Narrator: Whenever I talk about health policy, especially as we try to reform it here in the United States, I get a lot of request to talk about how exactly health care works in different countries, lots of countries. It's not that I don't think that those are great questions, I do. It's that summarizing a health care system in just a few minutes isn't easy. But we don't shirk from difficult tasks here and so we are going to start tackling countries, one by one starting with the United States here on Healthcare Triage.
The United States health care system is similar to that of many other countries in that it is a mixture of both private and public components. Let's start with the easy stuff. Almost all care is provided for by the private sector. Although some hospitals are run by the government, most are run by private organizations. About 70% of hospitals are non-profit leaving the rest in for profit hands. Most physicians, therefore, also work for private organizations and are not employed by the public sector. Other components of the health care system are also in the private sector including pharmaceutical and medical device companies. Research is paid for by both public and private sources with a little bit more coming from the private side. Added together, however, U.S. spending on medical research accounts for the vast majority of R&D spending in the world.
But how countries are different than most is in how they give citizens access to their systems. In this area, the United States is somewhat of anachronism. Until recently, about 15% of people in the United States were uninsured. This meant that if they needed care, they would have to pay it out of their own pocket and unless you've been living under a rock, you should know that health care in the United States is really expensive. So that's a problem. It means that a lot of people don't get the care they need and it means that we are failing a large number of people who live in the United States. About 60% of U.S. citizens get health insurance from their employer. These plans usually don't charge people different amounts based upon factors such as age, gender or past medical history. They range benefits but for the most part they cover preventive care, care if you get sick, and prescription drugs.
Plans vary in terms of how much people have to pay out of pocket for them. But we already did a video on how private insurance works and you really should have watched that already. About 15% of Americans are covered by Medicare and most of them are elderly people. Medicare is a national social insurance program run and administered by the federal government. It's the closest thing we have to what people refer to as a single payer system where all people are covered by one type of insurance. But Medicare is pretty complicated.
First, there is Medicare part A, which covers you if you are hospitalized. It's pretty much free to most people over the age of 65 and almost no one doesn't get it. Medicare part B covers outpatient services and is sometimes deferred by people who are still getting insurance from their jobs. It has a pretty low deductible and then it has co-insurance of 20%. It covers tons of stuff including pretty much all tests and procedures you might get outside the hospital as well as lots of medical equipments that you might use. There are private supplemental Medi-gap policies that are offered by private companies that often cover the co-pays of co-insurance or add in extra benefits. Almost everyone buys one of these two so that elderly individuals wind up paying much less for their health care than you would expect.
Medicare part C or Medicare Advantage is an opportunity for private companies to offer Medicare-like benefits better than the government can. If they do and they do it for less money, they get to keep the extra in profit. Medicare beneficiaries can opt into Medicare Advantage plans instead of traditional Medicare. They sometimes have different benefits that appeal to them and about a quarter of them choose such a plan now. Medicare part D contains the prescription drug plans. They are actually designed and run by private insurance companies but they are approved and paid for by the federal government. Individual Medicare beneficiaries pick the part D plan they like depending on what drugs they think they might need. That's Medicare. It cost us about $536 billion last year.
The other big government program is Medicaid. Unlike Medicare, Medicaid is a state based program. Basically, it is supposed to provide health care coverage for the poorest among us. There are some minimal federal guidelines that are set for Medicaid and then each state gets to implement it as it sees best. Some states are more generous and some less so. Generally, Medicaid is meant to cover those at the low end of the socio-economic spectrum. The government defines poor this way. While you look at that, remember this amazing fact. A single parent with a child who makes a minimum wage earns more than the poverty level. That's how low the line is. Regardless, traditional Medicaid must cover kids under 6 years of age to 133% of the poverty line and kids 6-18 to 100% of the poverty line. The States Children's Health Insurance Plan, or SCHIP, ups these to 300% of the poverty line in most states.
Medicaid also covers pregnant women up to 133% of the poverty line and parents to 1996 welfare levels. Finally, it covers the elderly and those with disabilities who receive supplemental security income. The first important thing to note is that adults without children aren't mentioned at all and in most states they can't get Medicaid. Let me say that again. In most states, even the poorest adults without children, even those who make nothing at all don't get Medicaid. And it gets worse. Those 1996 welfare levels can be super low, so low that for instance, in Arkansas a couple with two children making $3,820 a year is too rich for Medicaid. Granted some states are more generous but in many of them parents have to be very poor in order to get Medicaid.
The Medicaid expansion in the Affordable Care Act was supposed to fix this. It was supposed to give Medicaid to everyone who makes less than 138% of the poverty line regardless of whether or not they have kids. It would have finally made Medicaid the universal program for the poor that many already believe it to be. But because of the Supreme Court decision that made the Medicaid expansion optional, lots of states are refusing it leaving an additional 5 million people with low incomes with no insurance this year. In 2009, Medicaid covered more than 60 million Americans. About one in three children are covered by Medicaid and one in three births is covered by Medicaid. A lot of Americans are in poverty. In 2011, Medicaid cost us about $414 billion.
[Results] of the veteran's health administration, which is totally a government-run system that provides care to veterans, and Tricare the military health insurance program that applies to some veterans, military personnel on retirees and dependents. Tricare works more like a private insurance. You think that sounds complicated? It is. Interestingly, while about two-thirds or so people get their insurance from private companies, only about one-third of spending comes from the private sector. In other words, the government has to cover about one-third of people in the United States but has to pay about two-thirds of the bill. Tell me again now the government isn't getting the short end of the stick. The money involved in health care in the United States is simply unbelievable.
You may remember this video of Johns, which talks about how out of control our spending is. Go watch it again. It's based in part of the series I did on my blog and the link for that is in the video info section below. I have also added a link to a series on quality in our system, which is, well, not what you would hope for given all that spending. Obamacare will change some of what I said, but not by much. Basically, we hope to get some people who didn't get insurance in their jobs, Medicaid or community-rated guarantee issue insurance like employed people get. With respect to Affordable Care Act, we are only talking about 30 million people or so or about 10% of our population. For more info on that go watch our first episode. So that's the U.S. health care system as being packaged as I can make it in under 10 minutes. It's private insurance for most, Medicare and Medicaid for some, and VA or Tricare for a few. How does this compare to other countries? Keep watching future episodes to find out.There may be small errors in this transcript.