Most Expensive, Not Most Effective: A Perspective on the Structure and Performance of the U.S. Health Care System
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Master of Science in Nursing Program, Aspen University
N502: Health Care Systems
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Month Day, Year
Most Expensive, Not Most Effective: A Perspective on the Structure and Performance of the U.S. Health Care System
The United States does not have a single health care system so much as a collection of systems that grew up side by side: employer-sponsored insurance, public programs for older adults and people with low incomes, a military and veterans system, and a large population with no coverage at all. This paper describes the defining features of that arrangement, compares its cost and performance with those of other high-income countries, examines where its spending goes, and considers what the system's structure means for advanced practice and leadership roles in nursing.
Defining Features of the U.S. System
Several features distinguish the U.S. system. First, financing is mixed and fragmented. Most working-age adults are insured through employers, older adults through Medicare, many low-income people through Medicaid, and others through individual market plans, each with its own rules, networks, and payment methods. Second, delivery is largely private: most hospitals are private nonprofit or for-profit organizations, and most physicians practice privately, even when paid with public funds. Third, access depends heavily on insurance status, so coverage gaps translate directly into delayed or forgone care. Fourth, the system has historically been oriented toward acute, specialized, technology-intensive care rather than primary care and prevention (Young & Kroth, 2018).
These features have historical roots. Employer-sponsored insurance expanded during World War II, when wage controls led employers to compete through benefits, and Medicare and Medicaid were enacted in 1965 to cover groups the employer system left out. Later reforms, including the Affordable Care Act of 2010, extended coverage by building on this structure rather than replacing it. The result is a system shaped less by design than by accumulation, in which each reform added a layer without removing the ones beneath it.
A single patient's experience shows how these features interact. Consider a composite 58-year-old self-employed electrician with diabetes who buys a high-deductible plan on the individual market. He delays a visit for a foot wound because of the deductible, is admitted with an infection to a hospital outside his plan's network, receives a surprise bill, and is discharged with a prescription he cannot afford until his coverage renews. Each step is governed by a different set of rules, none of which was designed with the others in mind, and no one in the system is responsible for his whole course. For the nurses caring for him, fragmentation is not an abstraction; it is the reason he arrived sicker and may return soon.
How the United States Compares
International comparisons show the consequences. An analysis comparing the United States with ten other high-income countries found that health care consumed 17.8 percent of the U.S. economy in 2016, against 9.6 to 12.4 percent in the comparison countries, yet had lower life expectancy and higher infant mortality. The United States did not use substantially more health care services than its peers; rather, prices for labor, pharmaceuticals, and administration were higher (Papanicolas et al., 2018). In other words, Americans do not receive much more care than people in comparable countries; they pay more for it.
The Commonwealth Fund's periodic comparisons of health system performance reach a similar conclusion. Its 2024 report ranked the United States last overall among ten high-income countries, with especially poor results for access to care, equity, and health outcomes, despite the highest spending (Blumenthal et al., 2024). The United States performs comparatively well on some measures of care process, such as certain preventive services, but these strengths do not translate into longer or healthier lives across the population.
Where the Spending Goes
If Americans are not receiving more care, part of the explanation lies in waste. A review of the literature estimated that waste in the U.S. health care system cost between $760 billion and $935 billion a year, roughly a quarter of total spending, across six domains: failures of care delivery, failures of care coordination, overtreatment or low-value care, pricing failures, fraud and abuse, and administrative complexity, which was the largest single category (Shrank et al., 2019). The authors estimated that interventions already shown to work could eliminate a substantial portion of that waste.
Several of these domains fall squarely within nursing's reach. Failures of care coordination, such as readmissions caused by poor transitions, are problems nurses manage every day. Failures of care delivery, including hospital-acquired infections and preventable complications, are sensitive to nursing practice. Even administrative complexity affects nurses, who spend considerable time on documentation required by multiple payers.
Reform Within the Structure
Recent reforms have tried to change the system's incentives without changing its basic structure. The Affordable Care Act expanded coverage through subsidized individual market plans and an expansion of Medicaid, which a 2012 Supreme Court decision made optional for states, so the gains in coverage have varied sharply by state. The same law accelerated a shift from paying for volume toward paying for value: accountable care organizations share savings when they reduce spending while meeting quality targets, and hospitals face payment penalties for excess readmissions and hospital-acquired conditions (Young & Kroth, 2018).
These reforms have produced real but partial change. Coverage expanded, and many hospitals invested in transitional care and infection prevention in response to financial penalties. Yet fee-for-service payment remains the foundation for most care, prices remain high, and the administrative burden of multiple payers has grown rather than shrunk. The pattern fits the system's history: new layers of incentive have been added on top of the old ones rather than in place of them. For nurses, value-based programs matter because the outcomes they reward, such as fewer readmissions and fewer hospital-acquired infections, are largely nursing-sensitive, which gives nursing a measurable claim on organizational attention and resources.
Implications for Nursing
For graduate-prepared nurses, the structure of the U.S. system creates both obligations and opportunities. Nurses in leadership roles must work within payment systems that often reward volume over value, while moving their organizations toward care that is coordinated and preventive. Care coordination, transitional care, and chronic disease management, areas where nursing has strong evidence and expertise, target exactly the waste the system can least afford. Advanced practice nurses expand access to primary care in areas where physicians are scarce, and nurse educators prepare the workforce the system will need as its population ages.
Nurses also have a policy role. Because the system is the product of accumulated decisions rather than a single design, it can be changed incrementally, and nurses, as the largest health profession and among the most trusted, are well positioned to influence those decisions through professional organizations, testimony, and data from their own practice.
Conclusion
The U.S. health care system is a mixed, fragmented arrangement built through layers of reform, and its defining problem is not that it provides too much care but that it pays too much for the care it provides and leaves too many people without reliable access. Its waste is concentrated in areas such as care coordination and delivery failures that nurses are well equipped to address. Understanding how the system is structured is the first step for any nurse who intends to lead within it or to help change it.
References
Blumenthal, D., Gumas, E. D., Shah, A., Gunja, M. Z., & Williams, R. D., II. (2024). Mirror, mirror 2024: A portrait of the failing U.S. health system. The Commonwealth Fund. https://www.commonwealthfund.org/publications/fund-reports/2024/sep/mirror-mirror-2024
Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. JAMA, 319(10), 1024-1039. https://doi.org/10.1001/jama.2018.1150
Shrank, W. H., Rogstad, T. L., & Parekh, N. (2019). Waste in the US health care system: Estimated costs and potential for savings. JAMA, 322(15), 1501-1509. https://doi.org/10.1001/jama.2019.13978
Young, K. M., & Kroth, P. J. (2018). Sultz & Young's health care USA: Understanding its organization and delivery (9th ed.). Jones & Bartlett Learning.
How this N 502 Module 1 example is structured
N502 opens with an overview of the U.S. health care delivery system, and in many sections the first written assignment asks for a perspective on the system's structure and performance. Aspen does not publish module deliverables, so your classroom's prompt sets the exact questions. This example takes a clear position, describes the system's features and their origins, supports its claims with peer-reviewed comparisons and waste estimates, and ends with implications specific to graduate nursing roles.
N502 Module 1 questions, answered
What does N502 Module 1 usually ask for?
The first module introduces the U.S. health care system, and the written assignment commonly asks for a perspective on its structure, history and performance, often including comparisons and implications for nursing. Aspen does not publish module deliverables, so check your classroom for the exact prompt.
Why does the United States spend more than other countries?
Comparative research finds that Americans do not use dramatically more care; the difference is mainly higher prices for labor, drugs and administration, along with substantial waste. The sample reports these findings from a JAMA comparison and a review of waste in U.S. health care.
How do I connect a health systems paper to nursing?
Identify the parts of the system's problems that nursing practice affects, such as care coordination, preventable complications and access to primary care, and explain the roles graduate-prepared nurses play in addressing them. The sample ends with implications for leadership, advanced practice, education and policy.
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