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As this book enters its closing chapters, we step back from the details of the US health care system to view the system as a larger whole. Who are the major actors? How have they interacted over the past few decades? What might the future bring?


The health care sector of the nation’s economy is a 3 trillion dollar system that finances, organizes, and provides health care services for the people of the United States. Four major actors can be found on this stage (Table 16-1).

Table 16-1The four major actors

  1. The purchasers supply the funds. These include individual health care consumers, businesses that pay for the health insurance of their employees, and the government, which pays for care through public programs such as Medicare and Medicaid and through various tax subsidies. All purchasers of health care are ultimately individuals, because individuals finance businesses by purchasing their products and fund the government by paying taxes. Nonetheless, businesses and the government assume special importance as the nation’s organized purchasers of health care.

  2. The insurers receive money from the purchasers and pay the providers. Traditional insurers take money from purchasers (individuals or businesses), assume risk, and pay providers when policyholders require medical care. Yet some insurers are the same as purchasers; the government can be viewed as an insurer or purchaser in the Medicare and Medicaid programs, and businesses that self-insure their employees can similarly occupy both roles. (In previous chapters, the term “payer” refers to both purchasers and insurers.)

  3. The providers, including hospitals, physicians, Accountable Care Organizations (ACOs), nurses, nurse practitioners, physician assistants, pharmacists, social workers, nursing homes, home care agencies, and pharmacies, among others, actually provide the care. While health maintenance organizations (HMOs) are generally insurers, some are also providers, owning hospitals and employing physicians.

  4. The suppliers are the pharmaceutical, medical supply, and computer industries, which manufacture equipment, supplies, electronic health records, and medications used by providers to treat patients.

Insurers, providers, and suppliers make up the health care industry. Each dollar spent on health care represents an expense to the purchasers and a gain to the health care industry. In the past, purchasers viewed this expense as an investment, money spent to improve the health of the population and thereby the economic and social vitality of the nation. But over the past 40 years, a fundamental conflict has intensified between the purchasers and the health care industry: The purchasers wish to reduce, and the health care industry to increase, the number of dollars spent on health care. We will now explore the changing relationships among purchasers, ...

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