of the program can vary by state. For example, in New York, it is called Child Health Plus. CHIP typically covers routine checkups, vaccines, dental and vision care, prescription drugs, and care when children are sick.
Medicare
Medicare is a federal health insurance program mainly for people age 65 and older. Unlike Medicaid, Medicare is not based on income. It is primarily based on age, though some people qualify earlier because of a disability or certain medical conditions.
Medicare has several parts, including hospital insurance, medical insurance, prescription drug coverage, and Medicare Advantage plans offered by private insurance companies that follow Medicare rules.
The program is funded mainly through Medicare taxes that workers pay during their working years.
COBRA
COBRA, short for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows eligible workers and their families to keep the same health insurance plan from a former employer for a limited time.
The important thing to know is that you usually have to pay the full premium yourself, including the portion your employer used to cover. COBRA can be very expensive, but it can be helpful during a transition period if you do not have new insurance yet. For example, it can help you keep the same doctors and medical services while waiting for new coverage to begin.
Health insurance for service members and veterans
Some groups have their own health care systems, such as service members, veterans, and their families. Programs such as TRICARE and the Department of Veterans Affairs health care system serve these groups. This is a separate part of the U.S. health insurance landscape and does not apply to most people.
In general, it helps to think about U.S. health insurance by group: working adults often get coverage through an employer; low-income individuals may qualify for Medicaid; children may be covered through Medicaid or CHIP; older adults usually enroll in Medicare; and people who do not fall into those groups may buy coverage through the Marketplace.
In addition, each state may offer its own programs for different groups of residents.
For example, New York has Medicaid and CHIP, known there as Child Health Plus, as well as the Essential Plan for many people whose income is too high for Medicaid but who still have trouble affording private insurance. New York also has Emergency Medicaid, which may cover certain emergency services for eligible people, including some people without lawful immigration status.
You can check your state’s Department of Health website, or a similar state agency, to learn more about health insurance programs available where you live.
Why do people have such opposite opinions about U.S. health care?
The U.S. health insurance system is complicated because there is no single plan for everyone. Instead, different groups of people get coverage in different ways.
The differences in what each program or insurance plan covers are a major reason people can have such different experiences with the health care system.
Health care in the U.S. is expensive. Even with a decent insurance plan, paying 20% coinsurance can still leave someone with a bill that is far more than they can comfortably afford.
In fact, about 8% of the U.S. population does not have health insurance, which is roughly 28 million people. The rate is higher among working-age adults and much lower among people over 65, largely because of Medicare.
For immigrants, access to health insurance — especially strong, comprehensive coverage — can be more limited because of employment opportunities, income, immigration status, and state-specific rules.
Eligibility for some public insurance programs also depends on immigration status and the rules in each state.
What to know before using health insurance
If you are new to health insurance in the U.S., the first step is to understand what program and plan you have. Pay attention to basic cost-sharing terms such as premium, deductible, copay, coinsurance, and out-of-pocket maximum. It is also important to know which doctors, clinics, and hospitals are in your plan’s network.
Many people focus only on the monthly premium and overlook the deductible or out-of-pocket maximum. Then, when a health issue comes up, they realize the actual cost can be much higher than expected.
Conclusion
The U.S. health insurance system can feel confusing, especially for newcomers. But once you understand the basic terms and how different types of coverage work, it becomes much easier to make informed decisions for yourself and your family.
A good place to start is by figuring out which group you fall into and which insurance program fits your situation. From there, take time to learn key terms such as premium, deductible, copay, coinsurance, and out-of-pocket maximum — and how your specific plan applies them.
Understanding these basics alone can help you avoid many unpleasant surprises and feel more in control of your health care costs.
So if you ever hear completely opposite opinions about health care in the United States, do not rush to decide who is right or wrong. In many cases, both experiences may be real, because a person’s experience depends heavily on the insurance coverage they have.
You can learn more about health insurance in the United States in these related articles:
New to U.S. Health Insurance? Start With These Essential Steps
Common health insurance benefits you should not overlook