Characteristics of the U.S. Healthcare System and Health Insurance Structure

 

In South Korea, the government supports the health and medical expenses of all citizens through the National Health Insurance system. In contrast, the United States is known for its high medical costs and lacks a single, government-funded health insurance program. Without private insurance, receiving medical care at hospitals can be extremely difficult. This stems from the unique structure of the U.S. healthcare system.

Characteristics of the U.S. Healthcare System

One defining feature of the U.S. healthcare system is the separation between physicians and hospitals. Unlike South Korea, where doctors are affiliated with specific hospitals, in the U.S., physicians use hospital facilities but are not necessarily employees of the hospital. As a result, when receiving treatment at a U.S. hospital, patients typically receive separate billing statements: one for the physician's services and another for hospital facility usage. Because doctors and hospitals operate separately, insurance coverage is also applied separately to each.

This structure significantly limits a patient's freedom in selecting healthcare providers. For instance, if a patient wishes to see Dr. B at Hospital A, the process differs between South Korea and the U.S. In South Korea, patients can visit the hospital as a walk-in outpatient and receive treatment, paying a subsidized fee under the national health insurance. In the U.S., both the hospital and the physician must be covered by the patient's insurance to minimize financial burden. If neither the hospital nor the physician is included in the insurance coverage, the patient may end up paying a substantial amount out of pocket.

Health Insurance Structure in the U.S.

The U.S. health insurance system is divided into public insurance (Medicare, Medicaid, CHIP) and private insurance (Employer-sponsored insurance, Marketplace Plans, Individual Plans, Short-term Plans).

Public Insurance

Public insurance programs in the U.S. are available only to those who meet specific eligibility criteria, functioning as a welfare-based supplement to private insurance. The majority of Americans rely on private insurance, typically obtained through employer-sponsored plans.

• Medicare: Federally funded insurance for seniors aged 65 and older, as well as individuals with disabilities.
• Medicaid: Jointly funded by federal and state governments, providing assistance for low-income individuals.
• CHIP (Children’s Health Insurance Program): Provides healthcare coverage for children under 18, based on income level.

Among these, Medicare is not entirely government-funded; it consists of multiple parts:

• Part A (Hospital Insurance): Covers hospital stays, nursing facilities, hospice care, and certain home healthcare services.
• Part B (Medical Insurance): Covers outpatient visits, physician consultations, and medical equipment.
• Part C (Medicare Advantage): A bundled plan that combines Part A, Part B, and Part D, offered by private insurers. It may include dental and vision coverage.
• Part D (Prescription Drug Coverage): Assists with medication costs, vaccines, and injections.

Original Medicare (Part A and Part B) is funded by the federal government. However, private insurance companies administer Part D and optional plans like Part C and Medicare Supplement Insurance. Under Part C, the government pays insurers a fixed amount per patient, allowing individuals to enroll in private plans at a discounted rate.

Private Insurance

Most Americans obtain health insurance through private providers, categorized as follows:

• Employer-Sponsored Insurance: Companies offer employees access to private insurance plans.
• Fully-Insured: The traditional insurance model where companies pay premiums to insurers, and employees receive benefits.
• Self-Insured: Employers design customized insurance plans with lower premiums, taking on financial responsibility for employee medical expenses. Insurers facilitate hospital networks and cost assessments.
• Individual Health Insurance (Direct Purchase): Individuals purchase private insurance independently, either through brokers or directly from insurance providers. Freelancers and self-employed individuals commonly use this option.
• Some individuals purchase standardized Affordable Care Act (ACA)-compliant insurance through the Marketplace.
• Short-Term Plans: Temporary insurance coverage for specific periods.

Conclusion

The absence of a universal health insurance system in the U.S. has led to continued expansion of the healthcare industry, primarily fueled by private insurance enrollment. Additionally, an aging population and increasing chronic illnesses have heightened demand for healthcare services, accelerating the growth of telemedicine, specialized pharmacies, and digital health technologies. As the private insurance sector expands, healthcare providers, pharmaceutical companies, and medical technology firms stand to benefit. Many businesses are strengthening their market position through AI-driven medical data analysis, personalized treatment solutions, and healthcare platform development. Consequently, the healthcare industry is expected to experience sustained growth in the future.