America’s health insurance system is a “complex patchwork quilt,” says HKS Associate Professor of Public Policy Mark Shepard. “There’s Medicare over here, there’s Medicaid over here, there’s employer coverage here, but there’s a big hole in the middle. Before Obamacare, a lot of people didn't have health insurance coverage, and what Obamacare tried to do was to put another patch on our quilt to get people covered, and it succeeded. But there’s still a lot of holes in the quilt, and so coverage is incomplete.” We asked Shepard to explain that patchwork system, how we got to where we are today, and what could happen to health insurance under the new administration of President Trump—who tried to repeal Obamacare in 2017. The interview has been edited for length and clarity.
Q: How does the health insurance system work in the United States, and where do people get their insurance coverage?
Mark Shepard: The first thing to know about the U.S. health insurance system is that we really don’t have a system. We have a complex patchwork of overlapping ways that people get health insurance. About half of Americans get coverage from their job, what’s called employer-sponsored insurance. It’s not really a system, but it’s a voluntary decision by firms to offer a benefit to their employees. And if you switch jobs or lose your job, you need to find new health insurance.
Just over a third of Americans get coverage from one of two big government programs, Medicare or Medicaid. Medicare is the coverage for senior citizens and people receiving disability benefits from Social Security. Medicaid is the government program for very low-income people, where there are very specific rules in different states for what low-income means—including age group, family status, and a host of other factors. Neither of these government programs is universal. They’re open only to specific groups who qualify, and the rules for determining eligibility are often complex and vary across states.
Finally, about 14% of Americans fall into a broad “other” category. They don’t qualify for employer-provided insurance, and they don’t qualify for Medicaid or Medicare. They’re supposed to sign up for what’s called private non-group health insurance. You buy it directly from an insurance company as an individual or family. A major goal of Obamacare was to regulate this market and to provide subsidies to help people afford this coverage.
But in fact, most people in this “other” group don’t end up getting any insurance at all. They’re the 26 million Americans, or 8% of the population, who are uninsured. A major goal of Obamacare was to help more people get health insurance coverage, so that if they get sick, they can get the care they need without running up huge medical bills. But Obamacare only partly succeeded at this goal.
Q: Is this how other nations run their health insurance systems, or is the United States distinct?
Shepard: The United States is a major outlier. All other high-income nations have adopted what you might call a “unified” health insurance system that makes sure that everyone has some form of basic health insurance coverage. This is sometimes called universal coverage. The specifics of how this works varies a lot across countries.
In some places like the U.K. and Canada, it’s a single government-run health insurer. In other places like Germany and Switzerland, it’s private health insurers who design their own plans and compete for customers in a regulated market. But in all cases, there’s a single system, unlike our patchwork system in the United States, and coverage is automatic or mandatory, unlike our voluntary system. As a result, all other high-income nations fully cover their population, whereas the United States leaves about 8% of people uninsured.
Q: Did Obamacare succeed in the goal of reducing the number of people without insurance?
Shepard: The simple answer is yes. Obamacare gave more people health insurance. Before it was enacted in the early 2010s, about 45 million Americans lacked health insurance coverage. After Obamacare's main provisions took effect in 2014, uninsurance fell sharply. By 2016, only 27 million Americans lacked health insurance coverage, almost an unprecedented fall in such a short period of time.
But a different way of putting this is that Obamacare still fell far short of its goal of universal coverage. About 25 to 30 million Americans still lacked coverage, and we’ve seen essentially no net progress in health insurance coverage from 2016 up to the latest data in 2023. There was a slight rise in uninsurance from 2016 to 2019 during the Trump era, as President Trump was hostile to the Affordable Care Act. We saw a slight fall in uninsurance, about 1 percentage point, during the Biden era, when new policies were enacted to increase subsidies for coverage. But overall, we’re kind of stuck.
“What I expect we’ll see in the next Trump term is not much change, more stasis. While, in theory, President Trump and Congressional Republicans could take steps to undermine the law, they probably won’t.”
Q: So who are the remaining people without insurance?
Shepard: The common misconception is that most remaining uninsured are people not eligible for affordable insurance. People often point to the fact that 10 states have still not expanded Medicaid to all low-income people—something made possible by a 2012 Supreme Court decision that gave states the option not to expand Medicaid.
But the data don't bear out the idea that most uninsured fall into this category. Only about 6% of the uninsured, just 1.5 million of the total 26 million, are in what’s called the “Medicaid coverage gap”—meaning they’re in a non-expansion state and are earning too little to qualify for Medicaid. The other 24.5 million uninsured would not be reached even if all 10 hold-out states expanded Medicaid.
Another common misperception is that people are uninsured because they’re not eligible for ACA subsidies or other affordable coverage. In fact, when you survey the uninsured, many say that they don’t think they can afford coverage, but this also seems to be a misperception. Based on the data, about 80% of the uninsured qualify for some form of affordable coverage, and almost half may qualify for some form of free coverage from Medicaid or a health insurance exchange.
In fact, the problem is not that people aren’t eligible for coverage but that they’re not being connected with the forms of affordable coverage that they are eligible for. And the reason for that is that we have a very complex health insurance system. We don’t make it easy to sign up for coverage to stay enrolled or to get coverage because it’s so complex.
Q: So, what could policymakers do to help cover more people?
Shepard: I think what we need is a new approach that asks, "How do we set up a system in which it’s easy and automatic for people to get and stay insured?" What if, when people leave a job or shift out of Medicaid, they were automatically enrolled in a new form of coverage that’s appropriate for them? In other words, what we need here is not expanded subsidies or expanded eligibility, but simpler processes to get and stay enrolled in insurance.
Now, getting to fully automatic enrollment is pretty hard within our current system. It would require a major overhaul of data and administrative infrastructure, but there are some simple strategies that states can explore.
The first is helping people retain the coverage that they already have. Streamlining the processes for renewing eligibility for Medicaid is one key priority. States gained a lot of experience with this during the unwinding of the COVID public health emergency in 2023 and learned how to make it easier to stay enrolled in Medicaid.
A second easy win is helping smooth the coverage handoff from one type of health insurance to another. So, for instance, when someone is disenrolled from Medicaid, can they be more easily or automatically enrolled in subsidized private marketplace coverage? When someone loses their job, could they be automatically handed off to Medicaid or the appropriate health insurance program?
Importantly, when states enroll more people in coverage, there’s often a financial gain, since most forms of coverage are subsidized by the federal government. If states saw the uninsured as an opportunity—a way in which they’re currently leaving money on the table by not enrolling people in federally subsidized coverage—then they could see the problem differently. It could be a win-win for both individuals, who get access to healthcare they need, and to states, getting more coverage and more money flowing into their state, of course, at higher costs to federal taxpayers.
Q: What are some of the measures that the first Trump administration took to undermine the ACA?
Shepard: In his first term, President Trump set out to repeal the ACA and to replace it with what he called “something better.” But there wasn’t a clear alternative plan that even Republicans could agree on, and the repeal effort of 2017 failed.
President Trump was still hostile to the law, and he took other steps to undermine it. First, the tax penalty on being uninsured, what was sometimes called the “individual mandate penalty,” was repealed as of 2019. This ended up not being a major issue because the penalty was small and not fully enforced in the first place. Second, the president canceled a type of insurance subsidy that was earmarked to lower out-of-pocket costs for poorer Americans. And, third, the president and Congress reduced funding for advertising and outreach to help people enroll in Obamacare.
Because of these steps, there was a real fear that Obamacare, and especially the new private health insurance markets, would collapse. But this didn’t happen. Initially, there was some market turmoil. Insurance prices rose sharply from 2016 to 2018, and about half of participating health insurance companies chose to exit these markets.
But in fact, enrollment didn't fall very much during this period because there were still generous subsidies in place to protect consumers. And over time, it was clear that there were enough stabilizing forces within the system to prevent its collapse. Since 2019, the markets have, in fact, more than fully bounced back, partly because of these stabilizing forces, and partly because of more generous subsidies enacted in 2021, under President Biden's American Rescue Plan (and later extended by the Inflation Reduction Act).
As a result, trends in Obamacare have generally been positive. Enrollment in Obamacare is way up. It almost doubled between 2020 and 2024. Insurance premiums have been stable over time, despite generally steep inflation in other areas of the American economy. And insurer participation, which had fallen by half, has now fully bounced back to its highest levels in the program’s history.
Q: What might happen in the second Trump administration? Do you think there will be continued actions to undermine the ACA?
Shepard: I see a bit of a shift in how the president and Republicans in general perceive Obamacare and coverage in general. Throughout the 2010s, I think the word “Obamacare” was politically toxic on the right. There was this reflexive opposition and desire to repeal and even undermine the law.
But in the 2024 campaign, you saw a shift. President Trump asserted that he saved Obamacare during his first term, and Vice President JD Vance said something similar, arguing that the law was collapsing, and that Trump took steps to fix it. Whether or not that statement is fully true, it’s clearly a shift in tone, and there’s a sense not of hostility, but of acceptance and a desire to work within the new reality that is Obamacare, and that leaves me encouraged.
What I expect we’ll see in the next Trump term is not much change, more stasis. While, in theory, President Trump and Congressional Republicans could take steps to undermine the law, they probably won’t. The more generous subsidies that were enacted under President Biden are likely to expire in 2026. I doubt Republicans will be willing to extend them. If so, that will increase uninsurance a bit, but not a lot. Remember, uninsurance was only about 1% to 1.5% points higher back in 2018 to 2019, even though the larger subsidies weren’t in place, and the Trump administration was actively hostile to the law.
In fact, we might even see some progress on Medicaid expansion in the 10 remaining states that have not expanded it. Most are red states, and they’re not expanding it, not for economic reasons—it’s actually quite a good deal economically—but for political reasons. If President Trump can provide acceptable terms, in other words, kind of an excuse for these states to expand Medicaid, you could see some of these states expand Medicaid and help cover some of the remaining uninsured Americans who are in the coverage gap.
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