Live Free & Die
American Sickness
Under the microscope
Life expectancy vs. health expenditure, 1970 to 2022
The American health-care system is an anomaly among rich nations. It is a labyrinthine hybrid of public and private ownership, characterized by its staggering expense and its lack of universal coverage. Unlike its European counterparts, the United States has eschewed a single-payer model in favour of a market-based approach, where access is inextricably linked to employment and income.
The result is a system of paradoxes: it produces the world’s most advanced medical technology yet leaves millions vulnerable to financial ruin. While private enterprise drives innovation, the absence of a unified safety net creates profound disparities in care.
Health spending has maintained a steep climb
Contrary to the myth of unbridled American capitalism, the state is a massive payer in the health economy. The public sector is anchored by two leviathans: Medicare and Medicaid. Medicare, a federal program funded by payroll taxes, provides coverage for those aged 65 and older, as well as younger people with specific disabilities. It acts as a universal entitlements program for the elderly.
Cost control
Medicaid, by contrast, is a means-tested safety net for the poor, jointly funded by federal and state governments but administered locally. This results in a patchwork of eligibility; a poor adult may qualify in California but be rejected in Texas. Together, these programs stabilize the market and manage chronic conditions for the most vulnerable, yet they remain under constant budgetary pressure.
“It’s not that we’re getting more; it’s that we’re paying much more”
— Gerard F. Anderson, PhD
The Structure of Private Provision For the working-age population, the private sector reigns supreme. The majority of Americans obtain coverage through employer-sponsored plans—a quirk of history cemented by tax incentives. This market is dominated by a complex alphabet soup of plans. Health Maintenance Organisations (HMOs) act as gatekeepers, requiring referrals to control costs. Preferred Provider Organisations (PPOs) offer greater flexibility at a higher price, while Exclusive Provider Organisations (EPOs) occupy the middle ground. Pharmacy Benefit Managers (PBMs) seem to demand all the money.
In this system, insurers and providers engage in a perpetual tug-of-war over reimbursement rates. This dynamic drives the pricing of services and determines the availability of care, often leaving the patient to navigate a bewildering array of networks and deductibles.
Part 2: Money and Oversight
Average drug prices
are sky-high
One Lipitor pill in the U.S.
is the same as that of three
in Argentina
One Plavix pill in the U.S.
is the same as that of four
in Spain
One Nexium pill in the U.S.
is the same as that of eight
in France
Funding Sources Financing American health care is a multifaceted affair, drawing from a blend of taxes, premiums, and out-of-pocket spending. Taxation provides the bedrock, funding Medicare and Medicaid. Private premiums, paid by employers and employees, sustain the commercial market—a burden that has grown heavier despite the subsidies introduced by the Affordable Care Act (ACA).
Perhaps most punitive are out-of-pocket payments. Deductibles and co-payments have risen sharply, meaning that even the insured often hesitate to seek care for fear of the bill. This reliance on direct consumer payment raises uneasy questions about the trade-off between financial sustainability and equitable access.
23% of Americans have opted out of an ambulance ride due to the potential cost
Government Oversight While the market drives delivery, Washington casts a long regulatory shadow. The Food and Drug Administration (FDA) serves as the gatekeeper, rigorously testing pharmaceuticals and devices. Its stamp of approval is the gold standard for safety and efficacy, balancing consumer protection with the industry's hunger for innovation.
Meanwhile, the Centers for Medicare & Medicaid Services (CMS) exerts enormous soft power. By setting reimbursement standards for public programs, the CMS effectively sets the price floor for the entire industry. State regulators add another layer of oversight, licensing providers and enforcing local codes. It is a federalist approach to regulation, requiring intricate coordination to maintain standards across fifty states.
A System Under Strain The American system is beset by a chronic ailment: cost disease. Spending has consistently outpaced inflation, consuming nearly 18% of GDP, yet health outcomes often lag behind other OECD nations. This economic burden falls heavily on households and businesses alike.
Inequality remains the system’s most glaring failure. Access to care is dictated by geography, race, and class. Rural hospitals are shuttering, creating medical deserts, while minority communities face disproportionate barriers to high-quality treatment. Despite the presence of world-class institutions, the uneven quality of care, marred by medical errors and fragmented communication, remains a persistent drag on national well-being.
Recent Trends The Covid-19 pandemic acted as an accelerant for structural change. The most significant shift has been the mainstreaming of telemedicine. Digital health platforms, once a fringe convenience, became a lifeline during lockdowns and have since proved vital for reaching rural populations. The pandemic also laid bare the fragility of public health infrastructure, prompting a renewed focus on preparedness and equity.
Simultaneously, there is a slow but steady pivot toward "value-based care." This model seeks to reward providers for patient outcomes rather than the volume of services rendered. It is an attempt to align incentives, encouraging preventative medicine over expensive interventions.
The aging U.S. population will require more care
Future Directions and Conclusion The trajectory of American health care points toward a collision of technology and reform. Artificial intelligence promises to revolutionize diagnostics, while the expansion of telehealth could democratize access to specialists. However, technology alone cannot cure structural flaws. Future debates will likely focus on regulatory frameworks to curb costs and the potential expansion of public options to cover the uninsured.
Live free and die
Life expectancy in the US by income
In general, higher income leads to longer life expectancy, but income has little effect for life expectancy of Hispanic-Americans.
Does this Higher Spending Lead to Better Outcomes?
Higher healthcare spending can be beneficial if it results in better health outcomes. However, despite higher healthcare spending, America’s health outcomes are not any better than those in other developed countries. The United States actually performs worse in some common health metrics like life expectancy, infant mortality, unmanaged diabetes, and safety during childbirth.
A healthcare system with high costs and poor outcomes undermines our economy and threatens our long-term fiscal and economic well-being. Fortunately, there are opportunities to transform the healthcare system into one that produces higher quality care at a lower cost. For more information on potential reforms, check out the Peterson Center on Healthcare recommendations.
In conclusion, the United States possesses a health-care system of unique complexity. It is a mesh of public safety nets and private enterprise, producing both miracles and misery. As the nation grapples with an aging population and spiraling costs, the challenge will be to harness the efficiency of the market while ensuring that the fruits of medical progress are not reserved for the few. The path forward requires not just innovation, but a fundamental reckoning with how care is financed and delivered.
In 2022, the United States spent an estimated $12,742 per person on healthcare — the highest healthcare costs per capita across similar countries. For comparison, Switzerland was the second highest-spending country with $9,044 in healthcare costs per capita, while the average for wealthy OECD countries, excluding the United States, was only $6,850 per person. And it was more than double the $4,559 the U.S. spent per capita on health care in 2000. Such comparisons indicate that the United States spends a disproportionate amount on healthcare.