THE U.S. SYSTEM
From the founding of the republic Americans have valued self-help and vigorously eschewed dependence.
Thus, it has been difficult to overcome their reluctance to let
government assume responsibility for private matters, including health.
As a consequence, private and entrepreneurial medical practice was the keystone of such health care as existed in the United States in the first 150 years. Private interests, physicians, hospitals, and other health institutions developed a profitable stake in the medical-care system. During and following the Depression of the 1930s, private health insurance evolved in response to a felt need, and grew
enormously in response to the wage and price controls of World War IIÑespecially in the substitution by business of "fringe benefits" like health and hospital insurance for wage increases. Technological and pharmaceutical inventions and discoveries deriving from the wartime experience also dramatically enlarged the reach of the private sector in health matters. This apparent private-sector success in advancing medical science reinforced the public's resistance to government interference in health matters and at the same time created a constituency that had a large stake in maintaining the private health-service status quo.
Nevertheless, some public funds have been spent, and public participation in the health system has been taking place since Depression times. The inability of millions of citizens to obtain or to pay for even minimal levels of care forced the federal government to intervene. But it was not until the 1960s, with the passage of the Medicare and Medicaid laws, that the federal government became a significant investor and player. Since then, as costs rose inexorably, and Congress had to raise larger sums to meet them, strenuous efforts have been directed to contain and control costs, without painfully limiting access and provision of service for the poor and aged.
As a result, the U.S. medical-care system is a complex mix of public and private payments. It is enormously costly, and is characterized by maldistribution of resources and serious inequities of access. Private medical practice is eroding from solo practice into clinic conglomerates, which physicians usually do not control; an oversupply of specialists is compensating for an undersupply of primary-care physicians by providing primary care at specialist rates; fee-for-service has been replaced by salaried and capitated payments; an array of expensive technological diagnostic and surgical procedures, often redundant, has been added to traditional medical practices; and hospitals have merged in the investor-owned as well as the nonprofit sector, producing huge aggregates like industrial corporations, in which a "product" (medical care) is "purveyed" (by doctors and hospitals) to "consumers" (patients). The "bottom line" therefore is fiscal, not qualitative.
Thus, by the 1990s the U.S. medical-care system found itself in a quandary. Enormously well stocked with resources, wealthy and prodigally expensive, it was nevertheless a statistical failure. Public health data belied the common belief that it was the best medical-care system in the world. The U.S. infant mortality rate, for example, was 8.9 per 1,000 live births, ranking the United States 16th in the world. Life expectancy also fell short of that in most industrialized countries.