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This chapter examines the mechanisms through which health services are organized, financed, and delivered in the United States. Collectively, these mechanisms function as a complex and adaptive system in which purchasers, providers, consumers, and regulators of health services interact in ways that are not always coordinated or expected. These actors and their actions evolve over time in response to each other and to changes in their external environment, including changes in medical knowledge and technology, changes in the political and economic climate, changes in social norms and values, and changes in population health and disease processes. Understanding the major actors within the nation's health system and the ways in which they interact provides a basis for managing and improving the performance of the system in terms of the accessibility, quality, and cost of health services.


A universal, national system of health insurance and health care does not exist in the United States as it does in many other industrialized countries. This fact often leads observers to conclude that the United States lacks an organized and coordinated health system. Nevertheless, a functioning health system does exist in the United States, one that relies on a combination of governmental action, market forces, and voluntary charitable initiatives to deliver health services to populations in need. Consequently, the U.S. health system operates through the complex and changing interactions of multiple public sector and private sector actors.1

Concepts from general systems theory are useful in understanding the structure and operation of the nation's complex health system. These concepts stress the importance of identifying the major actors within a system, the resources on which these actors depend, the mechanisms through which these actors interact, and the principal external forces that affect these actors.2 The actors within the nation's health system can be classified generally as health-care purchasers, providers and other suppliers, consumers, and policy-makers/regulators. The resources used by these actors include funding, personnel, facilities, technology, and information. These resources are organized by providers and suppliers through their interaction with purchasers and policy makers to produce services for consumers.

The health system, like all systems, is dynamic with many feedback loops among purchasers, providers, consumers, and policy makers. This allows for continual change within the system and therefore continual change in the system's performance. Because of the interdependencies among different actors, efforts to modify one component of the system are likely to affect other components. As a consequence, health interventions and reform efforts may have both direct and indirect effects on the health system, leading to both intended and unintended outcomes. For example, efforts to expand the array of health services covered by private health insurers may have indirect and unintended effects on the number of consumers without health insurance coverage, which in turn may affect the volume of care delivered through hospital emergency departments.


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