The US government is the largest buyer of healthcare in the world. Medicare alone spent ~$1.1 trillion in 2024, about a fifth of national health spending, and Medicaid, the VA, TRICARE, the Indian Health Service and ACA premium subsidies add hundreds of billions more. More and more of that public money flows through private companies: in 2026 about 55% of eligible Medicare beneficiaries were in privately run Medicare Advantage plans (KFF), and most Medicaid enrollees are in state-contracted managed care plans. For those companies, government rules are the business model. Rate notices, risk-adjustment formulas, star ratings and state procurements decide revenue more than any sales team does. This section explains how traditional Medicare pays providers, how Medicare Advantage pays plans (benchmarks, bids, rebates, risk scores, stars), Part D after the Inflation Reduction Act, Medicaid financing and managed care, the 2025 federal Medicaid changes, and the VA and military systems. The commercial market is in 03.
What the study covers
- 1Overview: the government payer map
- 2Traditional Medicare
- 3Medicare Advantage
- 4Part D and the Inflation Reduction Act
- 5Medicaid and CHIP
- 6VA, military health and other federal programs
- 7Key numbers
- 8Landmark companies and cases
- 9Pitfalls
- 10How an expert thinks about it
- 11Glossary
Technical exhibits
Worked examples, checklists and case studies included with this study.
Medicare Advantage Capitation Worked Example
Stylized MA plan P&L per member per month: benchmark, bid, rebate, risk score with normalization and coding-intensity adjustment, star bonus, MLR, and sensitivity to stars, coding and utilization (computed by script)
Risk Adjustment and Star Ratings Primer
How CMS-HCC risk scores, the V28 model, RADV audits and the star-ratings system work, and why they decide MA profitability