Honestly, medical waste is the lesser of your concerns in my experience.
A LOT of cities are not properly treating the water, not just for lead pipes like in Flint, I'm talking failure to bother adding chlorine to kill biologicals in the system. When I was in the midwest it seemed every 2 years some local town was busted for not doing this and they had a boil water alert in effect.
The other thing I saw was them not filtering, well, anything. Every time they did maintenance on the pumping station behind me my house filter would be packed with clay and mud.
My advice,
Not sure how the heck you plan on spending $500 on filters, you can get an undersink Reverse Osmosis for under $200, you won't notice a difference in the water.
Bit of warning though for any filter, make sure you can get filters easily and cheaply. 90% of a RO purchase price is often the filters, the rest is cheap. 3 gallons per day is PLENTY even for a decent size family, unless you have an aquarium.
Normally you setup a whole house filter, then a softwater system (you may or may not need it), then a reverse osmosis under the sink to separate faucet. House filter will remove sediment, the RO will fix the taste. House filter and softwater should NOT be feeding the external hose outlets and sprinklers, not only is it wasteful, but the salt is bad for your lawn, car, driveway, etc.. RO should only be feeding that second small faucet. If you do get softwater, it should not be used for cooking, either bypass the faucet and/or install a RO. I would also reduce the salt content waaaaaay down, some people love a lot in the water (admittedly it does feel nice), but salt has quadrupled in price in less than a decade. A tiny amount goes a long way towards reducing water spots and such, so unless you want that feel, reduce it to very low levels.
Other thing's I would change when/if I do it again...
Bypass the softwater going to the water heater and the RO, the water heater will likely last longer as will the RO filters (probably). It also may be possible to catch the discarded water for use on the lawn or other things, they use quite a bit. I would also install parallel whole house filters (not serial), as they clog you lose pressure, two filters would reduce this and allow the filters to be used longer.
Side note, don't buy the cheap house filters, they clog in half the time.