Key Takeaways

• The care economy is massive and growing, with over 130 million Americans providing care and $26 billion in venture capital invested, driven by consistent demand and reliance on third-party payers like Medicaid and insurers.
• Proposed federal policy changes (particularly cuts to Medicaid and shifts in ACA support) could significantly disrupt the sector by reducing coverage, altering reimbursement models, and increasing costs for consumers.
• Ultimately, the future of the care economy will depend not just on innovation, but on how well companies adapt to policy changes and align with evolving healthcare funding systems.

More than 63 million U.S. adults provide care for other adults with serious medical conditions. Combined with the 91 million Americans caring for children, roughly 130 million people are engaged in caregiving.

That scale has driven significant investor interest. Since 2015, venture capital firms have invested $26 billion into more than 700 companies across the care economy, including pregnancy, childcare, disability and aging services. A recent analysis by Beyond Ventures, Pivotal and The Holding Co. describes care as a “durable investment thesis rooted in enduring human needs and long-standing structural gaps.” The same analysis found the sector has produced 13 unicorns and several multibillion-dollar exits.

How The Care Economy Generates Revenue

Care companies often rely on third-party payers rather than direct consumer spending. When individuals use maternal health platforms or home care services, reimbursement typically comes from insurers, employers or government programs.

This structure has historically provided revenue stability. Medicaid, Medicare and commercial insurers function as the financial backbone of the care economy, particularly for services such as long-term care, home health and disability support.

What Federal Policy Changes Could Mean For The Care Economy

The Congressional Budget Office estimates that the proposed One Big Beautiful Bill Act would reduce federal Medicaid spending by $911 billion over 10 years and increase the number of uninsured Americans by 10 million by 2034. Separate estimates indicate that up to 17 million people could lose coverage, including children, pregnant women, seniors and individuals with disabilities.

Policy changes outlined in the bill include restrictions on eligibility for long-term services and supports, adjustments to home equity limits and the removal of federal nursing home staffing requirements. These changes directly affect segments such as elder care, which has attracted $7.1 billion in venture capital investment.

Because many care companies depend on public reimbursement systems, reductions in coverage or payment rates can alter business models. In response, providers may shift costs into private insurance markets, contributing to higher premiums and out-of-pocket expenses.

The Role Of Policy In Market Creation

Federal policy has played a central role in shaping the care economy. Medicaid remains the primary payer for long-term care, while Affordable Care Act provisions expanded coverage for services such as prenatal and maternal healthcare.

These mandates helped enable the growth of companies like Maven Clinic, which reached a $1.7 billion valuation in 2024. The company’s trajectory reflects a broader pattern: demand for care services alone is not always sufficient to sustain business growth without reimbursement mechanisms that ensure payment.

At the same time, enhanced Affordable Care Act premium tax credits are set to expire. Those subsidies have supported enrollment in commercial plans, which in turn contribute to revenue streams for care-focused companies.

Industry Response And Ecosystem Development

Organizations such as FamTech.org are working to coordinate stakeholders across the care economy. The U.S.-based network includes more than 400 companies, investors and partners focused on areas such as childcare, elder care, women’s health and caregiver support.

Anna Steffeney, executive director of FamTech.org, said in a statement: “The next phase of growth in the care economy won’t be defined by more startups alone, it will be defined by how effectively we connect innovation to real-world systems like employers, healthcare and public policy.”

What Investors Are Watching Next

For more than a decade, investors have viewed government healthcare spending as a stabilizing force in the care economy. Changes to Medicaid, Medicare and Affordable Care Act provisions could reshape that assumption.

If reimbursement structures shift, the impact will likely extend beyond individual companies to the broader ecosystem of more than 700 venture-backed startups and the $26 billion invested in the sector. The extent of that impact will depend on how policy changes are implemented and how quickly companies adapt to evolving payment models.