Health care in the United States

Health care in the United States is provided by many separate legal entities. The U.S. spends more on health care, both as a proportion of gross domestic product (GDP) and on a per-capita basis, than any other nation in the world. Current estimates put U.S. healthcare spending at approximately 15% of GDP, the world's highest. The health share of GDP is expected to continue its historical upward trend, reaching 19.6 percent of GDP by 2016.

The U.S. is the only major industrialized nation in the world lacking universal health care access. In the United States, around 84% of citizens have health insurance, either through their employer (60%), purchased individually (9%), or provided by government programs (27%; there is some overlap in these figures). Certain publicly-funded health care programs help to provide for the elderly, disabled, children, veterans, and the poor, and federal law ensures public access to emergency services regardless of ability to pay. U.S. government programs accounted for over 44% of health care expenditures, making the U.S. government the largest insurer in the nation. Per capita spending on health care by the U.S. government placed it among the top ten highest spenders among United Nations member countries in 2004. When public and private spending are added together, the U.S. spends more per capita than any other nation. Americans without health insurance coverage at some time during 2006 totalled about 16% of the population, or 47 million people. . Health insurance is expensive, and medical bills are overwhelmingly the most common reason for personal bankruptcy in the United States.

The debate about U.S. health care concerns questions of access, efficiency, and quality purchased by the high sums spent. The World Health Organization (WHO) in 2000 ranked the United States health care system as 37th by overall performance, 72nd by health and 1st by expenditure (among 191 member nations included in the study). The WHO study conclusions have been criticized by conservative commentators as "fairness in financial contribution" was used as an assessment factor, marking down countries with high per capita private or fee-paying health treatment. The CIA World Factbook ranked the United States 41st in the world for lowest infant mortality rate and 45th for highest total life expectancy. The National Health Interview Survey, released annually by the Centers for Disease Control's National Center for Health Statistics reported that approximately 66% of survey respondents said they were in "excellent" or "very good" health in 2006.

Health care providers
American health care is provided by a diverse array of individuals and legal entities. Individuals offer inpatient and outpatient services for commercial, charitable, or governmental entities. The healthcare system is not fully-publicly funded but is a mix of public and private funding. In 2004, private insurance paid for 36% of personal health expenditures, private out-of-pocket payments were 15%, while federal, state, and local governments paid 44%.

Services
"Ambulatory care" refers to health care outside the hospital; most health care in the United States occurs in the outpatient setting. "Home health care services" are generally nursing enterprises, but are usually ordered by physicians. Private sector outpatient medical care is provided by personal primary care physicians (specialists in internal medicine, family medicine, and pediatric medicine), subspecialty physicians (gastroenterologists, cardiologists, or pediatric endocrinologists are examples) or non-physicians (including nurse practitioners and physician assistants). In 1996, concierge medicine emerged, where enhanced care and services are provided by primary care physicians for a retainer fee.

Facilities
There are for-profit hospitals, which are usually operated by large private corporations and there are nonprofit hospitals, which may be operated by county governments, state governments, religious orders, or independent nonprofit organizations. Hospitals provide some outpatient care in their emergency rooms and specialty clinics, but primarily they exist to provide inpatient care. Hospital emergency departments and urgent care centers are sources of sporadic problem-focused care. "Surgicenters" are examples of specialty clinics. Hospice services for the terminally ill who are expected to live six months or less are most commonly subsidized by charities and government. Prenatal, family planning, and "dysplasia" clinics are government-funded obstetric and gynecologic specialty clinics respectively, and are usually staffed by nurse practitioners.

Medical products, research and development
Companies provide medical products such as pharmaceuticals and medical devices. The nation spends a substantial amount on medical research, mostly privately-funded. As of 2000, non-profit private organizations (such as the Howard Hughes Medical Institute) funded 7%, private industry funded 57%, and the tax-funded National Institutes of Health funded 36% of medical research in the U.S. However, by 2003, the NIH funded only 28% of medical research funding; funding by private industry increased 102% from 1994 to 2003. The research and development for applications is primarily done in commercial research and development labs while the government and universities fund the majority of basic research. Much of this basic research is funded or performed by governmental research institutes such as the NIH and NIMH.

Health care payment
Most Americans (59.7%), receive their health insurance coverage through an employer, although this percentage is declining. Costs for employer-paid health insurance are rising rapidly: since 2001, premiums for family coverage have increased 78%, while wages have risen 19% and inflation has risen 17%, according to a 2007 study by the Kaiser Family Foundation. Workers with employer-sponsored insurance also contribute; in 2007, the average percentage of premium paid by covered workers is 16% for single coverage and 28% for family coverage. In addition to their premium contributions, most covered workers face additional payments when they use health care services, in the form of deductibles and copayments.

The government subsidizes employer-paid health care by exempting employer contributions from taxation as income. The value of this tax subsidy is an estimated $150 billion a year. About 9% of the population purchases health care insurance directly from the market. Government sources cover 27% of the population (80.3 million). In 2006, 47 million people in the U.S. (15.8% of the population) were without health insurance for at least part of the year. Among the uninsured, nearly 38 million were employment-age adults (ages 18 to 64), and more than 27 million worked at least part time. About 37% of the uninsured live in households with incomes over $50,000. According to the Census Bureau, 36.7 million of the uninsured are citizens. Another 10.2 million are non-citizens, but the Census Bureau does not distinguish in its estimate between legal non-citizens and illegal immigrants. It has been estimated that nearly one fifth of the uninsured population is able to afford insurance, almost one quarter is eligible for public coverage, and the remaining 56% need financial assistance (8.9% of all Americans).

A 2003 study in Health Affairs estimated that uninsured people in the U.S. received approximately $35 billion in uncompensated care in 2001. The study noted that this amount per capita was half what the average insured person received. The study found that various levels of government finance most uncompensated care, spending about $30.6 billion on payments and programs to serve the uninsured and covering as much as 80–85 percent of uncompensated care costs through grants and other direct payments, tax appropriations, and Medicare and Medicaid payment add-ons. Most of this money comes from the federal government, followed by state and local tax appropriations for hospitals. Another study by the same authors in the same year estimated the additional annual cost of covering the uninsured (in 2001 dollars) at $34 billion (for public coverage) and $69 billion (for private coverage). These estimates represent an increase in total health care spending of 3–6 percent and would raise health care’s share of GDP by less than one percentage point, the study concluded. Another study published in the same journal in 2004 estimated that the value of health forgone each year because of uninsurance was $65–$130 billion and concluded that this figure constituted "a lower-bound estimate of economic losses resulting from the present level of uninsurance nationally."

Commercial
The "fee-for-service" business model is the default legal situation where the patient must pay out-of-pocket in full for all services rendered, similar to other service industries.

Insurance payments are a form of cost-sharing and risk management where each individual or their employer pays predictable monthly premiums. This cost-spreading mechanism often picks up much of the cost of health care, but individuals must often pay up-front a minimum part of the total cost (a ‘’deductible’’), or a small part of the cost of every single procedure (a copayment).

Managed care includes preferred provider organizations, in which insurers negotiate discounted rates with contracted providers, health maintenance organizations such as Kaiser Permanente, which run their own hospital and clinic networks to control costs, and a few employers who employ an in-house physician or even operate their own outpatient clinics. Managed care is controversial, because cost control requires that treatments be authorized by a third party, intervening between doctors and their patients. Managed care frequently denies treatment options considered too costly for their benefits. Managed care is a form of non-price "rationing" (as distinguished from price rationing); this explicit rationing is frequently criticized as one of the drawbacks of some national health care systems.

Public
Many individuals not covered by private insurance are covered by government insurance programs such as Medicare and Medicaid, various state and local programs for the poor, and the Veterans Administration, which provides care to veterans, their families, and survivors through medical centers and clinics. In 2006, Medicaid provided health care coverage for 38.3 million poor Americans and Medicare provided health care coverage for 40.3 million elderly and disabled Americans. One study estimates that about 25% of the country's uninsured, or roughly another 11 million people, are eligible for government health care programs but unenrolled. However, extending coverage to all who are eligible remains a fiscal challenge. It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements. In 1997, the federal government also created the State Children's Health Insurance Program (SCHIP), a joint-federal state program to insure children in families who earn too much to qualify for Medicaid but cannot afford health insurance. SCHIP covered 6.6 million children in 2006, but the program is already facing funding shortfalls in many states. The government has also mandated access to emergency care regardless of insurance status and ability to pay through the Emergency Medical Treatment and Labor Act (EMTALA), passed in 1986, but EMTALA is an unfunded mandate.

Role of government in health care market
The cost impact of a mixed public-private system is subject to debate. Some commentators and economists observe that government programs bid up health care prices because they lack the financial incentives to bargain with health care providers. On the other hand, low reimbursement rates for Medicare and Medicaid have increased cost-shifting pressures on hospitals and doctors, who charge higher rates for the same services to private payers, which eventually affects health insurance rates. Furthermore, health maintenance organizations were declining before Congress passed the Health Maintenance Organization Act of 1973, heavily subsidizing the HMO business model.

Health care regulation and oversight
There are government institutes such as the Centers for Disease Control and Prevention that identify threats to public health. In addition there are regulatory bodies such as the FDA that identify and approve drugs for medical use and sale. Many healthcare organizations also voluntarily submit to inspection and certification by the Joint Commission on Accreditation of Hospital Organizations, JCAHO.

Delays in seeking care and increased use of emergency care
Uninsured Americans are less likely to have regular health care and use preventive services. They are more likely to delay seeking needed care, resulting in more medical crises and emergency hospitalizations, which are more expensive than ongoing treatment for such conditions as diabetes and high blood pressure. Uninsured patients are twice as likely to visit hospital emergency rooms as those with insurance; burdening a system meant for true emergencies with less-urgent care needs.

Shared costs of the uninsured
The costs of treating the uninsured must often be absorbed by providers as free care, passed on to the insured via cost shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.

Administrative costs
The health care system in the U.S. has a vast number of players &mdash; there are hundreds, if not thousands, of insurance companies in the U.S. This system has considerable administrative overhead, far greater than in nationalized, single-payer systems, such as Canada's. An oft-cited study by Harvard Medical School and the Canadian Institute for Health Information determined that some 31 percent of U.S. health care dollars, or more than $1,000 per person per year, went to health care administrative costs, nearly double the administrative overhead in Canada, on a percentage basis.

According to the insurance industry group America's Health Insurance Plans, administrative costs for private health insurance plans have averaged approximately 12 percent of premiums over the last 40 years. There has been a shift in the type and distribution of administrative expenses over that period. It appears that the cost of adjudicating claims has fallen. Insurers are spending more on other administrative activities, however, such as medical management, nurse help lines, and negotiating discounted fees with health care providers.

Coverage gaps
Enrollment rules in private and governmental programs result in millions of Americans going without health care coverage, including children. The most recent data available from the U.S. Census Bureau indicates that 47 million Americans (about 15.8% of the total population) had no health insurance coverage at some point during 2006. Most uninsured Americans are working-class persons 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. As health insurance rates rise and the population ages, those seeking to purchase health insurance directly are finding it increasingly difficult to do so, because some insurers are managing their risk by denying directly purchased coverage to individuals who have pre-existing conditions, some of them minor. 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." Although EMTALA certainly keeps alive many working-class people who are badly injured, 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.

Coverage gaps also occur among the insured population &mdash; one study by the Commonwealth Fund published in Health Affairs estimated that 16 million U.S. adults were underinsured in 2003. The study defined underinsurance as characterized by at least one of the following conditions: annual out-of-pocket medical expenses totaling 10% or more of income, or 5 percent or more among adults with incomes below 200% of the federal poverty level; or health plan deductibles equaling or exceeding 5% of income. The underinsured were significantly more likely than those with adequate insurance to forgo health care, report financial stress because of medical bills, and experience coverage gaps for such items as prescription drugs. The study found that underinsurance disproportionately affects those with lower incomes &mdash; 73% of the underinsured in the study population had annual incomes below 200% of the federal poverty level.

Health disparities among minorities
In the United States, health disparities are well documented in minority populations such as African Americans, Native Americans, Asian Americans, and Hispanics. When compared to whites, these minority groups have higher incidence of chronic diseases, higher mortality, and poorer health outcomes. Among the disease-specific examples of racial and ethnic disparities in the United States is the cancer incidence rate among African Americans, which is 25% higher than among whites. In addition, adult blacks and Hispanics have approximately twice the risk as whites of developing diabetes. Minorities also have higher rates of cardiovascular disease, HIV/AIDS, and infant mortality than whites.

Racism and health
Individual and institutional racism, along with the stigma of inferiority, can adversely affect health for minorites. Racism can also directly affect health in multiple ways. Residence in poor neighborhoods, racial bias in medical care, the stress of experiences of discrimination and the acceptance of the societal stigma of inferiority can have deleterious consequences for health.

Inequalities in health care
There is a great deal of research into inequalities in health care. In some cases these inequalities are a result of income and a lack of health insurance a barrier to receiving services. In other cases inequalities in health care reflect a systemic bias in the way medical procedures and treatments are prescribed for different ethnic groups. Raj Bhopal writes that the history of racism in science and medicine shows that people and institutions behave according to the ethos of their times. Nancy Krieger wrote that racism underlies unexplained inequities in health care, including treatment for heart disease, renal failure, bladder cancer, and pneumonia. Raj Bhopal writes that these inequalities have been documented in numerous studies. The consistent and repeated findings were that black Americans received less health care than white Americans —particularly when the care involved expensive new technology.

Healthcare regulatory costs
The healthcare industry is likely the most heavily regulated industry in the United States. A Cato Institute study suggests that this regulation provides benefits in the amount of $170 billion but costs the public up to $340 billion. The study found that the majority of the cost differential arises from medical malpractice, FDA regulations, and facilities regulations. Part of the cost arises from regulatory requirements that prevent technicians without medical degrees from performing treatment and diagnostic procedures that carry little risk.

Mental illness and the Emergency Medical Treatment and Active Labor Act (EMTALA)
Mentally ill patients present a challenge for emergency departments and hospitals. In accordance with the Emergency Medical Treatment and Active Labor Act, mentally ill patients who enter emergency rooms are evaluated for emergency medical conditions. Once mentally ill patients are medically stable, regional mental health agencies are contacted to evaluate them. Patients are evaluated as to whether they are a danger to themselves or others. Those meeting this criterion are admitted to a mental health facility to be further evaluated by a psychiatrist. Typically, mentally ill patients can be held for up to 72 hours, after which a court order is required. Since the late 1970s, the community-based care model has been encouraged within the U.S. rather than institutionalization.

Inequities
EMTALA is 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. 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. 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.

Prescription drug coverage
During the 1990s, the price of prescription drugs became a major issue in American politics as the prices of many new drugs increased exponentially, and many citizens discovered that neither the government nor their insurer would cover the cost of such drugs. In absolute currency, the U.S. spends the most on pharmaceuticals per capita in the world. However, national expenditures on pharmaceuticals accounted for only 12.9% of total healthcare costs, compared to an OECD average of 17.7% (2003 figures). Some 25% of out-of-pocket spending by individuals is for prescription drugs.

The U.S. government has taken the position (through the Office of the United States Trade Representative) that U.S. drug prices are rising because U.S. consumers are effectively subsidizing costs which drug companies cannot recover from consumers anywhere else (because many other countries use their bulk-purchasing power to aggressively negotiate drug prices). The U.S. position is that the governments of such 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. Currently, the U.S., as a purchaser of pharmaceuticals, negotiates some drug prices but is forbidden by law from negotiating drug prices for the Medicare program. Approximately one in five drugs that begin testing make it through the full approval process.

Health care debate
The United States is the only wealthy, industrialized nation that does not ensure universal coverage. There is currently an ongoing debate on the need to achieve universal coverage as well as the best methods for improving the U.S. health care system.