14.2: The U.S. Healthcare Model
The United States has a long history and culture of independence, self-reliance, and individualism. There is a cultural belief that those who work hard over time will be successful, and reward should not be universal, but based on merit. This strong emphasis on the individual also seeps into the U.S. healthcare model and creates resistance against the more collectivist models utilized in other countries. Combine this sense of individualism with gigantic healthcare, pharmaceutical, and health insurance markets, and we get a sense of the U.S. healthcare model. Yet a long healthy life free from illness or injury is not guaranteed to those who work hard, nor is the healthcare market ever a “free” market - it will always be imperfect (Shi & Singh, 2017). The demand for healthcare is based on the health status of individuals, which is influenced by genetics, biology, environment, and behaviors, as well as other social determinants. On the supply side, technology, specialization, and accessibility will all play into how healthcare is delivered and distributed.
Thus, the United States healthcare system can be visualized as a four-part system or quad-function model (see Fig. \(\PageIndex{1}\) below). This includes the financing, insurance, payment, and delivery of care. Sometimes these components overlap or are closely integrated.
According to the Center for Medicare and Medicaid Services, the National Healthcare Expenditure in 2022 was up 4.1% from the previous year at $4.5 trillion, or about 17.3% of Gross Domestic Product (GDP). Essentially, 17.3% of the U.S. economy is taken up by healthcare. This amounts to about $13,493 per person. The average growth in healthcare expenditures has been about 4.8% per year on average between 2014-2020. In 2022, the federal government spending was the largest piece of the expenditure pie at 33%, and households (including premiums and out of pocket costs) were close behind at 28%, whereas private businesses contributed 18%. See Fig. \(\PageIndex{2}\ below.
Although this chapter focuses on U.S. healthcare, it is enlightening to compare per-capita healthcare spending with other countries of similar wealth. The Organization for Economic Cooperation and Development (OECD) recorded the average spending for similar nations was equal to approximately $5000 U.S. dollars (USD) per capita in 2022. For example, Switzerland and Germany spent an average of $8000USD per capita, and Australia, New Zealand, and Canada spent between $6000-$7000USD. Several other European and South American countries have considerably lower expenditures (OECD, 2023). When expressed as a percentage of the gross domestic product (GDP) for each country, the U.S. healthcare expenditure still outpaces other wealthy countries. See Fig. \(\PageIndex{3}\) below.