11 minute read time
Follow the money and you might get lost. That’s why I made a diagram for the entire US healthcare system’s financial flows - covering an incomprehensible $5 Trillion in healthcare spending.
The US healthcare system looks like an eldritch horror - tentacles reaching into every corner of American life.
But we built this creature. Like Dr. Frankenstein, we assembled it piece by piece - Medicare for the elderly, insurance through jobs, Medicaid for the poor, exchanges for everyone else. Each piece solved a specific problem. Each addition made sense in isolation.
Put them together and you get something alive. Something vast. Something no one would have designed from scratch - because we never agreed on what we were designing.
The flows in the diagram represent $4.9 Trillion - but they also trace every medical decision made in America last year. Every dose administered and every diagnosis delivered. Every ambulance ride and every rehabilitation. Every birth and every final goodbye.
The flows are the aggregate infrastructure of how we keep people alive and healthy - and also, the accumulated friction that makes it harder to stay that way.
This chart holds the confused senior on dialysis, lost between three different insurances. The branch has a brilliant researcher, waiting for approval to start her life-saving trial. Lost in the flow is a desperate parent calling six numbers to pray for one “in-network” specialist. The ends show a struggling hospital with a whole floor for billing - and a closet for social work.
Every flow in the diagram is someone’s life intersecting with the creature we created. And every flow is also a choice about obligation. Who do we owe care to? What do we owe and how much?
The question that comes up for this creation: What did we build and why?
Other wealthy nations finance healthcare too. They also have to balance costs, quality, and access. They also have powerful stakeholders fighting over money and control. But their diagrams don’t look like ours. To understand what we built - and why - we need to see what a coherent system looks like first.
Look, I’m not an international healthcare policy expert. But I went down a research rabbit hole reading Which Country Has the World’s Best Health Care? by Ezekiel Emanuel (my favorite of the legendary Emanuel brothers), and made some diagrams to understand what other countries actually built.
Not to propose we copy them - that ship sailed decades ago. But to see what it looks like when a country chooses a philosophy and then builds the body. Two examples: the UK’s Beveridge model (named after Lord Beveridge, not a beverage model from tacky 90s beer commercials), and Germany’s Bismarck model.
The obvious place to start is the UK’s NHS - the prime example of a single-payer health system. But before we get to how it works, we need to understand the choice that made it possible.
Lord Beveridge published his report in 1942, in the middle of World War II. Britain was being bombed nightly. Citizens were already sacrificing everything for collective survival. And Beveridge asked: if we’re asking people to die for each other, shouldn’t we also keep each other alive? Healthcare as a right, funded through taxes, free at point of service - a popular position around moral framing. Shortly after the war, the National Health Service launched in 1948 to match it.
Of the £317 billion ($400B USD) of UK healthcare spend, 81% comes from general taxation - one payer for nearly everything. NHS England handles most services directly.
Social care (orange in the graph) - like long-term care - are separately managed through local authorities, which creates some coordination gaps. Private insurance is a paltry spend in comparison - Americans would call this “concierge medicine”. Brits call it “queue jumping”, which should tell you everything about their cultural relationship to fairness and waiting your turn.
Look at what disappears in the UK diagram: no insurance cards to verify, no network checks, no surprise bills, no prior authorization departments. Admin costs are low with only one payer, there’s no one to negotiate with and no one to bill.
The complexity that Americans assume is inevitable is actually optional - once you decide who owes what to whom.
UK’s system has its problems - wait times, capacity strains - but Brits LOVE it anyway. The opening ceremony for the 2012 London Olympics celebrated the NHS with doctors, nurses, and (hopefully) fake sick children dancing on hospital beds. While dancing over a government agency may seem silly, they’re actually celebrating their shared moral commitment to each other.
Could America make this choice? Technically, yes. Politically, we’d need to agree that healthcare is a right we owe each other, funded collectively through taxes. That would mean massive tax increases, eliminating private insurance as the primary system, and trusting a single federal agency.
The operational resistance alone would be too much: I’ve watched hospital execs squeeze out thinning margins and payer executives navigate quarterly earnings calls. We’re talking about unwinding a $1T+ private insurance industry, reconfiguring every hospital’s revenue model, and convincing Americans to trust the federal government with something they currently (sort of) get through their jobs. That ship didn’t just sail - it sank decades ago.
The UK made one healthcare body in 1948, but was it too simple - or is it elegantly simple? We can compare it with something much more complex, like the Bismarck model.
Germany has roughly 140 competing insurance companies - in stark contrast to one payer of the UK. Yet Germany delivers universal coverage for over half of what the US spends per person.
Unifier of Germany, Otto von Bismarck (not named after who I initially thought) didn’t create this because he loved workers. He created it because socialists were gaining power in the 1880s and he needed to steal their thunder. “Give workers healthcare before they overthrow us” is peak realpolitik (the German word for “do what works, not what feels righteous”).
Americans are told you must choose: government control OR market competition. Germany said “both“ and built something Americans are told is impossible.
Employers and employees split a 14.6% payroll contribution, meaning wages automatically have a healthcare price tag to them. German workers get to choose from 140 competing sickness funds (aka “insurance companies” in American parlance).
But that competition is morally-bound by regulation: to accept any applicant, cover the same baseline benefits, and charge based on income (not health status). They compete on customer service, extra benefits, and operational efficiency - not on avoiding risky, expensive patients.
On the provider side, the German government sets prices to prevent gouging. Long-term care operates as a separate system (that orange flow on the diagram) instead of bankrupting families or clogging hospitals. Earn over €73,800 ($85K USD) and you can opt into private insurance (in purple).
Germany has universal coverage through competition and cost control through regulation. There are four distinct paths: statutory (blue), private (purple), long-term care (orange), and out-of-pocket (yellow). In practice, there is a lot of complexity, but structured towards the theory of social insurance.
But the German system has trade-offs: payroll tax is pressure on employers, the inequality between public and private tiers, and 140 bureaucracies to navigate. But the complexity serves a coherent purpose.
But imagine if American insurers competed on “who has the best nurse hotline” instead of “who can design the narrowest network to avoid costs”. That’s what happens when the obligation to cover everyone is non-negotiable.
Americans might actually like health insurers functioning as utilities, not profit-maximizing businesses. But federal price-setting across 50 states means telling every hospital and physician what they can charge - and CMS already struggles with Medicare rates alone.
The lobbying alone would be apocalyptic. While insurers would fight “utility” status, the hospitals would fight price controls. Not to mention that the entire physician payment model would need restructuring, while we’re in the midst of an upcoming clinician shortage.
But fundamentally, Americans would need to agree: your job connects you to a community of mutual obligation. Do we actually believe that? We built something like it through a historical accident (WW2 wage controls), but we’ve never committed to the moral premise.
Germany chose regulated competition in 1883 and built something complex - but the parts were designed to work together. We chose unregulated competition and built complexity that serves... what exactly?
There are other healthcare system archetypes as well: National Health Insurance (Canadian healthcare) and Out-of-Pocket systems. I could also build out diagrams for other countries too (have been suggested Singapore, Norway, and Japan). But like all other self-centered Americans, my focus is on talking about the US Healthcare System.
We can learn a lot from two distinct namesake models: the Bismarck model is “social insurance” and the Beveridge model is a “universal right”. The UK and Germany made different choices and built different systems: the UK moves money from taxpayers → NHS → services, Germany from employers + employees → sickness funds → services. But both embody their stated values.
So what does the US value? We built something that costs everyone, everything, everywhere - and still leaves 27 million uninsured.
The outcome is $4.9T - which would make it the 3rd largest economy in the world, a high 8% admin costs - compared to the UK’s 2% admin, with medical bankruptcy still possible. We’ve never agreed on what we value. So we built a system that embodies our disagreement: employer-based coverage (market choice) plus Medicare (social insurance) plus Medicaid (safety net) plus exchanges (regulated markets).
Maybe that IS the American philosophy: pluralism so deep we can’t even agree on how to keep each other alive.
My fear with the diagram is that it just becomes gratuitous complication-porn. I’m not trying to show something to get the reaction of, “Wow, what a tangled mess! Isn’t that insightful?” Let’s look more closely to see the nuance and significance of we can take away from this chart.
Soak in the Sankey (Tsang-key?) diagram again. From a distance, it looks like chaos - maybe even like failure. But zoom in and you’ll see something else: this isn’t random. Every flow, every split, every loop represents a decision someone made.
Here’s the first thing that jumps out: if you work a job in America (and you presumably do, to afford the internet where you’re reading this), you’re already paying for healthcare in multiple places on this chart:
Taxes: federal, state, and local taxes finance Medicare, Medicaid, and various public health programs in so many places. Our attempt at embedding it in single payer.
Payroll: if you’re employed, your employer pays taxes on Medicare (even though you presumably can’t use it until you retire at 65). This is a cost that doesn’t go to your salary.
Insurance premiums: get deducted from your paycheck to fund the employer group plans ($688B from employees alone).
And don’t forget the most insidious payment - out-of-pocket costs - which add up to half a trillion.
We already built socialized medicine - we just made it more expensive.
Academics have pointed this out for years: Americans already finance healthcare collectively, just more inefficiently than countries with actual single-payer. Taxpayers already spend $2.35T - more than the entire GDP of Italy, the 8th largest economy in the world. That’s half the healthcare system before a single insurance premium gets paid.
Healthcare is already a collective responsibility - we just pretend it’s individual. Then make individuals pay twice: once through taxes, once through premiums.
The second thing that jumps out: look at how much flows toward the elderly.
While the obvious culprit is over $1T on Medicare, Nursing Homes account for $218B (split between Medicare and Medicaid) while Home Health & Hospice takes $100B. Medically speaking, old age is EXPENSIVE with the highest complications and comorbidities.
What decision does this say aside from “care for old people”? Medicare is a collective promise - you pay in from age 22 to 65, you collect from 65 to death. And don’t forget special needs plans, which contain so much complexity and overhead for the most vulnerable of the elderly.
Medicaid is technically for “low-income people”, but look closer: 22% of all Medicaid spending goes to nursing homes ($188B). That’s grandma’s long-term care after she runs out of money. Germany separated long-term care into its own system. The UK has a distinct local authority. The US folded it into Medicaid and pretended it’s a poverty program. Another choice we made without admitting it: we socialize the costs of aging, but only after families go broke first.
A stark contrast to Children’s Health Programs (in green). But this isn’t about whether old people deserve healthcare spending compared to our investment in children’s health. This diagram just points out that we’ve made a civil covenant to care for our elders.
The US diagram is a Rorschach test - whatever story you want to tell:
The $100B in public health versus $1,452B in hospital care: the tale of treatment instead of prevention.
The $120B in children’s health versus $1,000B in Medicare: how we repair old age instead of investing in youth.
The $441B in prescription drugs - the story of incentivizing American innovation over price controls.
And the administrative complexity at every handoff…
The question isn’t whether these choices are right or wrong. The question is: do we even know what we chose?
When we say “just fix healthcare,” this monstrous chart shows the problem. You can’t “just expand Medicare” - Medicare is already funded by four different sources. You can’t “just cut insurance middlemen” - employer plans flow $1T+ to care. Every fix redirects one river while missing the ecosystem.
The UK built a system that moves money from taxpayers to services. Germany built a system that moves money from employers and employees to services.
We built a system that costs everyone, everything, everywhere - and we’re still arguing about whether healthcare is a right, an earned benefit, or a market commodity.
I spent weeks mapping this diagram. Actually taking away parts? That’s choosing who loses coverage, whose job disappears, which hospital closes.
The chart isn’t simply dollars flowing through programs - it tells a story of how we support each other. Whether money goes to your trusted doctor, to hospitals that save you when you’re gravely ill, to nursing homes where our elders age with dignity, to invest in programs that keep our children - and our futures - healthy.
This is American ambivalence about what we owe each other. It’s not just a creature to be fixed. It’s 330 million people living inside the creature we created.
Ernst Haeckel drew his creatures to reveal nature’s hidden order. This diagram reveals our hidden disorder - or perhaps, a different kind of order than we admitted we were building. The question isn’t whether this creature is beautiful or monstrous.
The question is: now that we see what we made, what do we want to do about it?