For many people, including those who work in healthcare, the healthcare system in Texas and the United States is complicated and can feel overwhelming to navigate.
Here are some basics.
The terms healthcare coverage, health insurance, healthcare policy, and healthcare plan may sound different but they refer to the same thing: an insurance contract or program that provides financial protection against healthcare costs.
There are two basic categories of health insurance:
- Private: coverage provided and paid for by employers or individuals.
- Public: coverage provided by Medicare, Medicaid, Veterans’ Administration, or other taxpayer-funded programs.
Private Health Insurance
Most private health insurance is provided by employers. People can also buy it individually.
Job-based health insurance is a unique feature of the United States’ healthcare system. During World War II, employers began offering it as a recruitment tool. The strategy stuck and today it is how most people get health insurance.
In Texas, 47.4% of people get coverage via their job, versus 61% nationally. One reason fewer Texans get healthcare coverage this way is because Texas has more people working in industries where job-based coverage is not typically offered, such as construction and retail sales.
For others, their employer might offer it, but the monthly premiums and out-of-pocket costs deter them from enrolling.
Private health insurance also can be purchased individually.
For individuals who purchase private health insurance outside of employer-sponsored coverage, one of the most common ways to purchase it is on the health insurance Marketplace or healthcare.gov. Congress established the Marketplace in 2010 as part of the federal Affordable Care Act (ACA) with the goal of increasing the availability of health insurance for people who do not qualify for public coverage.
Private insurance companies sell coverage on the health insurance Marketplace, allowing people to compare different products based on their costs and premiums. Most people who buy coverage here get extra financial help – called premium tax credits – to bring premiums costs down. Tax dollars pay for this extra help.
People who are ineligible for health insurance Marketplace coverage or who do not qualify for extra help can purchase private coverage directly from health plans.
Public healthcare coverage includes Medicare, Medicaid, the Children’s Health Insurance Program, and Veterans’ Healthcare. Texas law also requires each county to operate a County Indigent Healthcare Program.
Medicare: A taxpayer-funded federal health insurance program primarily serving seniors (people aged 65 and older). The program also covers people with certain medical conditions or disabilities.
Medicaid: Like Medicare, Medicaid is funded by taxpayers, though the funding is shared by the federal government and states. Medicaid provides health insurance coverage to eligible low-income pregnant women, infants, children, people with disabilities and the elderly.
Eligibility criteria include age, income, and specified medical conditions such as pregnancy or disability.
Federal law determines the demographics states must cover, with flexibility for states to cover more people within federal parameters.
While Medicaid is one of the primary programs to serve low-income people, not all low-income people qualify. For example, states have the option to extend benefits to working-age, low-income adults. Forty states have done so. Texas has not.
Children’s Health Insurance Program (CHIP): CHIP provides coverage to low-income, uninsured children whose families earn too much to qualify for Medicaid but not enough to purchase private coverage.
Veterans’ Healthcare: VA Health offers multiple healthcare coverage programs to provide healthcare to both active duty and retired service members from any branch of the United States’ military and their family.
County Indigent Health Program: A limited-benefit healthcare coverage program that covers uninsured Texas residents who do not qualify for Medicaid and have modest means.
The Cost of Healthcare Coverage
Within the broad categories of private and public health insurance, there is immense variation in what benefits and services are covered and thus what it costs.
Regardless of the amount people pay, what people pay can be divided into four categories.
- Premiums: a monthly fee paid to the insurer.
- The amount varies based on the benefits and services being covered.
- Some employers cover all or a portion of this cost for their employees.
- Lower monthly premiums typically mean higher costs elsewhere and vice versa.
- Deductibles: a set amount paid by the enrollee before the insurance company starts sharing the costs.
- Deductibles are paid on an annual basis. When a new calendar or plan year starts, the calculator restarts.
- Some services, such as preventive health services, are often excluded from the deductible.
- Deductible amounts vary by whether the coverage is for an individual or a family. The average annual individual deductible is about $1,800; family deductible is about $3,000.
- Deductibles vary by plan type and coverage level.
- Copayment: a fixed amount paid only when an enrollee uses a specific service, such as visiting a doctor or filling a prescription.
- Copayments do not apply to the deductible.
- Coinsurance: the percentage of healthcare costs to be paid for a service after meeting the deductible.
Most plans also include an annual out-of-pocket maximum – a cap on what people spend after adding up payments for the deductible, copayments, and co-insurance. After reaching this limit, the health plan will pay 100% of covered, in-network services, excluding the monthly premium payment.
Types of ACA Health Coverage
There are ACA regulated plans and non-ACA compliant plans.
ACA regulated plans must cover “essential health benefits”. These include doctor visits, mental health services, hospital stays, emergency care, maternity care, and pediatric care, among others. Health plans also can offer additional services.
ACA plans cannot exclude people for health reasons. If you have a chronic disease, such as diabetes, cancer, or previously had a heart attack – known as preexisting conditions – you cannot be charged more or refused coverage. However, plans can adjust premiums based on your age, where you live, and if you smoke.
On the Marketplace, eligible people can choose plans rated by metal level:
- Platinum
- Gold
- Silver
- Bronze.
All levels must provide comprehensive coverage – services people need to stay healthy, such as annual checkups, vaccines, and cancer screenings, as well as care for when they are sick or injured, including hospital care, mental health treatment, and rehabilitation.
The difference between levels is how much an enrollee pays each month for premiums versus out-of-pocket costs, including deductibles. Some people qualify for extra help with costs if they have limited incomes.
Bronze plans have the lowest monthly premium, but the highest deductibles. In Texas in 2026, bronze plan enrollees pay an average of $426 each month plus $7,476 deductible. Silver-plan enrollees pay $651 monthly along with a $5,304 deductible.
ACA “catastrophic” plans, on the other hand, have the lowest premiums but much higher deductibles. These plans also cover all essential health benefits but will not pay for services until the deductible is met except for three primary care visits. In 2026, the deductible is $10,600 for an individual and $21,200 for a family.
Non-ACA compliant catastrophic plans also require enrollees to meet the deductible before coverage begins. However, these plans also may cover fewer services and benefits.
