The hit television drama “The Pitt” has no shortage of high stakes and heartbreaking stories. In one episode, a construction worker with poorly-managed diabetes is brought into the emergency department after fainting. It turns out that Orlando makes too much money for safety net programs but not enough to afford private health insurance. He has been rationing his insulin because he couldn’t afford the full volume he was prescribed. 

After leaving the hospital against medical advice, he returns a few episodes later with a serious head injury following another fall. The good news, delivered without irony from the case manager, is that Orlando’s new disability now makes him eligible for health insurance.  

This is an all too common story across American households: individuals self-rationing care to avoid unmanageable costs, which leads to avoidable complications that compound financial pressures. The scenario often involves a premature discharge from the hospital, a GoFundMe campaign, and uncertain future health outcomes. 

As the healthcare system in the United States convulses through falling subsidies and rising premiums, the number of uninsured individuals is anticipated to grow over the coming decade by an additional 17 million.

The U.S. health insurance system has slowly but surely evolved into an institutionalized scam: urgently requesting high sums of money, then denying claims when services are rendered. 

A major cause of Americans’ struggles to access good healthcare is our health insurance system. 

At its origin, health insurance was designed to reduce the strain of healthcare costs on individuals and families. Yet we have arrived at a place where health insurance creates as much strain as the healthcare costs it purports to buffer. 

The stakes of the U.S. health insurance system dysfunction are too high and wide- ranging to delay major reform efforts. One-third of Americans have already had to cut spending on essential items like food or borrowed money to cover healthcare expenses, and over 40% of Americans have some sort of medical debt. 

Medical bills are delaying needed healthcare, career changes, vacations, retirements, home purchases, even the decision to have children, coloring how Americans make decisions about nearly every other factor in their lives. 

Many Americans oppose single payer models because of concerns over rationed care, increased taxes, and the loss of individual choice. While these concerns reflect legitimate implementation challenges, they are often amplified by targeted advertisements, millions of dollars in congressional lobbying, and politically motivated disinformation.

The reality is that Americans already endure delayed and foregone care in a system that is simultaneously more expensive and less effective. 

With the introduction of germ theory, X-ray technology, and safer, more complex surgeries, hospital service costs increased. These rising costs created financial strain for both hospitals and patients.

Past presidential administrations have attempted major systemic reforms to our health care system. However, when they faced intense pushback from medical associations, industry lobbyists, and political opposition, political leadership in the U.S. has settled for minor legislative patches. 

The result is a U.S. health insurance system that has slowly but surely evolved into an institutionalized scam: urgently requesting high sums of money, then denying claims when services are rendered. 

Where Health Insurance Came From 

The modern concept of health insurance — and the first threads connecting health insurance with employment — originated in Germany in the late 1800s. At that time, rapid industrialization brought more people into dense urban areas and factories. 

Chancellor Otto von Bismarck faced a restless working class increasingly drawn to socialist politics. His solution to strengthen state loyalty and undercut socialist opposition was to introduce a national health insurance program, funded through joint employee and employer contributions into pooled funds. This “Bismarck” model laid the groundwork for health coverage to be considered a benefit attached to a job.

In 1945, President Truman proposed a plan for national health insurance that would have created a universal, government-administered program funded through payroll taxes. 

In the U.S., demand for this kind of pooled insurance began to grow in the late 1920s. At the start of the decade, U.S. healthcare was relatively inexpensive and commonly paid for out of pocket, but it was also basic care with limited diagnostic and treatment options. 

With the introduction of germ theory, X-ray technology, and safer, more complex surgeries, hospital service costs increased. These rising costs created financial strain for both hospitals and patients, leading businesses and the medical community to experiment with healthcare prepayment plans. 

In 1929, Baylor University Hospital in Texas piloted a program for the Dallas Public School Teachers Association. Around 1,500 participating teachers were able to pre-pay $0.50 a month (approximately $10 in today’s value); this pooled fund provided a guaranteed benefit of up to 21 days in the hospital. 

As financial strain compounded during the Great Depression, organizations began to replicate the Dallas teachers’ model for their employees. Together the programs came to be known as “Blue Cross” plans for hospital services. Blue Cross plans worked best when enrolling large groups, making large employers natural conveners for organizing coverage. 

By the 1960s, the majority of working Americans received health insurance through their jobs, leaving non-working Americans — particularly older adults and low-income households — largely uninsured. 

World War II both expanded and cemented the role of employer-sponsored health insurance. As part of federally mandated austerity measures, wage controls limited the ability for employers to compete for the scarce labor force that was not deployed overseas. Since health insurance was not considered a wage, employers began to offer health coverage plans as a recruitment incentive. 

When the Internal Revenue Service ruled that employee health insurance was not taxable income in 1943, it became financially advantageous for individual households to be covered through their employers compared to purchasing private market options. This tax exclusion effectively created a government subsidy for employer-provided health insurance plans, which were further expanded through unions and collective bargaining agreements. 

How and Why We Created Our Patchwork Insurance System

In 1945, President Truman proposed a plan for national health insurance that would have created a universal, government-administered program funded through payroll taxes. 

The proposal faced fierce opposition campaigns from physicians and medical associations, which cited fears of increased provider competition, insurance company supervision, and cost controls. They labelled the concept “socialized medicine” and framed it as anti-capitalist and un-American. 

In lieu of national legislation, medical associations expanded Blue Cross models to include outpatient physician services, or so-called “Blue Shield” plans. The combination of new Blue Shield benefits, expansion of employer-provided coverage, organized resistance, and political winds doomed Truman’s plan; it never came to a vote in Congress.

Given your specific doctors, conditions, and prescriptions, it is often impossible to compare health insurance plans side by side to evaluate value and potential for out of pocket payments. 

By the 1960s, the majority of working Americans received health insurance through their jobs, leaving non-working Americans — particularly older adults and low-income households — largely uninsured. 

In 1965, Congress established Medicare, federal health insurance for people 65 years old and above, and Medicaid, joint federal-state coverage for low-income individuals and families. While Medicare and Medicaid remain central tenets of the U.S. health insurance system, their implementation reinforced the fragmentation of Americans’ coverage by creating separate insurance pathways for different groups. 

The most significant reform came decades later with the passage of the Affordable Care Act (ACA) in 2010, also known as ObamaCare. 

The ACA sought to expand insurance coverage while maintaining the pre-existing mix of private and public insurance. The law created health insurance marketplaces where individuals could purchase coverage, often with income-based subsidies. It required insurers to cover individuals with preexisting medical conditions and eliminated lifetime coverage limits. 

The rise of the gig economy, the reduction in employee protections, and increased mobility between jobs has further increased individual vulnerabilities.

These policies considerably reduced the number of uninsured Americans, though adoption has been neither uniform nor comprehensive, and opposition has been enduring. Republicans have campaigned and voted against ACA mandates, lawsuits have gone before the Supreme Court, and the first Trump administration used executive and regulatory actions to roll back provisions of the ACA.  

Patchwork Solutions Rarely Withstand the Test of Time

The U.S. healthcare system over the 21st century faces continually rising costs and rising numbers of uninsured people not covered by employers or social safety net programs. The rise of the gig economy, the reduction in employee protections, and increased mobility between jobs has further increased individual vulnerabilities. 

Beyond the shaky structural foundations, there is also a growing realization that the patchwork of insurance jurisdictions, confusing terminologies, and opaque coverage terms and conditions may not be accidental, but design elements.

Billing errors are endemic, with financial incentives for private insurers to deny claims, delay payments, or miscode to increase out-of-pocket billing. Case in point: Each of the authors of this article had to correct billing errors over the recent months. One of us had a new dentist coded out-of-network and billed at a higher rate when the dentist is, in fact, in network and in the provider directory. The other had an annual physical, which should have been fully covered as preventive care, coded and billed as a complex visit. 

To institute meaningful reform, the U.S. can draw lessons from several alternative global models. 

Given the attention to detail required to identify discrepancies, the health literacy needed to navigate coverage policies, and the time-consuming nature of appeals, many individuals facing similar billing errors are unable to follow up. This complicated process allows insurers to pad their bottom line with little incentive to correct the issue. 

Health providers operate under a web of negotiated rates, fees, and billing codes to determine what your insurer will cover. Patients have no meaningful ability to regulate how much care they consume in a crisis. And even in routine care, the opacity of cost disincentivizes consumption of health services. 

Given your specific doctors, conditions, and prescriptions, it is often impossible to compare health insurance plans side by side to evaluate value and potential for out of pocket payments. 

All of these characteristics serve as anti-competitive market inefficiencies, leaving both insured and uninsured confused, in precarious financial situations, and in poor health. 

Prescription for the Future

Many now identify the logic of tying employment to health coverage as an accident of history, not a deliberate arrangement designed to drive good health outcomes. As Orlando’s story in “The Pitt” demonstrated, a system that provides health coverage only after a preventable devastating health diagnosis is no system at all.

Single-payer systems emerged from a recognition that fragmented, employment-linked coverage leaves too many people behind.

To institute meaningful reform, the U.S. can draw lessons from several alternative global models. 

While the 1945 Truman plan for national health insurance failed to take root in our country, the vision took shape in the United Kingdom. In 1948, the U.K. launched the National Health Service (NHS), providing health services funded through general income taxation rather than employment contributions. The government acts as a single payer and, in this case, also directly provides care through the NHS itself. 

Many Organization for Economic Co-operation and Development countries followed suit as their health systems evolved, establishing a variety of single payer models that could pool health utilization risks across their entire populations. These approaches have their own unique features and challenges, but largely retain the same underlying logic: pooling risk gives the state power to negotiate or set prices of services, medicines, and other supplies needed to keep hospitals running. 

Single-payer systems emerged from a recognition that fragmented, employment-linked coverage leaves too many people behind. The NHS and other single payer systems are not perfect and each face their own reform challenges in light of increasingly constrained budgets, aging populations, and delays in care. Despite these shortcomings, they are able to achieve better population and individual health outcomes at lower cost.

Meaningful reform requires acknowledging the profound dysfunction at the center of the current system and confronting the gap between what health insurance promises and what it currently delivers.

Many Americans support certain features commonly associated with single payer systems, particularly universal coverage, protection from medical debt, and lower drug prices. The U.S. already has several proven models that exist within or alongside the current structure at the state level that could provide a pathway to federal policy. 

Maryland’s all-payer rate-setting system, administered by the Health Services Cost Review Commission, demonstrates that government-negotiated pricing can control hospital costs without dismantling private insurance. 

Massachusetts, through its MassHealth program, expanded statewide coverage by expanding Medicaid eligibility and consolidating it with the Children’s Health Insurance Program.

Reference pricing — capping what insurers pay for specific procedures — has reduced costs for public employees in California and could promote price transparency if adopted more widely. 

For those who are locked out of both employer coverage and Medicaid, a public option on the ACA marketplaces could pool risk and boost the ability for plans to negotiate prices. Already Washington, Colorado, and Nevada are early pioneers of this approach.

Compare these state level innovations with the federal policy currently being explored: high deductible plans, expanding loopholes that allow exclusion of pre-existing conditions, and Medicaid work requirements. 

Meaningful reform requires more than these incremental fixes. It requires acknowledging the profound dysfunction at the center of the current system and confronting the gap between what health insurance promises and what it currently delivers. Only then can we build a system that improves health outcomes, protects individuals from financial burden, and treats healthcare as a right and not a privilege.