HCM 5000 Module 1 U.S. Health System Overview Paper Example

Eighteen Percent of the Economy, Part of Our Health: What the U.S. Healthcare System Contributes, How It Works and Who Pays

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Master of Science in Healthcare Management, Thomas Edison State University

HCM-5000: 21st Century Healthcare Systems

Mentor Name

Month Day, Year

Eighteen Percent of the Economy, Part of Our Health: What the U.S. Healthcare System Contributes, How It Works and Who Pays

National health spending reached $5.3 trillion in 2024, roughly $15,474 per resident, which equals 18.0% of the economy (Hartman et al., 2026). That sum buys a system that is technologically advanced, fragmented and, for many people, hard to navigate. This paper examines the system from the perspective of one composite person, a 52-year-old warehouse supervisor in Camden County, New Jersey, with type 2 diabetes and high blood pressure, who has employer coverage through a high-deductible plan. It considers how much the system contributes to his health status, describes the key components that shape his care, shows who pays for the system as a whole and critiques the financing trends most likely to affect him in the next decade.

The System's Role in Health Status

Health care is only one influence on how healthy a person is. McGinnis et al. (2002) estimated that shortfalls in medical care accounted for about 10% of early deaths in the United States, compared with roughly 40% attributed to behavior, 30% to genetic predisposition, 15% to social circumstances and 5% to environmental exposure. These are rough proportions and the categories overlap, but they make an important point: a system that spends heavily on treating illness cannot by itself produce a healthy population.

For the warehouse supervisor, the system's contribution is still real and specific. Regular primary care visits, laboratory monitoring, affordable medications and diabetes education can prevent kidney disease, vision loss and heart attack. The system can also harm his health through delay, cost and fragmentation. If his deductible leads him to skip a visit, ration insulin or ignore a foot wound until it becomes infected, the system's design, not his diabetes alone, shapes his outcome. His work schedule, the food available near his home and the stress of his job are outside the clinic but interact with everything that happens inside it.

Key Components of the System

Shi and Singh (2022) describe American health care through four connected functions: financing, which raises the money; insurance, which pools risk and decides what is covered; delivery, which provides services through hospitals, clinicians and other settings; and payment, which determines how and how much providers are paid. In most countries one or two public bodies perform several of these functions together. In the United States they are spread across thousands of employers, insurers, government programs and providers.

The supervisor's care illustrates the arrangement. His employer and his payroll deductions finance his coverage. A commercial insurer, acting as administrator for his employer's self-funded plan, pools risk and sets the network and the deductible. Delivery comes from a primary care practice owned by a regional health system, an independent pharmacy chain and, when needed, a hospital emergency department. Payment flows from the plan to each provider at rates negotiated separately, while he pays the full negotiated price until his deductible is met. No single organization sees his whole picture, which is one reason his care can feel disconnected.

Funding Sources and Their Contributions

The national health expenditure accounts show who paid for the $5.3 trillion. Private health insurance was the largest source at about 31% of spending, followed by Medicare at 21%, Medicaid at 18% and out-of-pocket payments by patients at 11%, while the last 11% came from smaller public programs, other private funds and public health work (Centers for Medicare & Medicaid Services [CMS], n.d.). Looked at by who ultimately sponsors the spending, the federal government paid about 31%, households 28%, private businesses 18% and state and local governments 16%.

These shares show that the line between public and private financing is blurred. Households pay not only out of pocket but also through premiums, payroll taxes and income taxes. Employers' contributions to insurance are part of workers' compensation, so they come from wages workers would otherwise receive. For the supervisor, the real cost of his care includes his deductible and premium contributions, the wage increases his employer has not given because health benefits cost more each year, and his share of the taxes that fund Medicare and Medicaid.

Trends in Financing and Delivery

Three trends deserve critical attention. First, spending is growing faster than the economy. Spending rose 7.2% in 2024 after 7.4% in 2023, driven by increased use and intensity of hospital care, physician services and prescription drugs, and health care's slice of gross domestic product grew from 17.7% to 18.0% (Hartman et al., 2026). CMS projects it will reach 20.6% by 2034 (CMS, n.d.). Unless wages keep pace, more of workers' compensation will go to health benefits.

Second, cost is shifting toward patients. High-deductible plans have spread because they lower premiums, but they expose people with chronic illness to large bills early in each year. The design rewards shopping for price, yet most of the supervisor's care cannot be shopped for in any meaningful way. Third, coverage has been high but fragile. The insured share of the population reached 92.5% in 2023 before dipping to 91.8% in 2024 as pandemic-era Medicaid protections ended (Hartman et al., 2026), and CMS expects it to fall to 90.5% by 2034. Each lost percentage point represents millions of people facing the system without a payer.

Taken together, these trends suggest a system that will cost more, ask more of patients directly and cover a slightly smaller share of the population, unless policy changes direction. For the supervisor, that means a growing risk that cost, not need, decides when he gets care.

Conclusion

The U.S. healthcare system consumes nearly a fifth of the economy yet accounts for only a modest share of what determines health. Its four functions are divided among many organizations, its funding comes from a mix of public and private sources that ultimately trace back to households, and its trends point toward higher costs and more exposure for patients. For one Camden County worker with diabetes, the system's value depends less on its technology than on whether its financing lets him use the care he needs before complications arrive.

References

Centers for Medicare & Medicaid Services. (n.d.). NHE fact sheet. Retrieved October 3, 2026, from https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet

Hartman, M., Martin, A. B., Lassman, D., Catlin, A., & The National Health Expenditure Accounts Team. (2026). National health care spending increased 7.2 percent in 2024 as utilization remained elevated. Health Affairs, 45(2), 110-120. https://doi.org/10.1377/hlthaff.2025.01683

McGinnis, J. M., Williams-Russo, P., & Knickman, J. R. (2002). The case for more active policy attention to health promotion. Health Affairs, 21(2), 78-93. https://doi.org/10.1377/hlthaff.21.2.78

Shi, L., & Singh, D. A. (2022). Delivering health care in America: A systems approach (8th ed.). Jones & Bartlett Learning.