Understanding the Design of America’s Health Care System

A few years back, during a history of public health course, a student raised an eye-opening question: why was her mother unable to afford insulin, despite working a full-time job, without insurance? To this, I offered my perspective rooted in historical context: the U.S. health care system was crafted deliberately to function this way.

Dysfunction or Design?

The narrative surrounding American health care often leans toward dysfunction—too complicated, too expensive, too inequitable. The term "dysfunction" implies failure; however, what if the issue lies in the fact that the system is operating exactly as it was intended? Grasping this legacy illuminates why reform has faced perpetual hurdles and why substantive change remains elusive.

A Historian’s Perspective

As a historian specializing in public health, my research focuses on access to oral health and health care disparities, particularly in the Deep South. By examining historical policy choices, it becomes evident how they have influenced today’s health care landscape. Tracing the origins of our current system helps explain its structure and the obstacles to reforming it into one that offers high-quality, affordable care for everyone. Understanding how profit, politics, and prejudice have shaped the current setup enables Americans to envision and demand a different reality.

Compromises Over Care

Research indicates that the high costs and inequities embedded in the current system are byproducts of policy choices made over decades, where profit was prioritized over people. In the U.S., health care evolved not from a shared vision of universal care but from compromises that favored private markets, maintained racial hierarchies, and emphasized individual responsibility over collective well-being.

Employer-based insurance emerged in the 1940s not due to a commitment to worker health but as a tax policy workaround during wartime wage freezes. By granting tax-free health benefits to employers, it inadvertently tied health access to employment status—a model still prevalent today. In contrast, many nations with employer-provided insurance offer robust public options that decouple access from job status.

Medicare and Medicaid: Double-Edged Swords

The expansion of public health infrastructure through Medicare and Medicaid in 1965 further complicated the landscape. While these programs sought to improve access, they also reinforced existing disparities. Medicare primarily benefitted wealthier Americans who had stable jobs and employer-based insurance throughout their working lives. In contrast, Medicaid was designed for the poor, leading to a patchwork of state-administered programs, each with varying eligibility and coverage.

Particularly in the South, lawmakers actively fought against federal oversight, fearing it would undermine state control over public health spending. This battle was not merely about economics; it was also about sustaining racial divisions during the Jim Crow era.

Visible Legacies of Division

Today, the traces of these historical decisions are painfully apparent. States opting out of Medicaid expansion, particularly in the South, have left significant populations—especially Black adults—trapped in a coverage gap. Many earn too much to qualify for Medicaid yet too little to receive subsidies via the Affordable Care Act’s marketplace.

Moreover, the design of the system often discourages preventative care. The limitations of Medicaid mean that crucial services like dental care, chronic disease management, and preventive screenings frequently go unaddressed, leading to a cycle of expensive, reactive care.

Cultural Attitudes and Misconceptions

Cultural perceptions around concepts such as “rugged individualism” shape resistance to public health solutions. During the postwar years, while many European nations adopted national health care systems, the U.S. expanded its market-driven approach. Publicly funded health systems were demonized as threats to individual freedom, a sentiment perpetuated through rhetoric from politicians and industry leaders alike. For example, President Ronald Reagan campaigned against Medicare in 1961, framing it as “socialized medicine.”

Administrative Complexity

Beginning in the 1960s, the complexity of the health care system surged with the rise of state Medicaid programs and private insurers. Patients now face complicated billing systems, confusing insurance networks, and a maze of formularies—all of which create barriers rather than ease of access. This complexity isn’t purely coincidental; it serves to benefit insurers and intermediaries, turning patient confusion into profit.

The Impact of the ACA

Even reforms like the Affordable Care Act of 2010, which expanded health insurance access, have reinforced existing inequities. By subsidizing private insurers instead of creating a public option, the ACA secured the central role of profit-driven companies in health care delivery. The Supreme Court’s decision in 2012, which made Medicaid expansion optional for states, further deepened disparities, allowing some states—like Alabama—to leave hundreds of thousands without insurance.

Chronic Disinvestment

The ramifications of these historical and structural decisions have pervasive consequences. Rural hospitals continue to close, and entire counties may find themselves devoid of essential health services. Many patients forgo necessary care, leading to mounting medical debt that can derail lives.

Moreover, chronic undervaluation of public health infrastructure has culminated in significant funding cuts. As evidenced during the COVID-19 pandemic, communities that are often low-income or rural found themselves particularly vulnerable, with overwhelmed health systems and higher mortality rates revealing the dire impact of neglect.

A System That Serves Itself

The barriers to change are firmly in place because the health care system serves the interests of its designers. Insurers thrive on a lack of transparency, while fee-for-service models reward quantity over the quality of care. Politicians benefit from campaign contributions and sidestep accountability through complex bureaucracies.

What appears to be dysfunction is, in reality, a system adept at transforming complexity into profit while leaving patients—especially the uninsured and underinsured—in impossible positions. They must choose between delaying treatment or incurring debt, managing their medication and appointments, or going without care altogether.

Looking Beyond the U.S.

Countries such as Germany, France, and Canada illustrate that other models exist, ones prioritizing universal access and transparency. Understanding the intent behind the U.S. health care system is fundamental to fostering a conversation about meaningful change. By examining how the system operates, we can begin to reimagine a health care landscape that truly serves the needs of all.