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What is government-run healthcare — and what isn’t

“Government-run healthcare” is an expression that has been used to inflame rather than inform. Discover what health programs are run by the government, and how they provide popular healthcare to millions of Americans

What Does Government-Run Healthcare Look Like?

“Government-run healthcare” is an expression that has been used to inflame rather than inform. The fact is, government-run health programs include large, popular and efficient programs that provide healthcare to millions of Americans today. This fact sheet provides a brief overview of three government-run health programs: Veteran’s Administration healthcare system, Medicare, and the Federal Employee Health Benefits Program.

Read brief (pdf).

by Senior Policy Analyst Lynn Quincy

The Veterans Administration
The closest example to a purely government-run system in our country is the Veterans Administration (VA) healthcare system, which provides subsidized care to veterans who qualify. Services are typically provided by physicians and nurses employed by the VA, in facilities owned and operated by the VA. The VA determines the scope of covered services and the healthcare information technology that providers use. Veterans do not pay premiums but they may pay a copay for services.

Yet even the VA offers private market services as needed. If necessary services, such as emergency care, are unavailable in the VA system, the VA will pay for services elsewhere. Moreover, the VA does not monopolize veterans’ healthcare; many eligible veterans can and do use other sources of coverage and care.

Studies have shown that the VA provides high quality care, great patient satisfaction and at a lower cost than other health coverage programs in our country.1

In part, this is because the VA is a truly innovative healthcare system. The VA was an early adopter of the electronic health record. Their integrated system of doctors and hospitals provides a superior platform for innovation. The VA has a unique research program that focuses on meeting the full spectrum of a patient’s medical needs. This commitment to advancement, coupled with an integrated healthcare system and a state-of-the-art electronic health record, has enabled the VA to attract the best and brightest investigators.

Medicare provides health coverage to the elderly and the severely disabled. In contrast to the VA, Medicare pays private practice doctors, and our nation’s network of private and public sector hospitals, to care for Medicare patients. A government agency determines provider payment rates and pays claims. Unless they are very low-income, enrollees pay a premium but their premium is far below the actual cost of the coverage. The remainder of the cost is covered by taxpayers, including a dedicated “Medicare tax” that we all pay over the course of our working lives.2

The Medicare program also has a private market insurance option called Medicare Advantage.3 Private insurers who meet the government’s standards can sell a variation of the traditional Medicare benefit package and be reimbursed from the government.

Medicare is a widely popular program supported by legislators on both sides of the aisle. The program provides medical and financial security to 43 million seniors and persons with disabilities.

Federal Employee Health Benefits Program
The Federal Employee Health Benefits (FEHB) program provides a wide choice of private health plans to federal employees and retirees, including members of Congress. The program is administered by a government agency, the U.S. Office of Personnel Management. This agency negotiates premiums and benefits with private insurers and oversees the plans’ compliance with consumer protections.

As with Medicare, the system relies on privately practice doctors and our nation’s network of private and public sector hospitals. In 2008, the FEHB program provided health coverage to about eight million current and former federal employees and their families.4

The FEHB program is sometimes held up as a model for health reform because it features many choices and because enrollees pay more for expensive health plans—helping slow increases in costs. FEHBP also is an efficient organization, with about 100 agency employees coordinating coverage for millions of federal employees and their families.


Bottom Line for Consumers
The label “government-run healthcare” encompasses many things. Governmentrun programs can certainly include inefficient administration, uncaring bureaucrats, or fraud and abuse. But government-run programs also include large, popular and efficient programs that provide healthcare to millions of Americans.

1 Phillip Longman. “Best Healthcare Anywhere,” Washington Monthly, January/February 2005.

2 How is Medicare Funded?. Centers for Medicare and Medicaid Services, September 2009.

3 When Medicare Advantage plans are marketed to seniors, they advertise plans with names like
“Secure Horizons,” “Senior Advantage,” and “Gold Choice” so many seniors not familiar with the
term “Medicare Advantage” even though that may be the plan they have.

4 Basic Facts About the Federal Employee Benefit Program, Consumers Union, July 2009.