The U.S. healthcare system is a $2 trillion industry. The U.S spends nearly 16% of its GDP on healthcare, almost twice the average among European Union countries.
Yet the U.S. ranks just 33rd on a United Nation's ranking of health and wellness. The United States spends vastly more to achieve inferior results.

At current rates, the U.S. will be spending $1 of every $5 of its GDP on healthcare by 2015, yet more than 1 in 4 workers will be uninsured.

It's estimated the proportion of the U.S. population aged 65 or more will increase 50% by 2020, and thus healthcare expenditures will continue to grow faster than the general economy no matter what is done. National health expenditures are projected to reach $3.1 trillion in 2012, or 17.7% of the U.S. economy. Healthcare spending accounted for only 6.5% of the economy in 1970.

Growth in healthcare spending rose particularly rapidly in the late 1990s, peaked in 2002 and has since slowed. But it still far exceeds growth in per capita income, wages and inflation. Over a five-year period through 2005, health insurance premiums shot up 87%, more than four times the 20% increase in wages, according to the Kaiser Family Foundation. As of 2006, the cost of health insurance averaged $4,242 a year for an individual, and $11,480 for families.

In 2007, American companies were expected to pay 7.7% more to provide health insurance to employees, benefits consultant Hewitt Associates forecast. The cost of insuring each worker and their family would rise to an average of $8,340 in 2007 from $7,744 in 2006 -- and more than double the year 2000 average of $4,081, Hewitt said.

The cost of hospital care has been -- and is expected to remain -- the most important driver of overall spending growth. Hospital spending accounted for 27.1% of the increase in health spending in 2002, while spending on prescription drug accounted for 16.3% and physicians' fees 16.5%. Hospital costs today account for a third of all medical expenditures. The average cost for a day in a U.S. hospital was $7,175 in 2006, twice that of other Western countries.

One major contributor to the increasing cost of hospital care is the greater use of very expensive high-tech equipment, often to perform diagnostic procedures ordered as a defense against being sued for medical malpractice.

Physicians' average net income declined 7% from 1995 to 2003, after adjusting for inflation, according to the Center for Studying Health System Change, a nonprofit research group in Washington.

More than 155 million Americans -- about half of all Americans -- rely on health insurance coverage provided by employers. But the Kaiser foundation warned in 2006 that the system of employer-provided health coverage is disintegrating rapidly. Since 2000, the percentage of U.S. companies offering health benefits has fallen from 69% to 61%.

But even those Americans still covered by company healthcare plans are feeling the squeeze. To maintain coverage in the face of relentless cost increases, many companies now require employees to pay larger contributions for dwindling coverage. Employers, seeking relief from double-digit cost increases, have put in place high-deductible plans and shifted more costs to employees.

An example of the trend is the change in coverage that took effect in January, 2007, at Wal-Mart Stores Inc., the largest private-sector employer in the country. Wal-Mart, which employs 1.3 million U.S. workers, stopped offering low-deductible plans and replaced them with low-premium plans with high deductibles.

Employers' health insurance premiums have risen 73% while average employee contributions have risen 143% since 2000, according to the National Coalition on Health Care (NCHS) in Washington.

Many U.S. companies are also abolishing the medical insurance coverage provided to retired employees. A survey by the Kaiser Family Foundation and Hewitt Associates of the nation's largest private-sector employers found that just 33% were offering retiree health coverage in 2005, down from 66% in 1988.

That comes as a severe blow to retirees, as healthcare spending soars with age. Fidelity Investments recently estimated that a 65-year-old couple retiring without employer-provided health benefits would likely need $200,000 just to cover medical costs beyond federal Medicare coverage.

But U.S. companies claim they must slash their healthcare spending costs to remain competitive in the face of intensifying global competition. The situation is best understood as it affects the U.S. Big Three automakers. In 2005, pension and retiree health costs totaled $1,470 per vehicle at Ford and $1,683 at GM, according to Merrill Lynch. Chrysler said it spent $2.2 billion on healthcare in 2006, nearly twice what it spent in 2000.

A grim situation also confronts Americans who try to buy individual medical insurance coverage. A 2006 study by the Commonwealth Fund found that 89% of working-age adults who sought individual coverage never bought a plan. The majority of the 1,878 people surveyed said it was very difficult to impossible to find affordable coverage. Some 21% said they were turned down, charged more because of a pre-existing condition, or could only find a policy that excluded coverage for pre-existing conditions.

And finally there are the estimated 45 million Americans who have no health insurance. This includes people too poor to afford health insurance, people unable to obtain coverage, and people without insurance by choice. About one in five people who apply for health insurance as individuals are denied coverage, typically due to pre-existing conditions and health histories which prompt insurers to classify them as too high risk. Many people without insurance are young adults in their 20s, who are twice as likely as adults aged 30-64 to not have health insurance, according to the Commonwealth Fund. The rate of uninsured 20-somethings has risen sharply in recent years, as the cost of coverage soared. The result has been to put even more pressure on rates charged older policyholders. As one health policy analyst explained: "If you don't have healthy people paying into the larger pool, you can no longer subsidize the cost of the people who at that time are needing a lot of health care. At a certain point the insurance part of insurance falls apart."

A study by the Commonweath Fund, a New York-based private healthcare policy foundation, found that the percentage of working-age Americans with moderate to middle incomes who lacked health insurance for at least part of the year rose to 41% in 2005, up sharply from 28% in 2001. Among individuals earning less than $20,000 a year, more than half had no health insurance. Overall, the percentage of people without insurance rose to 28% in 2005 from 24% in 2001.

Soaring costs for dwindling healthcare coverage has most middle-class Americans feeling spooked about the future. Halting runaway healthcare costs is now the No 1 domestic concern of American voters. Numerous polls show a majority of Americans believe they are one healthcare crisis away from personal bankruptcy, as they come to realize that the cost for treatment for a catastrophic illness or injury would rapidly exceed the limits of their healthcare coverage. In fact, healthcare spending is already the No. 1 cause of personal bankrupcty in the United States.

A 2006 Commonwealth Fund study found that about half the adults in middle-class families report serious problems paying for their health care. Some 48% of individuals in families earning $35,000 to $49,999 said they experienced somewhat serious or very serious problems paying their medical bills in the previous two years. Even a third of individuals in families earning $50,000 to $74,999, and 21% of people in families earning $75,000 or more reported trouble paying medical bills. The study also found that nearly half of those surveyed were unhappy with the medical care they received. 42% said they had experienced poorly coordinated, inefficient or unsafe care at some point during the past two years. Their experiences included medical errors, duplicate tests or failures to provide important test results to doctors or nurses.

Sloppy medical care is all too common. The Institute of Medicine estimates that between 44,000 and 98,000 people eachyear die from medical errors. It reported the number of deaths caused by prescribing or administering the wrong drugs more than doubled from 1983 to 1993. Other recent research indicates that nearly 30% of healthcare spending in the U.S. is for treatments that may not improve health status, may be redundant, or may be inappropriate for the patient's condition.

One of the chief reasons for the poor performance of the U.S. healthcare industry is its extremely low usage of information technology. Just a quarter of U.S. physicians used some form of electronic patient record in 2005, according to a Centers for Disease Control and Prevention report. Most experts agree electronic records can reduce medical errors by keeping presciptions, allergies and other information straight. They can also cut costs by reducing duplicate tests as well as staff needed to manage files.