How This Will Go

When defining a healthcare system, the three most important questions to ask would be:

1. Who provides the healthcare services?
2. Who receives the healthcare services?
3. Who pays for the healthcare services?

At first glance, it may seem that the most straightforward way of addressing these questions would be to simply answer them one at a time.

However, such an approach is fundamentally flawed, as with the American healthcare system, each individual question is fundamentally tied to the other two. Simply put, the group an individual American belongs in can dramatically change both who directly provides their care, and who pays for that care.

Therefore, a better approach would be to first break the American public into various categories, and then to describe the process of how the members in each of those categories attain healthcare. 

So, the categories of Americans which will be discussed in this analysis are as follows:

1. The elderly
2. Military veterans
3. The very poor
4. Larger-company employees
5. Smaller-company employees / the self-employed

As is probably obvious, there is a fair amount of overlap among these groups. However, for basic explanatory purposes, this is necessary. Going into more depth and being increasingly specific would compromise the basic goal of this piece: to provide a brief and simple analysis of the American healthcare system.

This system may seem overly-complicated as a whole, but in breaking it down into its core components, one can understand it with much greater ease.

Group 1: The Elderly

1. Who provides the healthcare services: The private healthcare industry
2. Who receives the healthcare services: All American citizens age 65 and older
3. Who pays for the healthcare services: The federal government

In 1965, the United States government decided that every American citizen at or over the age of 65 was entitled to health insurance, and provided for the creation of Medicare. The administration of this program is simple: American workers pay taxes in order to fund Medicare, which in turn, pays for almost all major healthcare expenses for the elderly.

The formal term for such a program is “single-payer national health insurance,” albeit in this case only for older Americans. It is important to note, however, that the federal government in this case only handles the cost of health insurance, not the administration, which is still conducted by the traditional private health insurance industry.

Group 2: Military Veterans

1. Who provides the healthcare services: The federal government
2. Who receives the healthcare services: Military veterans
3. Who pays for the healthcare services: The federal government

Military veterans in the United States have their own unique system for attaining health insurance: The Department of Veterans Affairs, or VA. Basically, American military veterans have their healthcare provided to them at the many VA facilities in the United States.

These facilities provide veterans with comprehensive care from medical professionals which are formal employees of the federal government. The VA is financed directly by the government through the tax dollars of American citizens.

Simply put, it is socialized medicine from start to finish.

While it is true that the VA covers a relatively small amount of Americans, it was still worth covering in this piece due to its uniqueness within the American healthcare system.

Group 3: The Very Poor

1. Who provides the healthcare services: The private healthcare industry
2. Who receives the healthcare services: The poorest Americans
3. Who pays for the healthcare services: Both federal and state governments

Along with Medicare, the United States also created Medicaid in 1965. The goal of this program is simple - to provide healthcare coverage for the most indigent Americans.

The funding of Medicaid is similar to that of Medicare: the federal government provides financing for the provision of healthcare services from the private healthcare industry, albeit for poorer Americans as opposed to the elderly.

This being said, there is a key difference between Medicare and Medicaid worth discussing, which is the involvement of state governments in Medicaid. Indeed, instead of funding healthcare costs directly, the federal government provides this funding to the individual states, who shoulder part of the financial burden for their individual Medicaid programs.

States have a fair degree of freedom in the implementation and funding of their programs, which has led to a wide variety in who gets covered depending on the state.

Group 4: Employees at wealthier / larger companies

1. Who provides the healthcare services: The private healthcare industry
2. Who receives the healthcare services: Larger-company employees
3. Who pays for the healthcare services: The employer of the (above) employees

As is likely well-known to most Americans, employer-provided health insurance is overwhelmingly the most common way people in the United States are covered. With the passage of the Affordable Care Act (ACA) in 2010, larger companies were actually mandated by law to provide health insurance for their employees.

However, the vast majority of the companies mandated to provide coverage by the ACA already did so, as it was greatly encouraged by the federal government.

Employer-sponsored health insurance has been tax exempt for years in the United States, meaning that it is cheaper for employers to provide their employees with larger health insurance plans, which would not be taxed, than higher wages.

Therefore, while it is true that employers do pay directly for their employees health insurance in this case, that payment is still heavily subsidized by the federal government. In 2017 alone, the tax exempt status of employer-sponsored healthcare cost the American taxpayer about $260 billion.

Group 5: Employees at less-wealthy companies / self-employed individuals

1. Who provides the healthcare services: The private healthcare industry
2. Who receives the healthcare services: Smaller-company employees / the self-employed
3. Who pays for the healthcare services: Both individuals and the federal government

Individuals who work for smaller companies which don’t provide health insurance, or are self-employed, can gain their healthcare through the individual healthcare exchanges established by the Affordable Care Act.

How these exchanges work is simple: Americans use them to purchase health insurance from their local insurer, and depending on their income, receive a subsidy from the federal government to purchase an insurance plan.

These exchanges require that individuals pay a certain percentage of their income (which increases as their income increases) towards their premiums, and upon doing so, the state covers the balance of the payment.

It is important to note that there are some citizens who earn too much on their own to qualify for subsidies (or less likely, are paid too much by an employer to qualify, and that employer still does not provide coverage).

Simply put, these individuals will bear the full brunt of the cost of their health insurance premiums, should they choose to purchase insurance.

Conclusion

The American healthcare system can be compared to a complex machine, with many different moving parts. It can be said then, that the goal of this piece was to analyze the major “parts” of that machine, through answering the three core questions regarding a healthcare system laid out at its beginning.

One last point to address before closing: this description of the American healthcare system should not have given the impression that all Americans are covered, as that is far from the case.

As many readers may have suspected, there are groups of American citizens which do not directly fall into any of the categories identified here and who go without health insurance, many for their whole lives.

Any discussion on how to expand healthcare coverage in the United States would inevitably go further into detail than this piece has. However, if this work has imparted to readers a strong basis for understanding the American healthcare system, than it has accomplished its goal.