You can't live with it, you can't live without it -- this pretty much sums up the attitude many Americans have toward today's health care industry. The industry is made up of a variety of providers of patient care, including hospitals, nursing homes and physicians' offices, as well as those who help coordinate, manage and pay for that care, like HMOs and other health insurers. It's no secret that the sector is a volatile one. Despite making up nearly 15 percent of the nation's gross domestic product (GDP) -- U.S. health care spending totaled $1.8 trillion in 2004 -- the industry has had a tough time figuring out how to turn healthy profits in a way that benefits both providers and patients. The growth rate in the industry has consistently outpaced the growth rate of the overall economy in recent years. Economists predict health spending will make up 18.7 percent of the country's GDP in 2014, a percentage considered "unsustainable" by many analysts. In fact, it is estimated that the public sector will pay for nearly half of all health spending in the U.S. by 2014.

Having a Senior Moment

By the year 2050, seniors will outnumber children for the first time ever, according to the AARP. With approximately one million people turning age 60 each month worldwide, the phenomenon known as "global aging" promises to have a deep impact on the demand for and delivery of health care services. In the U.S., the Baby Boom generation -- those born shortly after World War II up to the mid-1960s -- makes up a sizable portion of the total population. In fact, people aged 50 and older are the fastest-growing demographic group in the nation. This shift is already sparking interest in all issues affecting senior health -- from preventive health care to ward off problems later in life, to programs promoting home care and assisted living as alternatives to the dreaded nursing home option for seniors who can't take care of themselves.

Creaky Medicare

With an aging population comes growing pressure on the nation's reimbursement system for seniors and low-income patients. In the U.S., the federal government looms large in health care -- though not as large as some patient advocates would prefer (we'll get to health care reform later). In fact, ranked by sales, the government's own Centers for Medicare & Medicaid Services (CMS, formerly known as the Health Care Financing Administration) ranks No. 1 in the industry, according to data from Hoovers.com. Around 40 million Americans are eligible for Medicare coverage, more than twice as many as when the program was first established in 1966 under President Lyndon Johnson. In 2002, Medicare spending made up about 17 percent of total health care expenditures, or $267 billion, roughly equal to the 16 percent coming from Medicaid (which is administered by the states and covers low-income patients as well as senior citizens). From 2003 to 2004, Medicare expenditures increased 15.2 percent, nearly twice as high as the largest growth percentage in recent years. The Centers for Medicare and Medicaid Services estimate premiums for enrollees will rise to $89.20 per month in 2006, roughly $1.50 more than Medicare trustees projected. Medicare claims are submitted by health care providers through intermediaries or carriers, entities that have contracted through the government to serve as middlemen in the payment process. After navigating a tricky labyrinth of rules regarding coverage, these claims are either accepted or denied by the contractors. Top Medicare contractors include BlueCross BlueShield organizations in a number of states, plus other companies such as Palmetto GBA and Empire Medicare Services.

The Medicare program, perennially the subject of reform packages in Congress, is a political hot potato. Under the Bush Administration, a heated battle was waged between patient advocates and lobbyists for insurers and pharmaceutical companies in an effort to get prescription drug costs under control. In 2003 the administration established a prescription drug discount card for Medicare beneficiaries, but critics argued that it wasn't the solid overhaul the program truly requires. Bush's plans in his second term for Medicaid have also come under fire. Among his administration's proposed changes are reducing the federal matching rate for targeted case management (which often funds mental health services and assertive community treatment), reducing pharmacist reimbursement rates for prescription medications provided to Medicaid beneficiaries and capping the federal funding match for state administrative services costs, including outreach, enrollment and quality assurance. Also in the works is a proposal to fix faulty pricing techniques, which have caused Medicaid to overpay for some of the drugs it bought in the past, according to a March 2005 report by the Government Accountability office.

Flying Without a Net

The rest of the population -- those who aren't eligible for Medicare or Medicaid coverage -- either have to buy private insurance on their own, get it at discounted rates through an employer, or just go without and hope for the best. An alarming number of Americans, including many children, are in the latter category. In early 2004, almost 44 million Americans (about 15 percent of the population) were uninsured. Additionally, an April 2005 report by the Health Affairs Policy Journal predicted that the number of non-elderly uninsured Americans will grow to 56 million by 2013. Not only do these people risk financial meltdown when faced with unexpected medical emergencies, they're also less likely to rely on routine visits to doctors, dentists, and the like to maintain good health and prevent the onset of more serious conditions down the line. In addition, reports indicate that health care is more expensive overall for the uninsured. For example, some hospitals bill uninsured clients a higher rate for the same procedures provided to those with health coverage, since big insurance companies are able to negotiate discounts with providers.

The situation isn't so rosy for consumers fortunate enough to have coverage, either. Private health insurance companies paid for 35 percent of the total health expenditures in the U.S. in 2002, nearly $550 billion. But as the cost of providing health care coverage continues to rise, many employers are finding they can no longer afford this benefit, and are passing more of the costs on to employees in the form of higher premiums and stingier reimbursement plans. The American Medical Association is currently at work to put together a plan that mixes private and public sector financing to benefit the uninsured and improve quality of care and patient choice, with features like tax credits for the purchase of insurance and a wide range of affordable insurance options.

Unmanageable Care

Managed care, which came into prominence in the 1980s and 1990s as a response to rampant inflation in health care costs, has changed the face of the industry. Under these systems, insurers (also known as "payors") figured out that they could rein in costs by establishing networks of providers who participate in a network or health maintenance organization (HMO), which in turn covers a host of covered patients' needs. But in order for the reimbursement to be profitable, health care providers have to curb their own costs. This includes keeping strict limits on the amount of time they spend with patients to maximize the number of appointments they can squeeze in during a day -- leading to the hour-in-the-waiting-room, five-minutes-in-the-exam-room doctor visits many Americans experience today. Top managed care corporations include Anthem, HealthNet and UnitedHealth Group.

As illustrated by Hollywood dramas, prime time news programs and even the Gore presidential campaign, the public largely sees HMOs as stingy and heartless, willing to deny society's neediest members basic procedures that are deemed too costly or unnecessary through an impenetrable system of rules and limits. For their part, managed care organizations argue that without these limits, the cost of health care would rise for everyone in the network (and society at large), nullifying the benefits of such a system. Meanwhile, the government has gotten into the managed care game, allowing patients to participate in the "Medicare+Choice" program, which also operates under the provider network philosophy. As with much government-speak, the program actually controls costs by limiting patient choice, not adding to it, skeptics contend.

The Doctor Will See You Now

At the other end of the spectrum, consumers who can flash the cash increasingly are turning to "concierge" or "boutique" physician practices. These private practices offer the attentive, personal and thorough care associated with the pre-HMO days of house calls and Norman Rockwell paintings -- for a price. Patients shell out an annual fee up front that can range from several hundred to tens of thousands of dollars to join an exclusive roster of clients seen by a participating internist. So rather than scrambling to see up to 30 patients a day as in a typical managed care practice, boutique physicians can limit their number of cases to a select handful. Some of these practices charge for appointments above and beyond the annual fee (which is just a sort of retainer for their services); some accommodate reimbursement by health plans for things like specialized tests. As health care costs skyrocket and patients grow frustrated with insurance plans and the quality of managed care, these practices are becoming more popular -- and profitable -- business options for those doctors who don't see exclusive care for the well-off as an ethical dilemma.

The Quest for Reform

Every time a campaign season rolls around, the health care coverage crisis gets a lot of buzz -- but since Hilary Clinton's attempt to create a universal coverage plan was shot down early in her husband's tenure as president, few mainstream candidates have been willing to outline a specific, coherent strategy for reform. In fact, rejection of sweeping health care reform is somewhat of a tradition in the U.S., going back to the days when President Truman stumbled in the 1940s after introducing a universal coverage proposal. In addition, of those citizens who actually get out and vote each season, a large majority (92 percent in the 2000 election) have health insurance anyway, so officials aren't exactly running to fix the problem of the uninsured, according to an April 2004 BusinessWeek article. So while many reformers say a "single-payer plan" -- one in which the government takes over the administration of all health care costs -- is the only reasonable way to tame the coverage dragon, it may take a while before a viable plan takes shape.

Liability Looms

Another type of reform that gets plenty of Congressional buzz is in the area of medical malpractice liability. In fact, the powerful American Medical Association has made the issue its top priority recently. The association has taken to identifying states that are in a "medical liability crisis" owing to exploding insurance premiums and their effect -- providers limiting or halting certain services because of liability risks. In June 2004, there were 20 such states on the AMA's list. One such state, Massachusetts, is a case in point -- according to Massachusetts Medical Society research, 50 percent of the state's neurosurgeons, 41 percent of orthopedic surgeons and 36 percent of general surgeons had been forced to limit their scopes of practice because of insurmountable medical liability costs.

The Bush administration cited an end to "junk lawsuits" as one of its primary goals for the president's second term, calling for "medical liability reform that will reduce health care costs and make sure patients have the doctors and care they need." In the early months following his January 2005 inauguration, Congress passed Bush-backed legislation to restrain class-action lawsuits and overhaul bankruptcy laws. However, Bush's influence has not fared as well for the "med-mal" bill, which is expected to be passed through the House, but stands to be blocked by Senate Democrats. Bush's proposal limits to $250,000 the amount a health provider could be required to pay a patient for "pain and suffering" beyond actual cost of medical services provided and provides for payout of judgments over time instead of in a lump sum. Lobbyists from the Association of Trial Lawyers of America are also aiming to block the medical malpractice proposal.

It's a seeming unending loop: With multi-million-dollar judgments against providers making headlines regularly, a solid industry of trial lawyers is devoted to representing patients who complain of poor care (and in some cases, abuse or the deaths of loved ones). At the same time, such judgments cause liability insurers to panic, and many are refusing to cover health care providers at all. The insurers who have stayed in the medical liability market can charge a premium that providers increasingly can't afford to pay.

For lawmakers, the issue is a tough one -- how do you set a cap on the amount a plaintiff can receive for the preventable death of a loved one? Patient advocates frame the issue as a David-versus-Goliath scenario, charging that the monolithic medical community wants to limit consumers' rights to sue providers for poor care. Meanwhile, as the industry waits for the federal government to come up with a solution, states have begun to tackle the issue themselves, setting their own limits on the amount of money a malpractice judgment can reap for the plaintiff. Voters in the state of Texas, which was listed on the AMA's liability list, recently approved a constitutional amendment that caps awards for non-economic damages at $250,000. Similar tort reform measures are in place in West Virginia and Ohio. Though the actions of these states are a far cry from the kind of national reform physicians and insurers are gunning for, it is a start in a definitive direction.

Where the Jobs Are