The United States economy is the largest in the world, and its gross national income per head is among the highest in the world. The United States has a federal system of government, with substantial authority delegated to its regional governments – the 50 states – and a historical reluctance regarding central planning or control either at federal or state level.
The United States healthcare system reflects this wider context, having developed largely through the private sector, and combining high levels of funding with a distinctively low level of government involvement. The United States spends far more money on health care per head than any other country – 53% more than the second-highest country, Norway. As with many such national averages in this report there are wide variations within this, though, with spending per head ranging from about $5000 per head in Utah to more than $10,000 in the District of Colombia. International comparison shows a varied picture with respect to quality and outcomes, though, with very good indicators for some diseases (e.g., certain cancers) and poor ones for others (e.g., asthma). With regard to health behaviours, the picture is again varied; the United States has been notably effective in reducing smoking rates but equally ineffective in grappling with nutritional health and obesity. Most Americans still receive their coverage from private health insurance; unusually for high-income countries, over one-sixth of the population lacks health insurance, although this proportion is expected to be cut nearly in half if the main elements of the Affordable Care Act are implemented in 2014.
Organization and Governance
The United States health care system can be thought of as multiple systems that operate independently and, at times, in collaboration with each other. Powers in the health sector are divided between the federal and state governments. For example, states fund and manage many public health functions, pay part of the cost of Medicaid and shape its organization within that state, and set the rules for health insurance policies that are not covered by self-insured employer plans. On the other hand, products such as pharmaceuticals and medical devices are regulated at federal level. Regulations to achieve objectives of quality, access and cost control in healthcare may be set by public or private entities, at any or all of federal, state or local levels. However, there is relatively limited planning in terms of regulation, with little coordinated system-level planning in the United States in comparison to other countries, although incentives are somewhat used (for example to promote service provision in underserved areas).
Private sector stakeholders play a stronger role in the US health care system than in other high-income countries; the private sector led the development of the health system in the early 1930s, with the major federal government health insurance programmes, Medicare and Medicaid, only arriving in the mid 1960s. Medicare provides coverage for seniors and the disabled and Medicaid covers health care services for some of the poor and near-poor. Both public and private payers purchase health care services from providers subject to regulations imposed by federal, state and local governments as well as by private regulatory organizations.
Reflecting this multiplicity of actors, strengthening use of health information systems to link different actors has become a priority of the federal government, most recently with national legislation promoting increased use of electronic health records by providers and their exchange and integration between organizations.
Public sources constitute 48% of health care expenditures in the United States, private third party payer sources 40%, with the remaining 12% being paid by individuals out of pocket. Even though the proportion of public and private spending on health care is roughly comparable, only a minority (30%) of the United States population is covered by the public financing system – mainly through Medicare and Medicaid. Currently, the majority of Americans (54%) receive their coverage from private health insurance, with most privately insured individuals obtaining coverage through an employer. Purchasers in the form of health maintenance organizations (HMOs, which provide healthcare services on a prepaid basis through a network of providers) grew rapidly during the 1980s and early 1990s. Their market share has fallen substantially since then, due to a backlash against the tight restrictions put on patients, and preferred provider organizations (PPOs) have come to dominate the private insurance market. These contract with a network of providers but they tend to pay physicians on a fee-for-service basis, and make it easier to seek care outside the network. In 2012, among insured employees, 56% were in PPOs and only 25% in HMOs or similar plans.
One in six Americans is uninsured. Even among those with coverage, high out-of-pocket costs can be a barrier to receiving timely care and medications; one estimate is that medical costs are responsible for over 60% of personal bankruptcies in the country. Out-of-pocket (OOP) payments (e.g., direct payment by consumers for health services, coinsurance, co-payments, and deductible amounts) per capita have increased substantially in real terms in recent years, though because of the growth in overall health expenditure, the percentage that OOP spending represents of total health expenditure has decreased. Increases in real OOP spending over the last 40 years are not unique to the United States, although the United States has consistently ranked near the top in OOP spending among high-income countries.
Payment for health services in the United States depends on the service provided, the type of health worker providing it, the funder, as well as the type of facility and geographical location where the service is provided. Given this complexity, payment mechanisms for each type of health service (e.g., inpatient hospital care, prescription drugs) vary widely according to the payer involved.
Physical and human resources
Since the 1970s there has been an increase in ambulatory facilities, such as physician and dentist offices and ambulatory surgical centres, and a decrease in institutional settings such as hospitals and nursing homes. The number of hospital beds has also fallen (and is amongst the lowest per head among high-income countries), yet despite this decrease in beds occupancy rates in hospitals remain low, primary due to a dramatic decrease in inpatient length of stay. The United States uses relatively more of medical technologies such as MRIs and CT scanners than in comparable countries, which may also be a factor in its relatively low average length of stay, but the average age of its physical infrastructure, such as hospital buildings, is slightly increasing.
Employment of physicians, chiropractors, nurses, physician assistants and all types of therapists has increased since 1990. Particularly high increases in employment of physician assistants and therapists over the last three decades (and moderate increases in nurses) may indicate increasing reliance on these professionals for primary health care. On the other hand, employment of dentists, optometrists and pharmacists has decreased slightly in this period. Relative to comparable countries, the United States is around the median in physician supply, but toward the top in nurse supply. Licensing and certification of health professionals is carried out at state level; there is reciprocal recognition of licenses between most states, but not all.
The United States benefits from net inward migration of health care professionals. However, the country suffers from internal maldistribution of the health care workforce: by practice and setting (with a disproportionate number of specialist physicians compared to primary care physicians); by geographical location (with variations of physician to population ratios of more than 50%, with more professionals in the Mid-Atlantic and the Northeast than in the South and the Mountain West, and greater shortages of physicians in rural areas); and by racial and ethnic representation in the workforce (with African Americans, Latinos and American Indians underrepresented). There is no consensus regarding the overall adequacy of the future supply of physicians. Different forecasts are predicted based on different assumptions about future demand and supply. For nurses, the history of nursing workforce adequacy in the United States is one of cyclical but deepening shortages in the past few decades, and nursing workforce forecasts uniformly predict some degree of a shortage in the future unless significant steps are taken to increase supply. The Affordable Care Act and other recent federal policies may help alleviate predicted shortages.
Provision of Services
Insured individuals tend to enter the health care system through a primary care provider, though with some kinds of insurance (eg: PPO) individuals may go directly to a specialist. Uninsured individuals often do not have a regular primary care provider, but instead visit community health centres (which provide primary care for low-income, uninsured and minority populations) and hospital emergency rooms for their health care, which hinders continuity of care. Due to out-of-pocket costs they may be reluctant or unable to seek out specialty, surgical, or inpatient care unless they need emergency care; emergency departments in hospitals that receive payment from Medicare (which is nearly all hospitals in the US) are required by law to provide care to anyone needing emergency treatment until they are stable. Retail clinics (in pharmacies or large stores) are also emerging as places to go for treatment of minor medical conditions.
The number of acute inpatient (hospital) discharges and length of stay have fallen over the past decades, with more acute-care services, such as surgery, being performed on an outpatient basis. For example, in 2010 more than three-quarters of all surgeries were provided in an outpatient setting. Mental health services have also shifted predominantly from inpatient to outpatient, accompanied by substantially increased use of pharmaceuticals and reduction in provision of psychotherapy and mental health counselling. The utilization of post-acute-care services such as rehabilitation, intermittent home care, and sub-acute care has increased over the past decades due to the financial need for hospitals to discharge patients not requiring acute care. Palliative care is received mostly through hospice services, either in the patient’s home, or in a hospital, nursing home or other institutional setting. Hospice care has increased due to an expansion of Medicare benefits in 1983. The informal caregiver (usually family or friends) plays an important role in United States health care; 23% of Americans provide some form of informal care.
Pharmaceuticals are highly utilized in the United States compared to other industrialized countries, and their use has been growing. The use of complementary and alternative medicine (CAM) is also growing in the United States. Although physicians initially opposed the use of CAM, their stance has softened due to its popularity with the public and some scientific evidence regarding the efficacy of certain therapies. Patients must pay out-of-pocket for most forms of CAM.
Vulnerable populations in the United States include racial and ethnic minorities, those with low income, the uninsured, the disabled, the homeless, women, children, persons with HIV/AIDS, the mentally ill, the elderly, and those living in rural areas. Federal, state, and private agencies have programs for reducing disparities in health and health care for these populations. Populations that have special access to health services include American Indians and Alaska Natives, military personnel, veterans, and those who are institutionalized, such as prisoners.
United States public health is decentralized, with the main locus of power at the state level. The actual public health structures at state level vary significantly; in some states, public health functions are further decentralized (eg: to county level). At federal level, the United States Public Health Service brings together eight federal public health agencies (including the Centres for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health). Federal, state and local public health services have been underfunded, and tend to be driven by immediate concerns; for example, as concerns rose over terrorist attacks in the United States, much of the public health funding and services switched to terrorism preparedness, leaving holes in other areas of public health.
Principal health reforms
The Patient Protection and Affordable Care Act (ACA) of 2010 constitutes the most significant health reform in the United States since Medicare, though its adoption was highly controversial and its content reflects the general American preference for minimal government intervention.. Improving coverage is a central aim, with the ACA introducing a requirement for nearly all individuals to have some form of health insurance. The ACA aims to improve Improved coverage is envisaged through both the public and private sectors: subsidies are provided for the uninsured to purchase private insurance (there is no government-provided health care delivery option), and more broadened low-income people will obtain coverage through eligibility for Medicaid. The ACA also addresses underinsurance, providing greater protection for insured persons from their insurance being too limited in scope, inadequate in coverage or even being cancelled once they became ill. There are also increased funds for primary care to improve access. Public health is also strengthened, increased funding for public health programs, and requirements for chain restaurants and vending machines to display calories for food products.
Improving quality and controlling expenditures is also addressed through a range of measures. These are broadly a combination of incentives for efficiency and better-quality care plus penalties linked to inefficient care (eg: for hospital readmissions), rather than any major restructuring of the health system as such; there are also some time-limited reductions in particular areas of spending (eg: on pharmaceuticals). However, the ACA also contains measures pulling in the other direction; for example, a ban on US residents from buying and importing medication from other countries where it is cheaper, and preventing the use of cost-benefit analysis for healthcare practice or reimbursement in the Medicare program. The overall quality and financial impact of the ACA is disputed and difficult to predict.
Implementation has been on-going in stages since the law was signed in March 2010 with tMost aspects of the law are scheduled to be fully in operational by 2014, but before then political, economic, and social variables could change both the substance and the timetable. For example, a ruling of the US Supreme Court has already made the participation of individual states in the expansion of Medicaid effectively optional, with some states planning to opt out.
The United States health system has both considerably strengths and notable weaknesses. It has a large and well-trained health workforce, a wide range of high-quality medical specialists as well as secondary and tertiary institutions, a robust health sector research program and, for selected services, among the best medical outcomes in the world. But it also suffers from incomplete coverage of its citizenry, health expenditure levels per person far exceeding all other countries, poor measures on many objective and subjective measures of quality and outcomes, an unequal distribution of resources and outcomes across the country and among different population groups, and lagging efforts to introduce health information technology.
Overall, compared to other high-income countries, life expectancy in the United States is lower and mortality is higher, although there is disagreement over whether or not this relatively poor performance on mortality is due to structural problems with the health care system. Because a myriad of cultural, socioeconomic, environmental, and genetic factors affect health status, it is difficult to determine the extent to which deficiencies are health-system related, though it seems that at least some of the problems with United States performance with respect to health outcomes are a result of poor access to care.
For the future, since the birth rate in the United States is higher than that of most high-income countries, its dependency ratio – those too young or too old to work, divided by the working-age population – is expected to grow more slowly than in most other high-income countries. The budgetary pressure from demographic ageing on paying for social service programmes will therefore be less acute than in most other high-income countries. Nevertheless, given high costs and mixed performance, major concerns about the macro-level efficiency of the United States health system remain.
It is difficult to generalize about the United States health care system, and accordingly, hard to draw overall conclusions about its performance. In some respects, it is unquestionably among the best in the world, yet in other respects there are significant shortcomings.
One factor that sets the United States apart from its counterparts is the more limited government involvement. Historically, there has been a distaste for central planning, lack of control over the dissemination of medical technologies, reluctance to take advantage of the potential bargaining power afforded through large government insurers, the lack of a centralized prices and prospective budgeting and, most importantly, the absence of guaranteed insurance coverage.
There is general agreement among those on the left and the right that reforms are necessary to control spending. There is less agreement on whether there is a quality problem, nor much agreement on the need to provide coverage for the uninsured. In spite of these disagreements, the United States finds itself in perhaps its greatest transition since the introduction of Medicare and Medicaid through the passage of the Affordable Care Act in 2010. Whether the ACA will indeed be effective in addressing the challenges identified above can only be determined over time.
Such changes in the health care delivery will take a great deal of time. The ACA addresses major challenging issues such as geographic variation in the use of services and a bias towards subspecialty rather than primary care services, but mainly through small programs and pilot studies. The types of changes needed in health care delivery are unlikely to result from legislation. Rather, they need to be innovated and supported by both the public and private sectors as each grapples with the cost, quality, and access issues they face. They also hinge on changing people’s health behaviours.
Americans face an even more fundamental challenge: the lack of effective dialogue, much less consensus, on how to improve their health care system. There is very little agreement among the Democratic and Republican parties on the solutions to problems and, with a few exceptions, little in the way of working towards common solutions. Such a climate tends to result in stasis, slowing down the country’s ability to further innovate and improve the system. Solving the most vexing health care financing, delivery, and policy issues depends as much on finding common ground as it does on medical, social, behavioural, and organizational sciences.