Health care in the United States

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See also: Health care reform in the United States, Health care reform debate in the United
States, Patient Protection and Affordable Care Act, and Health Care and Education
Reconciliation Act of 2010
Health care in the United
States
Public health care
• Federal Employees
Health Benefits
Program
• Indian Health Service
• Medicaid
• Medicare
• Military Health
System / TRICARE
• State Children's
Health Insurance
Program (SCHIP)
• Veterans Health
Administration

Private health coverage

• Health insurance in
the United States
• Consumer-driven
health care
o Flexible
spending
account
(FSA)
o Health
reimburseme
nt account
o Health
savings
account
o High-
deductible
health plan
(HDHP)
o Medical
 savings
account
• Managed care
• Health maintenance
organization (HMO)
• Preferred provider
organization (PPO)
• Medical underwriting

Health care law

• Emergency Medical
Treatment and Active
Labor Act (1986)
• Health Insurance
Portability and
Accountability Act
(1996)
• Medicare Prescription
Drug, Improvement,
and Modernization
Act (2003)
• Patient Safety and
Quality Improvement
Act (2005)
• Patient Protection and
Affordable Care Act
(2010)

State/municipal level reform

• Fair Share Health
Care Act
• Healthy Howard
• Healthy San Francisco
• Massachusetts health
care reform

• Oregon Health Plan

This box: view · talk · edit
Health care reform in the
United States
• Healthcare Reform in
USA
• Patient Protection and
Affordable Care Act
• Healthcare Bill
(PPACA): Provisions
• Debate over reform
• History
• Public opinion
• Rationing
• Uninsured
• United States National
 Health Care Act
(H.R. 676: the lead
legislative proposal;
formerly the
"Expanded and
Improved Medicare for
All Act")

[show]More
Information

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Health care in the United States is provided by many separate legal entities. Health care
facilities are largely owned and operated by the private sector. Health insurance is
primarily provided by the private sector, with the exception of programs such as
Medicare, Medicaid, TRICARE, the Children's Health Insurance Program, and the
Veterans Health Administration.

The U.S. Census Bureau reported that a record 50.7 million Americans—16.7% of the
population—were uninsured in 2009.[1] More money per person is spent on health care in
the USA than in any other nation in the world,[2][3] and a greater percentage of total
income in the nation is spent on health care in the USA than in any United Nations
member state except for East Timor.[3] Although not all people are insured, the USA has
the third highest public healthcare expenditure per capita, because of the high cost of
medical care in the country.[clarification needed][4][5] A 2001 study in five states found that
medical debt contributed to 46.2% of all personal bankruptcies and in 2007, 62.1% of
filers for bankruptcies claimed high medical expenses.[6] Since then, health costs and the
numbers of uninsured and underinsured have increased.[7]

Active debate about health care reform in the United States concerns questions of a right
to health care, access, fairness, efficiency, cost, choice, value, and quality. Some have
argued that the system does not deliver equivalent value for the money spent. The USA
pays twice as much yet lags behind other wealthy nations in such measures as infant
mortality and life expectancy, though the relation between these statistics to the system
itself is debated. Currently, the USA has a higher infant mortality rate than most of the
world's industrialized nations.[nb 1][8] The United States life expectancy lags 42nd in the
world, after some other industrialized nations, lagging last of the G5 (Japan, France,
Germany, UK, USA) and just after Chile (35th) and Cuba (37th).[9]

Life expectancy in the USA is 48th in the world, below most developed nations and some
developing nations. It is below the European Union which doesn't have a health care
system either.[10][11] The World Health Organization (WHO), in 2000, ranked the U.S.
health care system as the highest in cost, first in responsiveness, 37th in overall
performance, and 72nd by overall level of health (among 191 member nations included in
the study).[12][13] The Commonwealth Fund ranked the United States last in the quality of
health care among similar countries,[14] and notes U.S. care costs the most.[15]
The USA is the "only wealthy, industrialized nation that does not ensure that all citizens
have coverage" (i.e., some kind of private or public health insurance).[16] In 2004 the U.S.
a Institute of Medicine report observed "lack of health insurance causes roughly 18,000
unnecessary deaths every year in the United States."[16] while a 2009 Harvard study
estimated that 44,800 excess deaths occurred annually due to lack of health insurance.[17]

On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) became
law, providing for major changes in health insurance.[18]

Contents
[hide]

• 1 Health care providers

o 1.1 Facilities
o 1.2 Medical products, research and development
• 2 Health care spending
o 2.1 Impact on U.S. economic productivity
• 3 Health care payment
o 3.1 Private
o 3.2 Public
o 3.3 The uninsured
o 3.4 Role of government in health care market
• 4 Health care regulation and oversight
o 4.1 "Certificates of need" for hospitals
o 4.2 Licensing of providers
 4.2.1 Emergency Medical Treatment and Active Labor Act
(EMTALA)
• 5 Overall system effectiveness compared to other countries
• 6 System efficiency and equity
o 6.1 Efficiency
 6.1.1 Value for money
 6.1.2 Delays in seeking care and increased use of emergency care
 6.1.3 Shared costs of the uninsured
 6.1.4 Variations in provider practices
 6.1.5 Care coordination
 6.1.6 Administrative costs
o 6.2 Third-party payment problem and consumer-driven insurance
o 6.3 Overall costs
o 6.4 Equity
 6.4.1 Coverage
 6.4.2 Mental health
 6.4.3 Medical underwriting and the uninsurable
 6.4.4 Demographic differences
• 7 Drug efficacy and safety
 o 7.1 The impact of drug companies
• 8 Political issues
o 8.1 Prescription drug prices
o 8.2 Health care debate
• 9 Health Care Reform
• 10 Health Insurance Coverage of Immigrants
• 11 See also
• 12 References
• 13 Notes
• 14 Further reading

• 15 External links

[edit] Health care providers

Main article: Health care provider

[edit] Facilities

Main article: Medical centers in the United States

In the United States, ownership of the health care system is mainly in private hands,
though federal, state, county, and city governments also own certain facilities.

The non-profit hospitals share of total hospital capacity has remained relatively stable
(about 70%) for decades.[19] There are also privately owned for-profit hospitals as well as
government hospitals in some locations, mainly owned by county and city governments.

There is no nationwide system of government-owned medical facilities open to the

general public but there are local government-owned medical facilities open to the
general public. The federal Department of Defense operates field hospitals as well as
permanent hospitals (the Military Health System), to provide military-funded care to
active military personnel.

The federal Veterans Health Administration operates VA hospitals open only to veterans,
though veterans who seek medical care for conditions they did not receive while serving
in the military are charged for services. The Indian Health Service operates facilities open
only to Native Americans from recognized tribes. These facilities, plus tribal facilities
and privately contracted services funded by IHS to increase system capacity and
capabilities, provide medical care to tribespeople beyond what can be paid for by any
private insurance or other government programs.[20]

Hospitals provide some outpatient care in their emergency rooms and specialty clinics,
but primarily 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.

[edit] Medical products, research and development

As in most other countries, the manufacture and production of pharmaceuticals and

medical devices is carried out by private companies. The research and development of
medical devices and pharmaceuticals is supported by both public and private sources of
funding. In 2003, research and development expenditures were approximately $95 billion
with $40 billion coming from public sources and $55 billion coming from private
sources.[21][22] These investments into medical research have made the United States the
leader in medical innovation, measured either in terms of revenue or the number of new
drugs and devices introduced.[23][24] In 2006, the United States accounted for three quarters
of the world’s biotechnology revenues and 82% of world R&D spending in
biotechnology.[23][24] According to multiple international pharmaceutical trade groups, the
high cost of patented drugs in the U.S. has encouraged substantial reinvestment in such
research and development.[23][24][25]

Economist Dean Baker finds that the development of drugs relies heavily upon research
funded by the public, and he suggests that savings to consumers would be immense if
public funding increased to 100% of R&D, thus eliminating drug companies'
justifications for monopoly pricing rights.[26]

[edit] Health care spending

U.S. healthcare costs exceed those of other countries, relative to the size of the economy
or GDP.
Total U.S. healthcare spending as a percent of U.S. GDP (gross domestic product).[27]
Click on chart for data.

Current estimates put U.S. health care spending at approximately 16% of GDP, second
highest to East Timor (Timor-Leste) among all United Nations member nations.[3] The
Health and Human Services Department expects that the health share of GDP will
continue its historical upward trend, reaching 19.5% of GDP by 2017.[28][29] Of each dollar
spent on health care in the United States 31% goes to hospital care, 21% goes to
physician/clinical services, 10% to pharmaceuticals, 4% to dental, 6% to nursing homes
and 3% to home health care, 3% for other retail products, 3% for government public
health activities, 7% to administrative costs, and 7% to investment, and 6% to other
professional services (physical therapists, optometrists, etc).[30]

The Office of the Actuary (OACT) of the Centers for Medicare and Medicaid Services
publishes data on total health care spending in the United States, including both historical
levels and future projections.[31] In 2007, the U.S. spent $2.26 trillion on health care, or
$7,439 per person, up from $2.1 trillion, or $7,026 per capita, the previous year.[32]
Spending in 2006 represented 16% of GDP, an increase of 6.7% over 2004 spending.
Growth in spending is projected to average 6.7% annually over the period 2007 through
2017.
In 2009, the United States federal, state and local governments, corporations and
individuals, together spent $2.5 trillion, $8,047 per person, on health care. This amount
represented 17.3% of the GDP, up from 16.2% in 2008.[33] Health insurance costs are
rising faster than wages or inflation,[34] and medical causes were cited by about half of
bankruptcy filers in the United States in 2001.[35]

The Congressional Budget Office has found that "about half of all growth in health care
spending in the past several decades was associated with changes in medical care made
possible by advances in technology." Other factors included higher income levels,
changes in insurance coverage, and rising prices.[36] Hospitals and physician spending
take the largest share of the health care dollar, while prescription drugs take about 10%.
[37]
The use of prescription drugs is increasing among adults who have drug coverage.[38]

One analysis of international spending levels in the year 2000 found that while the U.S.
spends more on health care than other countries in the Organisation for Economic Co-
operation and Development (OECD), the use of health care services in the U.S. is below
the OECD median by most measures. The authors of the study concluded that the prices
paid for health care services are much higher in the U.S.[39] Economist Hans Sennholz has
argued that the Medicare and Medicaid programs may be the main reason for rising
health care costs in the U.S.[40]

Health care spending in the United States is concentrated. An analysis of the 1996
Medical Expenditure Panel Survey found that the 1% of the population with the highest
spending accounted for 27% of aggregate health care spending. The highest-spending 5%
of the population accounted for more than half of all spending. These patterns were stable
through the 1970s and 1980s, and some data suggest that they may have been typical of
the mid-to-early 20th century as well.[41]

One study by the Agency for Healthcare Research and Quality (AHRQ) found significant
persistence in the level of health care spending from year to year. Of the 1% of the
population with the highest health care spending in 2002, 24.3% maintained their ranking
in the top 1% in 2003. Of the 5% with the highest spending in 2002, 34% maintained that
ranking in 2003. Individuals over age 45 were disproportionately represented among
those who were in the top decile of spending for both years.[42]
Health care cost rise based on total expenditure on health as % of GDP. Countries are
USA, Germany, Austria, Switzerland, United Kingdom and Canada.

Seniors spend, on average, far more on health care costs than either working-age adults or
children. The pattern of spending by age was stable for most ages from 1987 through
2004, with the exception of spending for seniors age 85 and over. Spending for this group
grew less rapidly than that of other groups over this period.[43]

The 2008 edition of the Dartmouth Atlas of Health Care[44] found that providing Medicare
beneficiaries with severe chronic illnesses with more intense health care in the last two
years of life—increased spending, more tests, more procedures and longer hospital stays
—is not associated with better patient outcomes. There are significant geographic
variations in the level of care provided to chronically ill patients, only 4% of which are
explained by differences in the number of severely ill people in an area. Most of the
differences are explained by differences in the amount of "supply-sensitive" care
available in an area. Acute hospital care accounts for over half (55%) of the spending for
Medicare beneficiaries in the last two years of life, and differences in the volume of
services provided is more significant than differences in price. The researchers found no
evidence of "substitution" of care, where increased use of hospital care would reduce
outpatient spending (or vice versa).[44][45]

Increased spending on disease prevention is often suggested as a way of reducing health

care spending.[46] Research suggests, however, that in most cases prevention does not
produce significant long-term costs savings.[46] Preventive care is typically provided to
many people who would never become ill, and for those who would have become ill is
partially offset by the health care costs during additional years of life.[46]

In September 2008 The Wall Street Journal reported that consumers were reducing their
health care spending in response to the current economic slow-down. Both the number of
prescriptions filled and the number of office visits dropped between 2007 and 2008. In
one survey, 22% of consumers reported going to the doctor less often, and 11% reported
buying fewer prescription drugs.[47]

In 2009, the average private room in a nursing home cost $219 daily. Assisted living
costs averaged $3,131 monthly. Home health aides averaged $21 per hour. Adult day care
services averaged $67 daily.[48]

[edit] Impact on U.S. economic productivity

On March 1, 2010, billionaire investor Warren Buffett said that the high costs paid by
U.S. companies for their employees’ health care put them at a competitive disadvantage.
He compared the roughly 17% of GDP spent by the U.S. on health care with the 9% of
GDP spent by much of the rest of the world, noted that the U.S. has fewer doctors and
nurses per person, and said, “[t]hat kind of a cost, compared with the rest of the world, is
like a tapeworm eating at our economic body.”[49]
[edit] Health care payment
Doctors and hospitals are generally funded by payments from patients and insurance
plans in return for services rendered.

Around 84.7% of citizens have some form of health insurance; either through their
employer or the employer of their spouse or parent (59.3%), purchased individually
(8.9%), or provided by government programs (27.8%; there is some overlap in these
figures).[50] All government health care programs have restricted eligibility, and there is
no government health insurance company which covers all citizens. Americans without
health insurance coverage in 2007 totaled 15.3% of the population, or 45.7 million
people.[50]

Among those whose employer pays for health insurance, the employee may be required
to contribute part of the cost of this insurance, while the employer usually chooses the
insurance company and, for large groups, negotiates with the insurance company.

In 2004, private insurance paid for 36% of personal health expenditures, private out-of-
pocket 15%, federal government 34%, state and local governments 11%, and other
private funds 4%.[51] Due to "a dishonest and inefficient system" that sometimes inflates
bills to ten times the actual cost, even insured patients can be billed more than the real
cost of their care.[52]

Insurance for dental and vision care (except for visits to ophthalmologists, which are
covered by regular health insurance) is usually sold separately. Prescription drugs are
often handled differently than medical services, including by the government programs.
Major federal laws regulating the insurance industry include COBRA and HIPAA.

Individuals with private or government insurance are limited to medical facilities which
accept the particular type of medical insurance they carry. Visits to facilities outside the
insurance program's "network" are usually either not covered or the patient must bear
more of the cost. Hospitals negotiate with insurance programs to set reimbursement rates;
some rates for government insurance programs are set by law. The sum paid to a doctor
for a service rendered to an insured patient is generally less than that paid "out of pocket"
by an uninsured patient. In return for this discount, the insurance company includes the
doctor as part of their "network", which means more patients are eligible for lowest-cost
treatment there. The negotiated rate may not cover the cost of the service, but providers
(hospitals and doctors) can refuse to accept a given type of insurance, including Medicare
and Medicaid. Low reimbursement rates have generated complaints from providers, and
some patients with government insurance have difficulty finding nearby providers for
certain types of medical services.

Charity care for those who cannot pay is sometimes available, and is usually funded by
non-profit foundations, religious orders, government subsidies, or services donated by the
employees. Massachusetts and New Jersey have programs where the state will pay for
health care when the patient cannot afford to do so.[53] The City and County of San
Francisco is also implementing a citywide health care program for all uninsured
residents, limited to those whose incomes and net worth are below an eligibility
threshold. Some cities and counties operate or provide subsidies to private facilities open
to all regardless of the ability to pay, but even here patients who can afford to pay or who
have insurance are generally charged for the services they use.

The Emergency Medical Treatment and Active Labor Act requires virtually all hospitals
to accept all patients, regardless of the ability to pay, for emergency room care. The act
does not provide access to non-emergency room care for patients who cannot afford to
pay for health care, nor does it provide the benefit of preventive care and the continuity
of a primary care physician. Emergency health care is generally more expensive than an
urgent care clinic or a doctor's office visit, especially if a condition has worsened due to
putting off needed care. Emergency rooms are typically at, near, or over capacity. Long
wait times have become a problem nationally, and in urban areas some ERs are put on
"diversion" on a regular basis, meaning that ambulances are directed to bring patients
elsewhere.[54]

[edit] Private

This section needs additional citations for verification.

Please help improve this article by adding reliable references. Unsourced material may be
challenged and removed. (January 2009)

Share by insurance coverage type, for those under 65 years of age

Most Americans (59.3%) receive their health insurance coverage through an employer
(which includes both private as well as civilian public-sector employees) under group
coverage, 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.[34] 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.[34] 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.

Just less than 9% of the population purchases individual health care insurance.[50]
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 procedure (a copayment). Private insurance accounts for 35% of total health
spending in the United States, by far the largest share among OECD countries. Beside the
United States, Canada and France are the two other OECD countries where private
insurance represents more than 10% of total health spending.[55]

Provider networks can be used to reduce costs by negotiating favorable fees from
providers, selecting cost effective providers, and creating financial incentives for
providers to practice more efficiently.[56] A survey issued in 2009 by America's Health
Insurance Plans found that patients going to out-of-network providers are sometimes
charged extremely high fees.[57][58]

Defying many analysts' expectations, PPOs have gained market share at the expense of
HMOs over the past decade.[59]

Just as the more loosely managed PPOs have edged out HMOs, HMOs themselves have
also evolved towards less tightly managed models. The first HMOs in the U.S., such as
Kaiser Permanente in Oakland, California, and the Health Insurance Plan (HIP) in New
York, were "staff-model" HMOs, which owned their own health care facilities and
employed the doctors and other health care professionals who staffed them. The name
health maintenance organization stems from the idea that the HMO would make it its job
to maintain the enrollee's health, rather than merely to treat illnesses. In accordance with
this mission, managed care organizations typically cover preventive health care. Within
the tightly integrated staff-model HMO, the HMO can develop and disseminate
guidelines on cost-effective care, while the enrollee's primary care doctor can act as
patient advocate and care coordinator, helping the patient negotiate the complex health
care system. Despite a substantial body of research demonstrating that many staff-model
HMOs deliver high-quality and cost-effective care, they have steadily lost market share.
They have been replaced by more loosely managed networks of providers with whom
health plans have negotiated discounted fees. It is common today for a physician or
hospital to have contracts with a dozen or more health plans, each with different referral
networks, contracts with different diagnostic facilities, and different practice guidelines.

[edit] Public

Government programs directly cover 27.8% of the population (83 million),[50] including
the elderly, disabled, children, veterans, and some of the poor, and federal law mandates
public access to emergency services regardless of ability to pay. Public spending
accounts for between 45% and 56.1% of U.S. health care spending.[60] 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.[61]

Government funded programs include:

 • Medicare, generally covering citizens and long-term residents 65 years and older
and the disabled.
• Medicaid, generally covering low income people in certain categories, including
children, pregnant women, and the disabled. (Administered by the states.)
• State Children's Health Insurance Program, which provides health insurance for
low-income children who do not qualify for Medicaid. (Administered by the
states, with matching state funds.)
• Various programs for federal employees, including TRICARE for military
personnel (for use in civilian facilities)
• The Veterans Administration, which provides care to veterans, their families, and
survivors through medical centers and clinics.[62][63]
• National Institutes of Health treats patients who enroll in research for free.
• Government run community clinics
• Medical Corps of various branches of the military.
• Certain county and state hospitals

The exemption of employer-sponsored health benefits from federal income and payroll
taxes distorts the health care market.[64] The U.S. government, unlike some other
countries, does not treat employer funded health care benefits as a taxable benefit in kind
to the employee. The value of the lost tax revenue from a benefits in kind tax is an
estimated $150 billion a year.[65] Some[who?] regard this as being disadvantageous to people
who have to buy insurance in the individual market which must be paid from income
received after tax.

Health insurance benefits are an attractive way for employers to increase the salary of
employees as they are nontaxable. As a result, 65% of the non-elderly population and
over 90% of the privately insured non-elderly population receives health insurance at the
workplace.[66] Additionally, most economists agree that this tax shelter increases
individual demand for health insurance, leading some to claim that it is largely
responsible for the rise in health care spending.[66]

In addition the government allows full tax shelter at the highest marginal rate to investors
in health savings accounts (HSAs). Some have argued that this tax incentive adds little
value to national health care as a whole because the most wealthy in society tend also to
be the most healthy. Also it has been argued, HSAs segregate the insurance pools into
those for the wealthy and those for the less wealthy which thereby makes equivalent
insurance cheaper for the rich and more expensive for the poor.[67] However, one
advantage of health insurance accounts is that funds can only be used towards certain
HSA qualified expenses, including medicine, doctor's fees, and Medicare Parts A and B.
Funds cannot be used towards expenses such as cosmetic surgery.[68]

There are also various state and local programs for the poor. In 2007, Medicaid provided
health care coverage for 39.6 million low-income Americans (although Medicaid covers
approximately 40% of America's poor),[69] and Medicare provided health care coverage
for 41.4 million elderly and disabled Americans.[50] Enrollment in Medicare is expected to
reach 77 million by 2031, when the baby boom generation is fully enrolled.[70]
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.[71] 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 that earn too much to
qualify for Medicaid but cannot afford health insurance.[72] SCHIP covered 6.6 million
children in 2006,[73] but the program is already facing funding shortfalls in many states.[74]
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,[75] but EMTALA is an unfunded mandate.[76]

[edit] The uninsured

Main article: Uninsured in the United States

Some Americans do not qualify for government-provided health insurance, are not
provided health insurance by an employer, and are unable to afford, cannot qualify for, or
choose not to purchase, private health insurance. When charity or "uncompensated" care
is not available, they sometimes simply go without needed medical treatment. This
problem has become a source of considerable political controversy on a national level.

According to the US Census Bureau, in 2007, 45.7 million people in the U.S. (15.3% of
the population) were without health insurance for at least part of the year. This number
was down slightly from the previous year, with nearly 3 million more people receiving
government coverage and a slightly lower percentage covered under private plans than
the year previous.[50] Other studies have placed the number of uninsured in the years
2007–2008 as high as 86.7 million, about 29% of the US population.[77][78]

Among the uninsured population, the Census Bureau says, nearly 37 million were
employment-age adults (ages 18 to 64), and more than 27 million worked at least part
time. About 38% of the uninsured live in households with incomes of $50,000 or more.[50]
According to the Census Bureau, nearly 36 million of the uninsured are legal U.S
citizens. Another 9.7 million are non-citizens, but the Census Bureau does not distinguish
in its estimate between legal non-citizens and illegal immigrants.[50] 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).[79] Extending coverage to all who are eligible remains a fiscal challenge.[80]

A 2003 study in Health Affairs estimated that uninsured people in the U.S. received
approximately $35 billion in uncompensated care in 2001.[81] 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% 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% and would raise health care’s share of GDP by less than one
percentage point, the study concluded.[82] 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."[83]

[edit] Role of government in health care market

Numerous publicly funded health care programs help to provide for the elderly, disabled,
military service families and veterans, children, and the poor,[84] and federal law ensures
public access to emergency services regardless of ability to pay;[85] however, a system of
universal health care has not been implemented nation-wide. However, as the OECD has
pointed out, the total U.S. public expenditure for this limited population would, in most
other OECD countries, be enough for the government to provide primary health
insurance for the entire population.[55] Although the federal Medicare program and the
federal-state Medicaid programs possess some monopsonistic purchasing power, the
highly fragmented buy side of the U.S. health system is relatively weak by international
standards, and in some areas, some suppliers such as large hospital groups have a virtual
monopoly on the supply side.[86] In most OECD countries, there is a high degree of public
ownership and public finance.[87] The resulting economy of scale in providing health care
services appears to enable a much tighter grip on costs.[88] The U.S., as a matter of oft-
stated public policy, largely does not regulate prices of services from private providers,
assuming the private sector to do it better.[89]

Massachusetts has adopted a universal health care system through the Massachusetts
2006 Health Reform Statute. It mandates that all residents who can afford to do so
purchase health insurance, provides subsidized insurance plans so that nearly everyone
can afford health insurance, and provides a "Health Safety Net Fund" to pay for necessary
treatment for those who cannot find affordable health insurance or are not eligible.[90]

In July 2009, Connecticut passed into law a plan called SustiNet, with the goal of
achieving health-care coverage of 98% of its residents by 2014.[91]

[edit] Health care regulation and oversight

Further information: American Board of Medical Specialties, United States Medical
Licensing Examination, and National Association of Insurance Commissioners

Healthcare is subject to extensive regulation at both the federal and the state level, much
of which "arose haphazardly".[92] Under this system, the federal government cedes
primary responsibility to the states under the McCarran-Ferguson Act. Essential
regulation includes the licensure of health care providers at the state level and the testing
and approval of pharmaceuticals and medical devices by the Food and Drug
Administration, and laboratory testing. These regulations are designed to protect
consumers from ineffective or fraudulent healthcare. Additionally, states regulate the
health insurance market and they often have laws which require that health insurance
companies cover certain procedures,[93] although state mandates generally do not apply to
the self-funded health care plans offered by large employers, which exempt from state
laws under preemption clause of the Employee Retirement Income Security Act. In 2010,
the Patient Protection and Affordable Care Act (PPACA) was passed, and includes
various new regulations, with one of the most notable being a health insurance mandate
which requires all citizens to purchase health insurance. While not regulation per se, the
federal government also has a major influence on the healthcare market through its
payments to providers under Medicare and Medicard, which in some cases are used as a
reference point in the negotiations between medical providers and insurance companies.
[92]

At the federal level, United States Department of Health and Human Services oversees
the various federal agencies involved in health care. The health agencies are a part of the
United States Public Health Service, and include the Food and Drug Administration,
which certifies the safety of food, effectiveness of drugs and medical products, the
Centers for Disease Prevention, which prevents disease, premature death, and disability,
the Agency of Health Care Research and Quality, the Agency Toxic Substances and
Disease Registry, which regulates hazardous spills of toxic substances, and the National
Institutes of Health, which conducts medical research.

State governments maintain state health departments, and local governments (counties
and municipalities) often have their own health departments, usually branches of the state
health department. Regulations of a state board may have executive and police strength to
enforce state health laws. In some states, all members of state boards must be health care
professionals. Members of state boards may be assigned by the governor or elected by the
state committee. Members of local boards may be elected by the mayor council. The
McCarran–Ferguson Act, which cedes regulation to the states, does not itself regulate
insurance, nor does it mandate that states regulate insurance. "Acts of Congress" that do
not expressly purport to regulate the "business of insurance" will not preempt state laws
or regulations that regulate the "business of insurance." The Act also provides that federal
anti-trust laws will not apply to the "business of insurance" as long as the state regulates
in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and
intimidation. By contrast, most other federal laws will not apply to insurance whether the
states regulate in that area or not.

Self-policing of providers by providers is a major part of oversight. Many health care

organizations also voluntarily submit to inspection and certification by the Joint
Commission on Accreditation of Hospital Organizations, JCAHO. Providers also
undergo testing to obtain board certification attesting to their skills. A report issued by
Public Citizen in April 2008 found that, for the third year in a row, the number of serious
disciplinary actions against physicians by state medical boards declined from 2006 to
2007, and called for more oversight of the boards.[94]
The Centers for Medicare and Medicaid Services (CMS) publishes an on-line searchable
database of performance data on nursing homes.[95]

The regulation is controversial. In 2004, conservative think tank Cato Institute published
a study which concluded that regulation provides benefits in the amount of $170 billion
but costs the public up to $340 billion.a that health care is the most heavily regulated
industry in the United States.[96] The study concluded that the majority of the cost
differential arises from medical malpractice, U.S. Food and Drug Administration (FDA)
regulations, and facilities regulations.[96]

[edit] "Certificates of need" for hospitals

In 1978, the federal government required that all states implement Certificate of Need
(CON) programs for cardiac care, meaning that hospitals had to apply and receive
certificates prior to implementing the program; the intent was to reduce cost by reducing
duplicate investments in facilities.[97] It has been observed that these certificates could be
used to increase costs through weakened competition.[92] Many states removed the CON
programs after the federal requirement expired in 1986, but some states still have these
programs.[97] Empirical research looking at the costs in areas where these programs have
been discontinued have not found a clear effect on costs, and the CON programs could
decrease costs because of reduced facility construction or increase costs due to reduced
competition.[97]

[edit] Licensing of providers

American Medical Association (AMA) has lobbied the government to highly limit
physician education since 1910, currently at 100,000 doctors per year,[98] which has led to
a shortage of doctors[99] and physicians' wages in the U.S. are double those in the Europe,
which is a major reason for the more expensive health care.[100]

An even bigger problem may be that the doctors are paid for procedures instead of
results.[100]

AMA has also aggressively lobbied for many restrictions that require doctors to carry out
operations that might be carried out by cheaper workforce. For example, in 1995, 36
states banned or restricted midwifery even though it delivers equally safe care to that by
doctors, according to studies. The regulation lobbied by AMA has decreased the amount
and quality of health care, according to the consensus of economist: the restrictions do
not add to quality, they decrease the supply of care.[98][101] Moreover, psychologists, nurses
and pharmacologists are not allowed to prescribe medicines.[clarification needed] Previously
nurses were not even allowed to vaccinate the patients without direct supervision by
doctors.

[edit] Emergency Medical Treatment and Active Labor Act (EMTALA)

Main article: Emergency Medical Treatment and Active Labor Act

EMTALA, enacted by the federal government in 1986, requires that hospital emergency
departments treat emergency conditions of all patients regardless of their ability to pay
and is considered a critical element in the "safety net" for the uninsured, but established
no direct payment mechanism for such care. Indirect payments and reimbursements
through federal and state government programs have never fully compensated public and
private hospitals for the full cost of care mandated by EMTALA. In fact, more than half
of all emergency care in the U.S. now goes uncompensated.[102] According to some
analyses, EMTALA is an unfunded mandate that has contributed to financial pressures on
hospitals in the last 20 years, causing them to consolidate and close facilities, and
contributing to emergency room overcrowding. According to the Institute of Medicine,
between 1993 and 2003, emergency room visits in the U.S. grew by 26%, while in the
same period, the number of emergency departments declined by 425.[103]

Mentally ill patients present a unique challenge for emergency departments and hospitals.
In accordance with EMTALA, 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.[citation needed]

[edit] Overall system effectiveness compared to other

countries
The CIA World Factbook ranked the United States 41st in the world for infant mortality
rate[104] and 46th for total life expectancy.[105] A study found that between 1997 and 2003,
preventable deaths declined more slowly in the United States than in 18 other
industrialized nations.[106] For example, the United States was listed as 37th for life
expectancy and 41st in low birth weight.[107]

The Organisation for Economic Co-operation and Development (OECD) found that the
United States ranked poorly in terms of Years of potential life lost (YPLL), a statistical
measure of years of life lost under the age of 70 that were amenable to being saved by
health care. Among OECD nations for which data are available, the United States ranked
third last for the health care of women (after Mexico and Hungary) and fifth last for men
(Slovakia and Poland were also worse). See the table and source at YPLL for details.

Recent studies find growing gaps in life expectancy based on income and geography. In
2008, a government-sponsored study found that life expectancy declined from 1983 to
1999 for women in 180 counties, and for men in 11 counties, with most of the life
expectancy declines occurring the Deep South, Appalachia, along the Mississippi River,
in the Southern Plains and in Texas. The gap is growing between rich and poor and by
educational level, but narrowing between men and women and by race.[108] Another study
found that the mortality gap between the well-educated and the poorly educated widened
significantly between 1993 and 2001 for adults ages 25 through 64; the authors
speculated that risk factors such as smoking, obesity and high blood pressure may lie
behind these disparities.[109] In 2011 the United States National Research Council
forecasted that deaths attributed to smoking, on the decline in the US, will drop
dramatically, improving life expectancy; it also suggested that 1/5 to 1/3 of the life
expectancy difference can be attributed to obesity which is the worst in the world and has
been increasing.[110] In an analysis of breast cancer, colorectal cancer, and prostate cancer
diagnosed during 1990–1994 in 31 countries, the United States had the highest five-year
relative survival rate for breast cancer and prostate cancer, although survival was
systematically and substantially lower in black U.S. men and women.[111]

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 U.S. health care system first in responsiveness, but 37th in overall
performance and 72nd by overall level of health (among 191 member nations included in
the study).[12][13] The WHO study has been criticized by the free market advocate David
Gratzer because "fairness in financial contribution" was used as an assessment factor,
marking down countries with high per-capita private or fee-paying health treatment.[112]
The WHO study has been criticized, in an article published in Health Affairs, for its
failure to include the satisfaction ratings of the general public.[113] The study found that
there was little correlation between the WHO rankings for health systems and the stated
satisfaction of citizens using those systems.[114] Some countries, such as Italy and Spain,
which were given the highest ratings by WHO were ranked poorly by their citizens while
other countries, such as Denmark and Finland, were given low scores by WHO but had
the highest percentages of citizens reporting satisfaction with their health care systems.
[114]
WHO staff, however, say that the WHO analysis does reflect system
"responsiveness" and argue that this is a superior measure to consumer satisfaction,
which is influenced by expectations.[115]

A report released in April 2008 by the Foundation for Child Development, which studied
the period from 1994 through 2006, found mixed results for the health of children in the
U.S. Mortality rates for children ages 1 through 4 dropped by a third, and the percentage
of children with elevated blood lead levels dropped by 84%. The percentage of mothers
who smoked during pregnancy also declined. On the other hand, both obesity and the
percentage of low-birth weight babies increased. The authors note that the increase in
babies born with low birth weights can be attributed to women delaying childbearing and
the increased use of fertility drugs.[116][117]

[edit] System efficiency and equity

Variations in the efficiency of health care delivery can cause variations in outcomes. The
Dartmouth Atlas Project, for instance, reported that, for over 20 years, marked variations
in how medical resources are distributed and used in the United States were accompanied
by marked variations in outcomes.[118]

[edit] Efficiency
[edit] Value for money

A study of international health care spending levels published in the health policy journal
Health Affairs in the year 2000 found that the U.S. spends substantially more on health
care than any other country in the Organization for Economic Co-operation and
Development (OECD), and that the use of health care services in the U.S. is below the
OECD median by most measures. The authors of the study conclude that the prices paid
for health care services are much higher in the U.S.[39]

[edit] 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 care, resulting in more medical crises,
which are more expensive than ongoing treatment for such conditions as diabetes and
high blood pressure. A 2007 study published in JAMA concluded that uninsured people
were less likely than the insured to receive any medical care after an accidental injury or
the onset of a new chronic condition. The uninsured with an injury were also twice as
likely as those with insurance to have received none of the recommended follow-up care,
and a similar pattern held for those with a new chronic condition.[119] 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.[120]

In 2008 researchers with the American Cancer Society found that individuals who lacked
private insurance (including those covered by Medicaid) were more likely to be
diagnosed with late-stage cancer than those who had such insurance.[121]

[edit] Shared costs of the uninsured

Main article: Uninsured in the United States

The costs of treating the uninsured must often be absorbed by providers as charity care,
passed on to the insured via cost shifting and higher health insurance premiums, or paid
by taxpayers through higher taxes.[122] However, hospitals and other providers are
reimbursed for the cost of providing uncompensated care via a federal matching fund
program. Each state enacts legislation governing the reimbursement of funds to
providers. In Missouri, for example, providers assessments totaling $800 million are
matched — $2 for each assessed $1 — to create a pool of approximately $2 billion. By
federal law these funds are transferred to the Missouri Hospital Association for
disbursement to hospitals for the costs incurred providing uncompenstated care including
Disproportionate Share Payments (to hospitals with high quantities of uninsured
patients), Medicaid shortfalls, Medicaid managed care payments to insurance companies
and other costs incurred by hospitals.[123] In New Hampshire, by statute, reimbursable
uncompensated care costs shall include: charity care costs, any portion of Medicaid
patient care costs that are unreimbursed by Medicaid payments, and any portion of bad
debt costs that the commissioner determines would meet the criteria under 42 U.S.C.
section 1396r-4(g) governing hospital-specific limits on disproportionate share hospital
payments under Title XIX of the Social Security Act.[124]

A report published by the Kaiser Family Foundation in April 2008 found that economic
downturns place a significant strain on state Medicaid and SCHIP programs. The authors
estimated that a 1% increase in the unemployment rate would increase Medicaid and
SCHIP enrollment by 1 million, and increase the number uninsured by 1.1 million. State
spending on Medicaid and SCHIP would increase by $1.4 billion (total spending on these
programs would increase by $3.4 billion). This increased spending would occur at the
same time state government revenues were declining. During the last downturn, the Jobs
and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) included federal
assistance to states, which helped states avoid tightening their Medicaid and SCHIP
eligibility rules. The authors conclude that Congress should consider similar relief for the
current economic downturn.[125]

[edit] Variations in provider practices

The treatment given to a patient can vary significantly depending on which health care
providers they use. Research suggests that some cost-effective treatments are not used as
often as they should be, while other health care services are over-used.[126][127]
Unnecessary treatments increase costs and can cause patients unnecessary anxiety.[128]
The use of prescription drugs varies significantly by geographic region.[129]

One study has found significant geographic variations in Medicare spending for patients
in the last two years of life. These spending levels are associated with the amount of
hospital capacity available in each area. Higher spending did not result in patients living
longer.[44][130]

[edit] Care coordination

Primary care doctors are often the point of entry for most patients needing care, but in the
fragmented health care system of the U.S., many patients and their providers experience
problems with care coordination. For example, a Harris Interactive survey of California
physicians found that:

• Four of every ten physicians report that their patients have had problems with
coordination of their care in the last 12 months.
• More than 60% of doctors report that their patients "sometimes" or "often"
experience long wait times for diagnostic tests.
• Some 20% of doctors report having their patients repeat tests because of an
inability to locate the results during a scheduled visit.[131]

According to an article in The New York Times, the relationship between doctors and
patients is deteriorating.[132] A study from Johns Hopkins University found that roughly
one in four patients believe their doctors have exposed them to unnecessary risks, and
anecdotal evidence such as self-help books and web postings suggest increasing patient
frustration. Possible factors behind the deteriorating doctor/patient relationship include
the current system for training physicians and differences in how doctors and patients
view the practice of medicine. Doctors may focus on diagnosis and treatment, while
patients may be more interested in wellness and being listened to by their doctors.[132]

Many primary care physicians no longer see their patients while they are in the hospital.
Instead, hospitalists are used, which fragments care because hospitalists usually have had
no previous relationship with the patient they are treating and do not have a personal
knowledge of the patient's medical history.[133][134] The use of hospitalists is sometimes
mandated by health insurance companies as a cost saving measure which is resented by
some primary care physicians.[135]

[edit] Administrative costs

The health care system in the U.S. has a vast number of players. There are hundreds, if
not thousands, of insurance companies in the U.S.[65][136] 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% 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.[137]

According to the insurance industry group America's Health Insurance Plans,

administrative costs for private health insurance plans have averaged approximately 12%
of premiums over the last 40 years. There has been a shift in the type and distribution of
administrative expenses over that period. The cost of adjudicating claims has fallen,
while insurers are spending more on other administrative activities, such as medical
management, nurse help lines, and negotiating discounted fees with health care providers.
[138]

A 2003 study published by the Blue Cross and Blue Shield Association also found that
health insurer administrative costs were approximately 11% to 12% of premiums, with
Blue Cross and Blue Shield plans reporting slightly lower administrative costs, on
average, than commercial insurers.[139] For the period 1998 through 2003, average insurer
administrative costs declined from 12.9% to 11.6% of premiums. The largest increases in
administrative costs were in customer service and information technology, and the largest
decreases were in provider services and contracting and in general administration.[140] The
McKinsey Global Institute estimated that excess spending on “health administration and
insurance” accounted for as much as 21% of the estimated total excess spending
($477 billion in 2003).[141]

According to a report published by the CBO in 2008, administrative costs for private
insurance represent approximately 12% of premiums. Variations in administrative costs
between private plans are largely attributable to economies of scale. Coverage for large
employers has the lowest administrative costs. The percentage of premium attributable to
administration increases for smaller firms, and is highest for individually purchased
coverage.[142] A 2009 study published by the Blue Cross and Blue Shield Association
found that the average administrative expense cost for all commercial health insurance
products was represented 9.18% of premiums in 2008.[143] Administrative costs were
11.12% of premiums for small group products and 16.35% in the individual market.[143]

One study of the billing and insurance-related (BIR) costs borne not only by insurers but
also by physicians and hospitals found that BIR among insurers, physicians, and hospitals
in California represented 20-22% of privately insured spending in California acute care
settings.[144]

[edit] Third-party payment problem and consumer-driven insurance

Most Americans pay for medical services largely through insurance, and this can distort
the incentives of consumers since the consumer pays only a portion of the ultimate cost.
[92]
The lack of price information on medical services can also distort incentives.[92] The
insurance which pays on behalf of insureds negotiate with medical providers, sometimes
using government-established prices such as Medicaid billing rates as a reference point.
[92]
This reasoning has led for calls to reform the insurance system to create a consumer-
driven health care system whereby consumers pay more out-of-pocket.[145] In 2003, the
Medicare Prescription Drug, Improvement, and Modernization Act was passed, which
encourages consumers to have a high-deductible health plan and a health savings
account.

[edit] Overall costs

The cost impact of the existing mixed public-private system is subject to debate. The
United States spends more as a percentage of GDP than similar countries, and this can be
explained either through higher prices for services or more utilization of these services
(for example, due to the United States having a more sickly population), or to a
combination of the two.[146] The United States has higher prices than other "rich
democracies", and this is a major explanation for its increased costs.[146]

Free-market advocates claim that the health care system is "dysfunctional" because the
system of third-party payments from insurers removes the patient as a major participant
in the financial and medical choices that affect costs. Because government intervention
has expanded insurance availability through programs such as Medicare and Medicaid,
this has exacerbated the problem.[147] According to a study paid for by America's Health
Insurance Plans (a Washington lobbyist for the health insurance industry) and carried out
by PriceWaterhouseCoopers, increased utilization is the primary driver of rising health
care costs in the U.S.[148] The study cites numerous causes of increased utilization,
including rising consumer demand, new treatments, more intensive diagnostic testing,
lifestyle factors, the movement to broader-access plans, and higher-priced technologies.
[148]
The study also mentions cost-shifting from government programs to private payers.
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.[149]
Health care costs rising far faster than inflation have been a major driver for health care
reform in the United States.

In March 2010, Massachusetts released a report on the cost drivers which it called
"unique in the nation".[150] The report noted that providers and insurers negotiate
privately, and therefore the prices can vary between providers and insurers for the same
services, and it found that the variation in prices did not vary based on quality of care but
rather on market leverage; the report also found that price increases rather than increased
utilization explained the spending increases in the past several years.[150]

[edit] Equity

[edit] Coverage

Enrollment rules in private and governmental programs result in millions of Americans

going without health care coverage, including children. The U.S. Census Bureau
estimated that 45.7 million Americans (15.3% of the total population) had no health
insurance coverage in 2007.[50] 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. 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[151] 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 does nothing about the difficulties in the American mental health
system.

Coverage gaps also occur among the insured population. Johns Hopkins University
professor Vicente Navarro stated in 2003, "the problem does not end here, with the
uninsured. An even larger problem is the underinsured" and "The most credible estimate
of the number of people in the United States who have died because of lack of medical
care was provided by a study carried out by Harvard Medical School Professors
Himmelstein and Woolhandler (New England Journal of Medicine 336, no. 11, 1997).
They concluded that almost 100,000 people died in the United States each year because
of lack of needed care."[152] Another 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% 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—73% of the underinsured in the study population had annual incomes below
200% of the federal poverty level.[153] Another study focusing on the effect of being
uninsured found that individuals with private insurance were less likely to be diagnosed
with late-stage cancer than either the uninsured or Medicaid beneficiaries.[121] A study
examining the effects of health insurance cost-sharing more generally found that
chronically ill patients with higher co-payments sought less care for both minor and
serious symptoms while no effect on self-reported health status was observed. The
authors concluded that the effect of cost sharing should be carefully monitored.[154]

Coverage gaps and affordability also surfaced in a 2007 international comparison by the
Commonwealth Fund. Among adults surveyed in the U.S., 37% reported that they had
foregone needed medical care in the previous year because of cost; either skipping
medications, avoiding seeing a doctor when sick, or avoiding other recommended care.
The rate was even higher— 42%—among those with chronic conditions. The study
reported that these rates were well above those found in the other six countries surveyed:
Australia, Canada, Germany, the Netherlands, New Zealand, and the UK.[155] The study
also found that 19% of U.S. adults surveyed reported serious problems paying medical
bills, more than double the rate in the next highest country.

[edit] Mental health

A lack of mental health coverage for Americans bears significant ramifications to the
U.S. economy and social system. A report by the U.S. Surgeon General found that mental
illnesses are the second leading cause of disability in the nation and affect 20% of all
Americans.[156] It is estimated that less than half of all people with mental illnesses receive
treatment due to factors such as stigma and lack of access to care.[157]

The Paul Wellstone Mental Health and Addiction Equity Act of 2008 mandates that
group health plans provide mental health and substance-related disorder benefits that are
at least equivalent to benefits offered for medical and surgical procedures. The legislation
renews and expands provisions of the Mental Health Parity Act of 1996. The law requires
financial equity for annual and lifetime mental health benefits, and compels parity in
treatment limits and expands all equity provisions to addiction services. Up to 2008
insurance companies used loopholes and, though providing financial equity, they often
worked around the law by applying unequal co-payments or setting limits on the number
of days spent in in-patient or out-patient treatment facilities.[158]

[edit] Medical underwriting and the uninsurable

In most states in the U.S., people seeking to purchase health insurance directly must
undergo medical underwriting. Insurance companies seeking to mitigate the problem of
adverse selection and manage their risk pools screen applicants for pre-existing
conditions. Insurers may reject some applicants or quote increased rates for those with
pre-existing conditions. Diseases that can make an individual uninsurable include serious
conditions, such as arthritis, cancer, and heart disease, but also such common ailments as
acne, being 20 pounds over or under weight, and old sports injuries.[159] An estimated
5 million of those without health insurance are considered "uninsurable" because of pre-
existing conditions.[160]

Proponents of medical underwriting argue that it ensures that individual health insurance
premiums are kept as low as possible.[161] Critics of medical underwriting believe that it
unfairly prevents people with relatively minor and treatable pre-existing conditions from
obtaining health insurance.[162]

One large industry survey found that 13% of applicants for individual health insurance
who went through medical underwriting were denied coverage in 2004. Declination rates
increased significantly with age, rising from 5% for those under 18 to just under one-third
for those aged 60 to 64.[163] Among those who were offered coverage, the study found that
76% received offers at standard premium rates, and 22% were offered higher rates.[164]
The frequency of increased premiums also increased with age, so for applicants over 40,
roughly half were affected by medical underwriting, either in the form of denial or
increased premiums. In contrast, almost 90% of applicants in their 20s were offered
coverage, and three-quarters of those were offered standard rates. Seventy percent of
applicants age 60–64 were offered coverage, but almost half the time (40%) it was at an
increased premium. The study did not address how many applicants who were offered
coverage at increased rates chose to decline the policy. A study conducted by the
Commonwealth Fund in 2001 found that, among those aged 19 to 64 who sought
individual health insurance during the previous three years, the majority found it
unaffordable, and less than a third ended up purchasing insurance. This study did not
distinguish between consumers who were quoted increased rates due to medical
underwriting and those who qualified for standard or preferred premiums.[165] Some states
have outlawed medical underwriting as a prerequisite for individually purchased health
coverage.[166] These states tend to have the highest premiums for individual health
insurance.[167]

[edit] Demographic differences

Main articles: Health disparities and Race and health

In the United States, health disparities are well documented in ethnic minorities such as
African Americans, Native Americans, and Hispanics.[168] 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.[169] In addition, adult African Americans and
Hispanics have approximately twice the risk as whites of developing diabetes. Minorities
also have higher rates of cardiovascular disease and HIV/AIDS than whites.[169]
Caucasian Americans have much lower life expectancy than Asian Americans.[170] A
2001 study found large racial differences exist in healthy life expectancy at lower levels
of education.[171]
Public spending is highly correlated with age; average per capita public spending for
seniors was more than five times that for children ($6,921 versus $1,225). Average public
spending for non-Hispanic blacks ($2,973) was slightly higher than that for whites
($2,675), while spending for Hispanics ($1,967) was significantly lower than the
population average ($2,612). Total public spending is also strongly correlated with self-
reported health status ($13,770 for those reporting "poor" health versus $1,279 for those
reporting "excellent" health).[60] Seniors comprise 13% of the population but take 1/3 of
all prescription drugs. The average senior fills 38 prescriptions annually.[172]

There is a great deal of research into inequalities in health care. In some cases these
inequalities are caused by income disparities that result in lack of health insurance and
other barriers to receiving services.[173] According to the 2009 National Healthcare
Disparities Report, uninsured Americans are less likely to receive preventive services in
health care.[174] For example, minorities are not regularly screened for colon cancer and
the death rate for colon cancer has increased among African Americans and Hispanic
people. 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.[175] Nancy Krieger wrote that
racism underlies unexplained inequities in health care, including treatment for heart
disease,[176] renal failure,[177] bladder cancer,[178] and pneumonia.[179] 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.[180] One
recent study has found that when minority and white patients use the same hospital, they
are given the same standard of care.[181][182]

[edit] Drug efficacy and safety

See also: Regulation of therapeutic goods in the United States

The Food and Drug Administration (FDA)[183] is the primary institution tasked with the
safety and effectiveness of human and veterinary drugs. It also is responsible for making
sure drug information is accurately and informatively presented to the public. The FDA
reviews and approves products and establishes drug labeling, drug standards, and medical
device manufacturing standards. It sets performance standards for radiation and
ultrasonic equipment.

One of the more contentious issues related to drug safety is immunity from prosecution.
In 2004, the FDA reversed a federal policy, arguing that FDA premarket approval
overrides most claims for damages under state law for medical devices. On 30 June 2006,
an FDA ruling went into effect extending protection from lawsuits to pharmaceutical
manufacturers, even if it was found that they submitted fraudulent clinical trial data to the
FDA in their quest for approval. This left consumers who experience serious health
consequences from drug use with little recourse. In 2007, opposition was raised in the
Congressional House to the FDA ruling, but the Senate upheld the status quo.
On 4 March 2009, an important U.S. Supreme Court decision was handed down. In
Wyeth v. Levine, the court asserted that state-level rights of action could not be pre-
empted by federal immunity and could provide "appropriate relief for injured
consumers."[184] In June 2009, under the Public Readiness and Emergency Preparedness
Act, Secretary of Health and Human Services Kathleen Sebelius signed an order
extending protection to vaccine makers and federal officials from prosecution during a
declared health emergency related to the administration of the swine flu vaccine.[185][186]

[edit] The impact of drug companies

The United States is one of two countries in the world that allows direct-to-consumer
advertising of prescription drugs. Critics note that drug ads costs money which they
believe have raised the overall price of drugs.[187]

When health care legislation was being written in 2009, the drug companies were asked
to support the legislation in return for not allowing importation of drugs from foreign
countries.[188]

[edit] Political issues

[edit] Prescription drug prices

The following text needs to be harmonized with text in Prescription drug prices in
the United States.
Main article: Prescription drug prices in the United States

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. Per capita, the U.S. spends more on pharmaceuticals than any other country.
National expenditures on pharmaceuticals accounted for 12.9% of total health care costs,
compared to an OECD average of 17.7% (2003 figures).[189] Some 25% of out-of-pocket
spending by individuals is for prescription drugs.[190]

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 in
other countries (because many other countries use their bulk-purchasing power to
aggressively negotiate drug prices).[191] The U.S. position (consistent with the primary
lobbying position of the Pharmaceutical Research and Manufacturers of America) is that
the governments of such countries are free riding on the backs of U.S. consumers. Such
governments should either deregulate their markets, or raise their domestic taxes in order
to fairly compensate U.S. consumers by directly remitting 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, pharmaceutical companies would be able
to continue to produce innovative pharmaceuticals while lowering 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 due
to the Medicare Prescription Drug, Improvement, and Modernization Act passed in 2003.
Democrats have charged that the purpose of this provision is merely to allow the
pharmaceutical industry to profiteer off of the Medicare program, which is already in
imminent danger of becoming financially insolvent.[192]

[edit] Health care debate

Main article: Health care reform in the United States

A poll released in March 2008 by the Harvard School of Public Health and Harris
Interactive found that Americans are divided in their views of the U.S. health system, and
that there are significant differences by political affiliation. When asked whether the U.S.
has the best health care system or if other countries have better systems, 45% said that the
U.S. system was best and 39% said that other countries' systems are better. Belief that the
U.S. system is best was highest among Republicans (68%), lower among independents
(40%), and lowest among Democrats (32%). Over half of Democrats (56%) said they
would be more likely to support a presidential candidate who advocates making the U.S.
system more like those of other countries; 37% of independents and 19% of Republicans
said they would be more likely to support such a candidate. 45% of Republicans said that
they would be less likely to support such a candidate, compared to 17% of independents
and 7% of Democrats.[193][194]

According to the Institute of Medicine of the National Academy of Sciences, the United
States is the only wealthy, industrialized nation that does not ensure universal coverage.
[16]
There is currently an ongoing political debate centering around questions of access,
efficiency, quality, and sustainability. Whether a government-mandated system of
universal health care should be implemented in the U.S. remains a hotly debated political
topic, with Americans divided along party lines in their views of the U.S. health system
and what should be done to improve it. Those in favor of universal health care argue that
the large number of uninsured Americans creates direct and hidden costs shared by all,
and that extending coverage to all would lower costs and improve quality.[195] Cato
Institute Senior Fellow Alan Reynolds argues that people should be free to opt out of
health insurance, citing a study by Economists Craig Perry and Harvey Rosen that found
"the lack of health insurance among the self-employed does not affect their health. For
virtually every subjective and objective measure of their health status, the self-employed
and wage-earners are statistically indistinguishable for each other."[196] Both sides of the
political spectrum have also looked to more philosophical arguments,[citation needed] debating
whether people have a fundamental right to have health care provided to them by their
government.[197][198]

An impediment to implementing any US healthcare reform that does not benefit

insurance companies or the private health care industry is the power of insurance
company and health care industry lobbyists.[199][200] Possibly as a consequence of the
power of lobbyists, key politicians such as Senator Max Baucus have taken the option of
single payer health care off the table entirely.[201] In a June 2009 NBC News/Wall Street
Journal survey, 76% said it was either "extremely" or "quite" important to "give people a
choice of both a public plan administered by the federal government and a private plan
for their health insurance."[202]

Advocates for single-payer health care often point to other countries, where national
government-funded systems produce better health outcomes at lower cost. Opponents
deride this type of system as "socialized medicine", and it has not been one of the favored
reform options by Congress or the President in both the Clinton and Obama reform
efforts.[203][204] It has been pointed out that socialized medicine is a system in which the
government owns the means of providing medicine. Britain is an example of socialized
system, as, in America, is the Veterans Health Administration. Medicare is an example of
a mostly single-payer system, as is France. Both of these systems have private insurers to
choose from, but the government is the dominant purchaser.[205]

As an example of how government intervention has had unintended consequences, in

1973, the federal government passed the Health Maintenance Organization Act, which
heavily subsidized the HMO business model — a model that was in decline prior to such
legislative intervention. The law was intended to create market incentives that would
lower health care costs, but HMOs have never achieved their cost-reduction potential.[206]

Piecemeal market-based reform efforts are complex. One study evaluating current
popular market-based reform policy packages concluded that if market-oriented reforms
are not implemented on a systematic basis with appropriate safeguards, they have the
potential to cause more problems than they solve.[207]

According to economist and former US Secretary of Labor, Robert Reich, only a "big,
national, public option" can force insurance companies to cooperate, share information,
and reduce costs. Scattered, localized, "insurance cooperatives" are too small to do that
and are "designed to fail" by the moneyed forces opposing Democratic health care
reform.[208][209] The Patient Protection and Affordable Care Act, signed into law in March,
2010, did not include such an option.

[edit] Health Care Reform

Main articles: Health care reform in the United States and Patient Protection and
Affordable Care Act
Health care reform in the
United States
• Healthcare Reform in
USA
• Patient Protection and
Affordable Care Act
• Healthcare Bill
(PPACA): Provisions
• Debate over reform
 • History
• Public opinion
• Rationing
• Uninsured
• United States National
Health Care Act
(H.R. 676: the lead
legislative proposal;
formerly the
"Expanded and
Improved Medicare for
All Act")

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The Patient Protection and Affordable Care Act (Public Law 111-148) is a health care
reform bill that was signed into law in the United States by President Barack Obama on
March 23, 2010. Along with the Health Care and Education Reconciliation Act of 2010
(passed March 25), the Act is a product of the health care reform agenda of the
Democratic 111th Congress and the Obama administration.

The law includes a large number of health-related provisions to take effect over the next
four years, including expanding Medicaid eligibility for people making up to 133% of
FPL,[210] subsidizing insurance premiums for peoples making up to 400% of FPL
($88,000 for family of 4) so their maximum "out-of-pocket" pay will be from 2% to 9.8%
of income for annual premium,[211][212] providing incentives for businesses to provide
health care benefits, prohibiting denial of coverage and denial of claims based on pre-
existing conditions, establishing health insurance exchanges, prohibiting insurers from
establishing annual spending caps and support for medical research. The costs of these
provisions are offset by a variety of taxes, fees, and cost-saving measures, such as new
Medicare taxes for high-income brackets, taxes on indoor tanning, cuts to the Medicare
Advantage program in favor of traditional Medicare, and fees on medical devices and
pharmaceutical companies;[213] there is also a tax penalty for citizens who do not obtain
health insurance (unless they are exempt due to low income or other reasons).[214] The
Congressional Budget Office estimates that the net effect (including the reconciliation
act) will be a reduction in the federal deficit by $143 billion over the first decade.[215]

[edit] Health Insurance Coverage of Immigrants

Of the 26.2 million foreign immigrants living in the US in 1998, 62.9% were non-
citizens. In 1997, 34.3% of non-citizens living in America did not have health insurance
coverage opposed to the 14.2% of native-born Americans who do not have health
insurance coverage. Among those immigrants who became citizens, 18.5% were
uninsured as opposed to non citizens who are 43.6% uninsured. In each age and income
group, immigrants are less likely to have health insurance.[216]
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