Health care in the United States is provided by many separate legal entities in a complicated scheme that may bewilder visitors. Unlike some other countries, there is a sharp separation between who provides health care and who pays for it.

In the U.S., 45 million people have no health insurance, and 25 million people are underinsured. In 2005, the price of health insurance is about $3,600 per year for a single person. The price is $10,000 per year for a family of four. This is too expensive for millions of Americans. Unfortunately, uninsured people can't afford regular check-ups that detect diseases in their early stages when they are curable. The disease develops and kills the person needlessly. Thousands of people die each year because they have no insurance to pay for the expensive life-saving treatments and surgery.

Who Provides It

American health care is provided to patients by a diverse array of entities. There are nonprofit hospitals, which may be operated by county governments, state governments, religious orders, or independent nonprofit organizations. There are for-profit hospitals, which are usually operated by large private corporations. There are many outpatient clinics, which may be operated by any of the above organizations or may be a partnership of health care professionals (essentially a large medical or dental group). Finally, there are some health care professionals who individually, or in a group, practice for personal profit.

Costs of medical supplies (consumables), machines, tools, and pharmaceuticals are usually passed through to the patient or their insurer. The pharmaceutical and medical supply industries have become dominated by powerful private conglomerates like Johnson & Johnson.

Who Covers It

The default legal situation has always been that the patient must pay out-of-pocket in full for all services rendered, as with any other service industry; this business model is known as "fee-for-service." But today, fee-for-service applies only to the minority of Americans who are not covered by any kind of insurance, a situation further discussed below.

Most Americans are covered by some kind of cost-spreading mechanism (i.e., insurance) which distributes the risk of illness and the cost of health care among a group of people. This means that each individual or their employer pays predictable monthly premiums, so that when any given individual needs health care, they will have to pay up-front one of the following: (1) nothing (increasingly rare), (2) a minimum part of the total cost (a deductible), or (3) a small part of the cost of every single procedure (a co-payment).

The entity that provides the health care is usually not the same entity that does the task of spreading the cost of it. The exceptions are health maintenance organizations like Kaiser Permanente which run their own hospital and clinic networks to control costs, and a few employers which employ an in-house physician (e.g., Google) or even operate their own outpatient clinics.

Instead, most Americans receive their health insurance coverage through benefits programs provided by employers. Most of the remainder are covered by government insurance programs like Medicare (United States) and Medicaid, and various state and local programs for the poor.

Either way, health care providers must bill a patient's insurer for the cost of services rendered. The billing process is generally considered to be one of the most inefficient and wasteful parts of American health care, for the following reasons:

(1) The lack of a national identity card forces insurers to impose many bureaucratic procedures like pre-authorization of non-emergency procedures upon both providers and patients to guard against fraud;

(2) The insurers have a financial interest in denying coverage for any reason, and providers and patients have a financial interest in fighting denials of coverage, and both end up wasting time and money in the process;

(3) The extreme fragmentation of the entire industry forces all entities to waste a lot of time learning about each other's bureaucratic procedures, because of the low probability that any pair of provider and insurer will regularly encounter each other; and

(4) Much of the health care industry still operates on inefficient paper documents, because no entity outside the federal government has the market power to impose a single standard for digital transmission of health care information, and the federal government has been unable to create such a standard as of 2005.

The Coverage Gap

Enrollment rules result in millions of Americans going without health care coverage, including children.

Most uninsured Americans are working-class persons between the ages of 2 and 65 whose employers do not provide health insurance, and who earn too much money to qualify for one of the local or state insurance programs for the poor, but do not earn enough to cover the cost of enrollment in a health insurance plan designed for individuals. Some states (like California) do offer limited insurance coverage for working-class children, but not for adults; other states do not offer such coverage at all, and so, both parent and child are caught in the notorious coverage "gap."

However, such persons cannot be left to die in the street. Since 1986, a controversial federal law, EMTALA [1], has required all American emergency rooms which bill federal healthcare programs to stabilize all incoming patients without regard to their ability to pay. This law was created as an unfunded mandate; the federal government and the state governments have never fully compensated both public and private hospitals for the full cost of such emergency charity care. The hospitals do attempt to bill uninsured patients directly under the fee-for-service model, but most such people cannot pay their hospital fees, and escape into bankruptcy when hospitals seek legal process against them.

As a result, innumerable private hospitals have gone out of business since 1986. Others have raised prices on those that can pay to avoid going out of business. Some physicians have vociferously questioned the ability of the remaining emergency rooms, particularly in smaller cities, to respond to very large-scale disasters like 9/11.

Although it certainly keeps alive many working-class people who are badly injured, another problem is that the 1986 law neither requires the provision of preventive or rehabilitative care, nor subsidizes such care, and it certainly does nothing about the difficulties in the American mental health system.

In turn, in many American cities, it is common for mentally ill homeless people to "cycle" through emergency rooms. When admitted, such patients can be suffering from numerous diseases and malnutrition; hospitals clean them up and nurse them back to health, then discharge them to the street at the first legally justifiable opportunity; and then the same patients are back in the ER in three to six months after becoming critically ill again. The hospital often ends up absorbing the full cost of care, since many homeless people are convicted drug addicts, which makes them ineligible for almost all federal and state assistance programs for the poor.

In the end, hospitals spread the cost to the patients who can pay (by raising prices on everything), which only further increases the total cost of health care for everyone. This increase in total cost may also cause additional people to become uninsured as insurance companies pass on the cost.

Finally, the unavailability of preventive care and the high cost of paying out-of-pocket means that many working-class persons delay visiting an emergency room as long as possible. In turn, such persons are more vulnerable to catastrophic diseases that could have been much more easily treated if identified early through regular checkups (like cancer and heart disease). The financial cost of treating those diseases at a late stage is also much higher.

Major Issues

Prescription Drug Coverage

Since the 1990s, the price of prescription drugs became a major issue in American politics as the prices of many new life-saving drugs soared to dazzling heights and many citizens discovered that neither the government nor their insurer would cover the cost of such drugs.

Although some people argue that the U.S. should regulate drug prices like nearly all other countries, the U.S. government has taken the position (through the Office of the United States Trade Representative) that U.S. drug prices are going through the roof because U.S. consumers are effectively subsidizing costs which drug companies cannot recover from consumers anywhere else (because so many other countries regulate drug prices). This is essentially an instance of the free rider problem in economics. The U.S. position is that the governments of those countries should either deregulate their markets or directly remit the difference (between what the companies would earn in an open market versus what they are earning now) to drug companies or to the U.S. government. In turn, those companies would be able to lower prices for U.S. consumers.

The counterargument is that the corporations commonly known as Big Pharma are among the most profitable in the world, and their executives and shareholders are already earning astronomical returns; the standard rebuttal is that those corporations and their investors take enormous financial risks in developing any given drug, and as with any capitalist enterprise, they should be allowed to capture enormous profit in exchange for accepting the risk of enormous losses. Less than 1 in 10 make it through the full approval process, and if a drug is proven to be unsafe later, then the manufacturer can be subject to massive legal liability (e.g., fen-phen).

Universal Health Care

As for remedying the problem of the lack of coverage, many physicians and analysts support the concept of nationalizing the health care system as has been done in most industrialized countries. However, such proposals are politically infeasible at this time, due to opposition from libertarians, fiscal conservatives, and the powerful corporations who manufacture most drugs and run most hospitals.

A major problem with nationalization is that the exceptionally high quality of American physicians at present appears to be partially dependent on their high salaries, which richly compensate them for their grueling working hours, prolonged education and training (approximately 10 years from when they make the decision as a college undergraduate), and high education debt.

In contrast, in nearly all other major industrialized countries, higher education institutions are also nationalized and thus their physicians do not have to obtain crushing loans just to finance their educations. However, physicians in such countries have lower maximum income potential, due to the nationalization of healthcare systems. During the SARS crisis, some American healthcare analysts argued that the grossly incompetent responses of several foreign healthcare systems (especially Canada) was partially caused by the tendency of the best and brightest students in such countries to be attracted to higher-paying fields like business or law. Similar comparative analyses have been performed on various other public health disasters.

It remains to be seen whether industrialized nations follow the U.S. system of requiring fees for services of great public importance, or whether the U.S. follows suit with the rest of the world.

In the meantime, upper classes of other countries sometimes fly to the U.S. or other countries with deregulated healthcare systems to be operated on by American-trained doctors (a phenomenon that has been well-documented by several newspapers including the New York Times).

There have also been occasional reports of incidents in which illegal immigrants from various countries (including the United Kingdom and Mexico) deliberately enter the United States to seek treatment of extremely severe or rare illnesses. When Immigration and Customs Enforcement sought to deport such persons for illegal entry or for overstaying their visas, the immigrants would throw themselves on the mercy of the American people. The argument is that deportation to their home countries would be a death sentence, because their home countries' healthcare systems are either incompetent or underfunded. In early 2005, one highly publicized case involved a young girl named Rachel Andrews, whose parents fought deportation to the U.K. on the grounds that U.K. doctors did not know how to treat her rare sleep disorders properly and that the life-saving drug she needed (Provigil) was not approved for pediatric use in the U.K.

Thus, with all of the above in mind, it is clear why American libertarians and conservatives defend the current system, dysfunctional as it is, as preserving the excellence of American medicine.

The current system can then be seen as an unpleasant compromise: it guarantees excellent care for the 100 million who have money to pay for good insurance, so-so care for the 150 million who have mediocre insurance or government insurance, and bare-bones emergency care for the 40 million who don't have any insurance.

See also: Canadian and American health care systems compared