How Medicare and Medicaid Rely on Private Health Insurance

For a majority of Medicare and Medicaid recipients, the government program is paying a private health insurance company to provide the service from a private firm. In the Spring 2026 issue of the Journal of Economic Perspectives, Tim Layton, Luca Maini, and J. Michael McWilliams tell the story of Medicare in “Substitutes for Success? Public versus Private Competition in Medicare Advantage.” Mark Shepard and Jacob Wallace tell the story of Medicaid in “Understanding Medicaid Managed Care: The Procured Competition Model.” (I work as Managing Editor of the JEP.) In general, the hope of both programs is that having private health insurance companies competing with each other will provide higher quality and/or lower costs for recipients of Medicare and Medicaid. But of course, the two programs have quite different focuses. Medicare is primarily focused on over-65 Americans. Layton, Maini, and McWilliams describe traditional Medicare program like this: Medicare, the program that provides…