The Structural Flaws that Must be Fixed to Transform the U.S. Health System

Key Takeaways:

• The U.S. health system’s future is uncertain but outside forces will define its direction.
• 9 structural changes appear necessary to a transformed system of health that’s affordable, comprehensive and effective.

Last week, I had a 27-hour stay in a hospital emergency room waiting for an open bed and a morning at the food pantry loading boxes in anticipation of a possible SNAP program suspension surge. It wasn’t the week I expected. So much for plans!

Such is the case for health insurance coverage for millions in the U.S. as the federal government shutdown enters Week 6. Democrats are holding out for continuation of Affordable Care Act (ACA) insurance subsidies that enable 22 million to “buy” insurance cheaper, and Republicans are holding out for federal spending cuts reflected in the One Big Beautiful Act (July 2025) that included almost a trillion reduction in Medicaid appropriations thru 2036.

ACA subsidies at the heart of the shutdown successfully expanded coverage in tandem with Medicaid expansion but added to its costs and set in motion corporatization and consolidation in every sector of the health system. The pandemic exposed the structural divide between public health programs and local health systems, and insurance premium increases and prior authorization protocols precipitated hostility toward insurers and blame games between hospitals, insurers and drug companies for perpetual cost increases.

Having mediated discussions between the White House and industry trade groups as part of the ACA’s design (2009), I witnessed first hand the process of its development into law, the underlying assumptions on which it is based and the politics before and after its passage in March 2010.  Its hanging chads were obvious. Its implementation stalled. Its potential to lower costs and improve quality never realized. It was a Plan disabled by special interests that rightly exploited its flaws and political brinksmanship that divided the country. But more fundamentally, it has failed to lower costs and improve affordability because it failed to integrate outside considerations—private capital, employers, technologies, clinical innovations and consumer finances—in its calculus.

Sixteen years later, healthcare is once again the eye of the economic storm. Insiders blame inconsistent regulatory enforcement and lack of adequate funding as root causes. Outsiders blame lack of cost controls. consolidation and disregard for affordability. Thus, while attention to subsidized insurance coverage and SNAP benefits might temporarily calm public waters, they’re not the solution.

All parties and all sides seem to agree the health system broken. For example, in my trustee surveys before planning sessions with Boards of health systems, medical groups and insurers, the finding is clear:

• 92% says the future of the U.S. health system in 7-10 years is fundamentally changed and not repeat of its past.
• 84% say their organizations are not prepared because short-term issues limit their ability to long-term planning.

Republicans think market forces will fix it. Democrats think federal policy will fix it. The public thinks it’s become Big Business that puts its interests before theirs. And the industry’s trade groups—AMA, AHA, AHIP, PhRMA, Adame, APHA, et al—face intense pressure from members adversely impacted by unwanted regulatory policies.

Few enjoy the luxury of long-term planning. That doesn’t excuse the need to address it. If a clear path to the system’s future is not built, incrementalism will enable its inevitable insolvency and forced re-construction.

What’s the solution? When comparing the U.S. health system to high performing systems in other high-income countries, these findings jump out:

• All spend less on healthcare services and more on social services than the U.S.
• All include government and privately-owned operators
• All fund their systems primarily through a combination of federal appropriations and private payments by employers and citizens.
• All pursue clinical standardization based on evidence.
• All are dealing with funding constraints as their governments address competing priorities.
• All are transitioning from episodic to chronic health as their populations age and healthiness erodes.
• All are focused on workforce modernization and technologic innovations to lower costs and reduce demand for specialty services.
• All enable private investment in their systems to increase competition and stimulate innovation.
• All facilitate local/regional regulatory oversight to address distinctions in demand and resources.
• All face with growing public dissatisfaction.
• All are expensive to operate.

No system is perfect. None offers a copy-paste solution for U.S. taxpayers. And even if one seemed dramatically better, it would be a generational surge rooted in futility that welcome it.

What’s the answer? At the risk of oversimplicity, the future seems most likely built on these 9 structural changes:

• Integrate social services (public health) with delivery.
• Create comprehensive primary and preventive health gatekeeping inclusive of physical and behavioral health, nutrition, prophylactic dentistry and consumer education.
• Rationalize specialty services and therapies to high value providers.
• Incentivize responsible health behaviors across the entire population.
• Increase private capital investments in healthcare.
• Modernize the workforce.
• Fund the system strategically.
• Define and disclose affordability, quality and value systemically.
• Facilitate technology-enabled self-care.

This will not happen quickly nor result from current momentum: the inertia of the status quo leans substantially toward protectionism not because it’s unaware. The risks are high. And while the majority of Americans are frustrated by its performance, there’s no referent to which look as a better mousetrap.

I anticipated last week would be pretty uneventful. It wasn’t. My Plan didn’t work out due, in part, to circumstances I didn’t foresee or control.

Healthcare’s the same. Outside forces seen or not will impact its future dramatically. Plans have to be made though Black Swans like the pandemic are inevitable.  But long-term planning built on plausible bets are necessary to every healthcare organization’s future.