When we talk about “healthcare” we are generally referring to many aspects that comprise the system, as a whole. By adding qualifiers, such as “healthcare provider,” or “healthcare system” we can start to examine specific parts. For example, “provider” deals with the people providing the service, while “system” is used to discuss the ways in which these services are paid for.
In this piece, we will begin to lay out the basic organizational structure of the United States healthcare system, how it’s financed, and speak to the role of private and public health insurance in order to better understand the system that provides care.
What is the Healthcare System?
Healthcare in essence, is the maintenance or improvement of personal health by many avenues including: prevention, diagnosis, and treatment of illness, injury, disease, and any other physical or mental impairments. Healthcare as a whole includes dentistry, psychology, nursing, medicine, physical therapy, occupational therapy, and much more.
Access to healthcare varies greatly by location and is primarily influenced by economic and social factors, i.e., urban care facilities in wealthier neighborhoods are going to provide better, more robust care than a poorer, smaller, rural care center.
Regardless of location, the World Health Organization (WHO), defines a well-functioning healthcare system as one with steady financing, a properly-trained and adequately-paid workforce, well-maintained facilities, and access to reliable information from which to base medical decisions on.
Unfortunately, because there is no centralized healthcare program in the United States, different hospitals in different locations provide wildly different levels of care. Which is reflected in the standard of care, as it directly takes into consideration what services are appropriate according to where the service is provided. A physician practicing in a rural hospital has to be held to a different standard than a physician practicing in an urban setting as they do not generally have access to the same treatments or facilities.
How is the Quality of Healthcare Determined?
Several factors determine the quality of healthcare provided within a developed nation. A study by The Commonwealth Fund found the U.S. ranked last of 11 developed nations overall. Findings confirm that even in the earlier four editions of the study, the United States consistently ranked last in indicators of efficiency, equity, and overall outcomes.
Health Insurance and Healthcare in the United States
The healthcare system in the United States is a hybrid of both public and private, for-profit and nonprofit insurers, and healthcare providers. The federal government provides funding for the national Medicare program which insures adults 65 years of age or older. The government provides limited care for some people with disabilities and funds various programs for veterans and low-income individuals, including Medicaid and the Children’s Health Insurance Program.
For the most part, private citizens in the United States are required to take full responsibility for acquiring their own, private health insurance either through employment or independently. This means individuals are often insured only if they are able to afford the cost and/or their employer chooses to provide health insurance.
Private insurance, which is the most common form of insurance coverage, is provided primarily by employers, but is done so on a voluntary basis. The uninsured rate, of 8.5 percent, was down from 16 percent in 2010, the year that the landmark Affordable Care Act became law. However, this rate shot up to a shocking 43 percent during the first half of 2020, as the COVID pandemic caused many people to lose employment, therefore leaving them underinsured, or completely uninsured altogether.
Financing
The United States spends more on health care services than any other nation—on average, more than twice as much per person than in many other developed countries. The costs are paid for by a complex mixture of public funds—Federal, State, and local government—as well as private insurance and private funds: there is no single nationwide system of health insurance.
Insurance Tied to Employment
There is also little to no coordination between private and public programs. Some people have both public and private insurance while others have neither. Those with no health insurance whatsoever receive fewer and less coordinated services than those with insurance. Many of these uninsured individuals receive their health care services through public clinics and hospital emergency rooms. Good care under these circumstances is not guaranteed as an emergency room is only legally required to stabilize a patient before discharging them, and furthermore, can refuse to treat a patient if they do not deem the injury or illness an immediate emergency.
Organization
There is no standard, centralized health organization in the United States. Therefore, any health services are provided by a loosely structured delivery system, organized by each individual community, on a local level. This means hospitals can open or close according to community resources, preferences, and the dictates of an open market for hospital services. This means there is no way for a low income or rural areas to establish quality care for the surrounding communities, as there are limited resources available because they have been funneled to wealthy communities.
This also applies to physicians, as they are free to establish their practice wherever they choose, and with soaring student loan debt, a physician willing to take a lower paying position in a lower income or rural area is increasingly rare.
Most hospitals are owned by private non-profit institutions; the remainder are owned by governments or private for-profit corporations. Physicians, the vast majority of whom are in private practice and paid on an fee-for-service (FFS) basis, see their patients in their offices and then admit them to hospitals where they can continue to serve them.
About two-fifths of physicians have an independent practice. Although there is a long-term trend toward the formation of more and larger group practices, the proportion of independent practices is shrinking albeit at a very slow rate. A relatively small number of physicians are not in the FFS sector but are employed by government, corporations, managed care networks, or hospitals.
How are Healthcare Services Delivered & By Whom?
There are about 6,700 hospitals in the United States, including 5,480 community, acute care hospitals, 880 specialty hospitals (e.g., psychiatric, rehabilitation, long-term care), and 340 Federal hospitals open only to military personnel, veterans, or Native Americans.
It is the role of the physician to admit patients to hospitals if they require further care, this means the physician chooses which hospital their patients will continue to receive care in. Because of this, hospitals work very hard to seem attractive to physicians, they do so by buying expensive equipment and by taking physician requests.
As a result, hospitals engage in what has been called a “medical arms race,” in which hospitals compete to own state-of-the-art technology. Incidentally, the United States has 8 times more magnetic resonance imaging machines (MRIs) per capita, 6 times more lithotripsy centers, and 3 times more cardiac catheterization and open heart surgery units per capita than Canada.
Healthcare professionals are charged with working to maintain the health and wellbeing of individuals through the practice and application of the principles and procedures of evidence-based medicine and medical care. Their role is to study, diagnose, treat and prevent human illness, injury and other physical and mental impairments in accordance with the needs of the individuals they serve.
They advise on and apply preventive and curative measures, and promote health with the ultimate goal of meeting the health needs and expectations of individuals and populations, and improving population health outcomes.
They also conduct research and improve or develop concepts, theories and operational methods to advance evidence-based health care.
Healthcare Workers include:
- Medical Doctors―both Generalist and Specialist Practitioners, including Public Health Doctors
- Nursing Professionals, including Public Health Nurses
- Midwifery Professionals, including Public Health Midwives
- Dentists
- Pharmacists
What is the Cost to Become a Physician?
According to the World Health Organization (WHO), properly trained physicians with access to coordinated information are one of the most important building blocks to a good working healthcare system. Therefore, access to good medical schools is essential to improving the healthcare system in the United States, but cost creates a barrier for many potentially talented physicians.
This is because medical education in the United States is financed by a combination of student tuition payments, Federal and State education programs, and private funds. Public funds support medical education through State-supported medical schools (about 60 percent of all medical schools), Federal and State student loan programs, Federal health education programs, and Medicare payments for graduate medical education in teaching hospitals.
Regardless of government programs, student debt for medical students has skyrocketed over the last two decades. In 1990, roughly 80 percent of medical students had an average debt of $46,224 upon graduation from medical school. Since 1990, medical school tuition has increased dramatically, and the average debt incurred by US medical students in the year 2020 averages over $120,000.
And because of the large amount of debt that must be accrued by a medical student in order to begin their practice, most medical students gravitate towards higher paying specialties, provided by urban hospitals, simply to pay off such large amounts of debt. This equates to the cost of medical school playing a large role in furthering the gap between the inadequate Medicare in rural or low income areas of the United States.
How Does the United States Healthcare Rank Worldwide?
The United States does not rank well, which may not be surprising to many. According to the commonwealth fund, when compared to six other industrialized countries, the United States spends the most money and has the highest mortality rate than all other six countries.
The reason for poor rankings may be surprising, including a nearly $250B annual loss to the nation due to a lack of health insurance.
The Prohibitive Cost of Healthcare
It is not that the healthcare offered is significantly worse than other countries, but a prohibitively high cost is the primary reason Americans give for problems accessing healthcare. The high cost barrier is what has ultimately created such an ineffective healthcare system.
Americans with below-average incomes are much more likely than their counterparts in other countries to report that they do not visit a physician when sick; or get a recommended test, even if they do eventually see a physician. They also are more likely to decline treatment or follow-up care, forego filling a prescription, or seeing a dentist. The reason for the refusal of care is not because there are no medical problems or the patient was magically cured of an ailment: the refusal is strictly financial.
Fifty-nine percent of physicians in the U.S. acknowledge their patients have difficulty paying for care. In 2013, 31 percent of uninsured adults reported not getting or delaying medical care because of cost, compared to five percent of privately insured adults and 27 percent of those on public insurance, including Medicaid/CHIP and Medicare.
Continuously Rising Insurance Premiums
While the majority of U.S. citizens do have some kind of health insurance, premiums are rising and the quality of the insurance policies is falling. Average annual premiums for family coverage increased 11 percent between 1999 and 2005, but have since leveled off to increase five percent per year between 2005 and 2015. Deductibles are rising even faster. Between 2010 and 2015, single coverage deductibles have risen 67 percent. These figures outpace both inflation and workers’ earnings.
It does not stop there, In 2020, the average annual premiums were $7,470 for single coverage and $21,342 per year for family coverage. The average premium for single coverage increased by 4% since 2019 and the average premium for family coverage increased by 4%. The average family premium has increased 55% since 2010 and 22% since 2015.
Impact on the U.S. Economy
The lack of health insurance coverage has a profound impact on the U.S. economy. The Center for American Progress estimated in 2009 that the lack of health insurance in the U.S. cost society between $124 billion and $248 billion per year. While the low end of the estimate represents just the cost of the shorter lifespans of those without insurance, the high end represents both the cost of shortened lifespans and the loss of productivity due to the overall reduced health of the uninsured. All before COVID.
The numbers got significantly worse in 2020. A Commonwealth Fund Biennial Health Insurance Survey pinpoints who is uninsured and why. In the first half of 2020, 43.4 percent of U.S. adults ages 19 to 64 were inadequately insured.
Underinsurance and Bankruptcy
The Commonwealth Survey, uses a measure of underinsurance that accounts for an insured adult’s reported out-of-pocket costs over the course of a year, not including insurance premiums, as well as their plan deductible. These actual expenditures and the potential risk of expenditures, as represented by the deductible, are then compared with household income. Specifically, the survey considers people who are insured all year to be underinsured if:
- their out-of-pocket costs, excluding premiums, over the prior 12 months are equal to 10 percent or more of household income; or
- their out-of-pocket costs, excluding premiums, over the prior 12 months are equal to 5 percent or more of household income for individuals living under 200 percent of the federal poverty level ($25,520 for an individual or $52,400 for a family of four in 2020); or
- their deductible constitutes 5 percent or more of household income
The out-of-pocket cost component of the measure is only triggered if a person uses their plan to obtain health care; it does not provide information about the plan design. There is a deductible component used as it is an indicator of the financial protection the plan offers and the risk of incurring costs before someone gets health care.
This creates a barrier to care for those who must weigh the cost of treatment and wellbeing, and prevents insurance companies from having to pay for care, as many people do not have the means to pay the deductible. The definition does not include people who are at risk of incurring high costs because of other aspects of their plan’s design, such as copayments or uncovered services.
A 2019 study from academic researchers found that 66.5 percent of all bankruptcies in the United States were tied to medical issues—either due to high costs for the care itself, or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found.
Universal coverage, in countries like the United Kingdom, Switzerland, Japan, and Germany makes the number of bankruptcies related to medical expenses negligible.
What is the Root of the United State Healthcare Crisis?
From every direction the US faces challenges in delivering healthcare to its citizens; from connecting patients to the care they need, training physicians and healthcare workers, to providing good healthcare facilities for all communities. Private insurance costs have become unmanageable for most Americans, leaving many vulnerable to being under- or completely uninsured.
As the story unfolds, two perpetrators have been identified: the mismanagement of healthcare funds and predatory health insurance companies. Independent healthcare providers are determined by community resources, not determined by healthcare standards. This fact leaves many victimized by the inadequacies of the system and cutting into the level of care provided to rural and low income communities by failing to provide good facilities and the necessary care. The healthcare system is serving the wealthy population, while leaving those with less stranded in a healthcare wasteland.
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