The United States Health Care System

The United States Health Care System

Gail E. Russell

“No reform is ever complete. We must constantly keep moving forward.”

—Senator Edward Kennedy

The U.S. health care system is complex and pluralistic. It is a mix of private and public initiatives and institutions that employ millions of workers in a myriad of settings to provide a wide range of health-related goods and services to the diverse U.S. population across geo-political environments that range from sophisticated cities to stretches of wilderness. The purpose of this chapter is to provide a description of this system and a framework for evaluation of the system for current and future reforms.

Characteristics of Systems

A system is a group of interacting people and processes that are organized for the purpose of producing goods and services and delivering them to the people who need or want them. A system openly interacts with its environment to procure raw materials and identify consumers of its goods and services and to respond to changes in need and demand, technology and innovation, demographic and economic trends, political realities, and natural and man-made disasters. Organizational and systems theories indicate that the effectiveness and survival of systems require continuous adaptation to internal and external factors. Systems must self-adjust to remain relevant and viable. If systems become too complex to function efficiently and effectively, adaptations falter, resulting in poor outcomes for the system and the population it serves.

Health care in the U.S. is an example of a very complex system. Its basic elements are patients, providers, and payers. However, the patients are diverse in age, education, social and economic status, and cultural/ethnic roots and include people who are: well but need routine examinations, screenings, health education/promotion, and guidance; experiencing critical illnesses or injuries and need extensive diagnostics and technology intensive care; experiencing common illnesses or life events that respond to routine interventions; experiencing chronic diseases or disabilities that vary in intensity and number and require monitoring and care over time; or experiencing terminal illnesses that require symptom management and supportive care. The health care providers are also diverse and include: institutions with a wide range of mission and capacity from high-technology diagnostics and interventions to homemaker services; clinicians drawn from multiple professional disciplines with different training and competencies; support services that range from the simple (e.g., greeters who welcome patients) to the sophisticated (e.g., diagnostic testing or information systems); and suppliers that provide goods and services that range from tissue paper to genetic material, from spiritual support to computer support, from paper clips to titanium replacement parts. Finally, health care payers vary widely and include: insurance companies that are regulated differently by each of the 50 states; various federal and state programs for special populations and the uninsured; individuals who pay out of pocket for premiums, services not covered by insurance, and philanthropy. Even these basic building blocks of the health care system are complicated.

Patients, providers, and payers interact at different times and with different motivations. Insurance companies seek to make money by designing benefit packages to market to individuals and employers and by managing benefits to enrollees to maximize patient outcomes and patient satisfaction. Employers purchase insurance packages for their employees to attract and retain workers. Individuals with insufficient knowledge of their future health care needs choose health insurance plans based on cost of premiums, co-payments, and deductibles. Individuals then use their health insurance to pay to visit an array of providers depending on the specific need for health care, the availability of providers, the nature and urgency of the problem, and even the time of day. Each provider has patients covered by many insurance plans, all with different benefits and administrative process for approving and paying for services. In the ideal world, there is synergy among patient, provider, and payer. In the real world, the variety and complexity of patient needs and health providers can lead to very disjointed service. Another real world fact is that up to one third of people under age 65 do not have health insurance and another 25 million are underinsured (Whelan & Feder, 2009). Uninsured people often delay treatment, become more seriously ill, and need more extensive and expensive treatments in more complex settings when they do present for care. And their care is financed by shifting the cost to insured patients, the insurance plans, and the taxpayer in a way that makes tracking the true cost of this care almost impossible.

Evaluation of the Health Care System

It is common to evaluate the health care system on three dimensions—how well it does in providing safe and effective patient care to the people who need it at a cost that is reasonable and equitably distributed; quality, access and cost. Several respected organizations use closely related concepts to define and monitor health systems performance. The World Health Organization (WHO) (2000) and the Institute of Medicine (IOM) (2001) use equity, efficiency, and healthy life years (Box 13-1). The Commission on a High Performance Health System (Commonwealth Fund, 2007) identifies six drivers of high-performance health care systems—again very related concepts (Box 13-2). These dimensions or concepts or drivers are interrelated and interconnected; changes in one dimension creates changes in other dimensions.

How does the U.S. health care system compare with industrialized counties on these dimensions of health care? In 2000, the WHO survey ranked the U.S. health system 37th in the world. The U.S. was 24th in terms of health attainment; 32nd in terms of equity of health outcomes across its population; and 54th in terms of fairness of financial contributions toward health care. There has been no progress on these issues.

According to the Commission on a High Performance Health System (2008), the U.S. health system gets Cs, Ds, and Fs on these dimensions and ranks last among Australia, Canada, Germany, New Zealand, and the United Kingdom (Table 13-1). These data propel the continuing health reform debate.


Quality of care is the degree to which health services for individuals and populations increase the likelihood of desired outcomes and are consistent with current knowledge. Quality care is collaborating with patients to perform appropriate assessments; make the most accurate diagnoses; implement appropriate treatments in the most convenient and efficient setting in a timely manner to maximize patients’ outcome and minimize any pain, disability, and down time for patients; monitor the treatment and its effectiveness; and make any needed adjustments or changes.

Patient Safety.

Patient safety is the freedom from accidental or preventable injury while receiving health care. Because health care interventions are complex, can be high risk, and are rendered to people when they are most vulnerable, extra effort must be directed to preventing injury or harm. Preventing avoidable harm or injury is the first level of quality. While the focus of patient safety is on adverse events and comparing rates to benchmarks, the need is for more innovation on effective measures for early detection and prevention.

Healthy Life Years.

The goal of any health care system is to ensure that people lead healthy lives. Common indicators deal with aggregate data and include deaths that could have been prevented with timely and effective care; infant mortality; and healthy life expectancy. U.S. health indicators lag behind other industrialized nations in several areas (Anderson, Frogner & Reinhardt, 2007). In a comparison of the U.S. health care system to the United Kingdom, Germany, Australia, New Zealand, and Canada, the U.S. was last in delivering safe care, and next to last in delivering the right care, coordinated care, and patient-centered care (Commonwealth Fund, 2007). Half of chronic care patients in the U.S. do not fill prescriptions, get the recommended care, or see a doctor due to cost. In seven other industrialized countries, the rate is only 7% to 36% (Commonwealth Fund, 2008). Recognizing the interconnectedness of reimbursement policy to quality, experts recommend a shift in resources and priorities to primary care, care coordination, prevention, and wellness and a change in how providers are paid by rewarding care management and coordination, not expensive and unnecessary tests, images, and procedures—by rewarding the quality not the quantity of care services (Kaiser Family Foundation, 2009).


Access is the ability to obtain needed, affordable, convenient, acceptable, and effective health care in a timely fashion. Over the years, many federal initiatives have focused on access to health care. Some examples include: Hill Burton funds that brought hospitals to rural and new suburban settings in the post–World War II era; education and training for the health professions that not only provide access to professional work and status for financially disadvantaged students but also brings newly minted providers to medically underserved areas of the country; and Medicare and Medicaid legislation that provides health insurance to elderly and disabled persons and poor children.

Despite many initiatives, access to health care remains a serious problem. Although access has many dimensions in the current health care debate (e.g., geographic availability of qualified providers and well-equipped facilities, convenient hours of operation, and culturally sensitive providers), access is a euphemism for adequate health insurance coverage. Over 46 million Americans lacked health coverage for all of 2008, up from 45.7 million in 2007 (U.S. Census Bureau, 2009). In addition, the number of individuals insured by the government rose from 83.0 million to 87.4 million, while the number insured by employer-sponsored insurance declined from 177.4 million in 2007 to 176.3 million in 2008 (U.S. Census Bureau, 2009). Another 25 million American adults are considered to be underinsured with high out-of-pocket health care expenditures (Fronstin, 2008). Nearly 83% of the uninsured live in families headed by workers (Fronstin, 2008). Almost two-thirds of uninsured workers have an employer who doesn’t offer coverage (Keehan, et al., 2008). Although the importance of health insurance cannot be underestimated, the Massachusetts experience with universal health coverage highlights other access issues, especially the critical shortage of primary care providers and urgent care and emergency services (Kaiser Commission on Medicaid and the Uninsured, 2009). (See Chapter 21.)


Equity bridges the dimensions of quality and access. The IOM (2001) defines equity as health care that does not vary in quality because of gender, ethnicity, geographic location, or socioeconomic status. In the U.S., persistent health disparities in segments of our population underscore this as a problem area. The U.S. Department of Health and Human Services (2008) defines health disparities as differences in the occurrence, frequency, death, and burden of diseases and other unfavorable health conditions that exist among specific population groups, including racial and ethnic minority groups. In 2002, the IOM reported that minorities are in poorer health, experience more substantial obstacles to receiving care, are more likely to be uninsured, and are at greater risk of receiving care of poor quality than other Americans. A recent National Healthcare Disparities Report (U.S. Department of Health & Human Services Agency for Healthcare Research and Quality, 2007) finds that limited progress is being made to eliminate health care disparities and that many significant gaps in quality and access have not been addressed. An increasingly diverse population demands that the U.S. address these disparities.

Another dimension of equity is highlighted by Wennberg’s work on practice variations in health care (Mullan, 2004). Different practices are based on things other than patient need and standards of care. So how do patients know that what they get is actually good for them? Equity demands that patients have access to the right care.


The cost of health care must be considered from several perspectives. For patients or consumers, cost is the price of purchasing needed health care goods and services and includes insurance premiums, co-pays and deductibles; out-of pocket health expenditures not covered by insurance; taxes (social security, federal, and state) that support health programs; in-kind services such as caring for aging parents or sick children; and voluntary contributions to health-related charities. For health care providers, the cost of health care is the cost of producing health care products and services and delivering them to patients in a timely and relatively convenient manner. From a broader perspective, the cost of health care is how much the state or nation spends on health care; the percent of the total domestic production that health care consumes. Incentives and policy initiatives that address the “cost” of health may be beneficial to one, some, or none of these perspectives. When discussing cost, it is important to clarify what perspectives are or are not being addressed.

Because health care costs are high, different methods of financing health care have evolved. In the U.S., most health care is provided by privately owned organizations and is financed by private health insurance purchased by individuals or in many cases by employers for groups of employees and their families. This is supplemented by government supported or operated programs for special populations, such as people who are on active duty military service, veterans, Native American, disabled, mentally ill, elderly, or poor women and children. However, the government support of these programs varies widely and the budget drives how fully they are implemented.


An efficient health care system maximizes quality of care and outcomes within the resources available and ensures that investments in new programs and services yield net value over time (Commonwealth Fund, 2006). Efficiency is usually measured by the total national expenditures on health as a percent of GDP and the percent of those expenditures that go to administration or overhead rather than health care goods and services. Rapid growth in health care costs is a major problem facing the U.S. economy (Table 13-2). In 2008, the U.S. spent nearly 17% of its gross domestic product (GDP) on health care. If health care costs continue to grow at the current rate, health care will be 25% of the U.S. GDP in 2025 (Whelan & Feder, 2009). This is not sustainable because more diversity in our economy is essential. In addition, because the government pays for half of all health services, health care usurps public funds from other important programs such as education, housing, and infrastructure.

Mar 18, 2017 | Posted by in NURSING | Comments Off on The United States Health Care System

Full access? Get Clinical Tree

Get Clinical Tree app for offline access