Although health insurance was initially conceived as a mechanism to reduce the financial impact of catastrophic illness, its role has expanded in attempts to make all types of health care financially accessible and available to the population. As health-care costs have continued to rise, the amount of out-of-pocket expenses paid by the end user has almost inversely decreased [KFF March 09]. Although causality in this relationship is difficult to directly establish, a classic experiment conducted by the RAND Corporation from 1974 to 1982 provided strong evidence that reductions in coinsurance lead to more people using health services and more services used per person [8]. On the other hand, cost sharing reduced the use of both inappropriate and appropriate medical services. Whereas this effect had minimal consequences on the health status of the majority of people enrolled in the study, for those who were poor and suffered chronic illnesses, the reduction in health utilization was harmful. The CBO concluded that between 5 and 20 % of the increase in health costs can be attributed to the progressive expansion of more extensive health-care coverage. One economist estimates that the insurance expansion represented by the institution of Medicare in 1965 may explain nearly half of the increase in health-care spending that occurred between 1950 and 1990 [9, 2].

Enacted in 2010, the Affordable Care Act (ACA) sought to increase the quality and affordability of health insurance and reduce the number of uninsured or underinsured Americans, while ultimately reducing health-care expenditures for both individuals and the federal government. Several economically significant provisions of the ACA were implemented in 2014, including an extensive federally funded expansion of the Medicaid program along with concomitant development of private health insurance products through the implementation of health insurance marketplaces, premium tax credits, and cost-sharing subsidies (Truffer, OMB).

As the USA has transitioned from its manufacturing-based industrial revolution to an economy that is 80 % service oriented, Americans have grown accustomed to rapid disruptive innovation and the development of advanced technological breakthroughs that fundamentally alter the structure and function of markets. In no sector is this phenomenon more evident than in health care. The development of new drugs, devices, services, procedures, and applications not only impacts current treatment paradigms but in many cases also expands possible treatments to new populations. Technological advances often outpace our ability to adequately study their effectiveness, and evidence-based strategies designed to rationally apply them are often replaced by their rapid and unsystematic adoption with unpredictable incorporation into medical practice.

As medical care and its financial components become more complex, so must the infrastructure that sustains it. While the administrative costs required to deliver health care can be difficult to accurately capture and gauge comprehensively, few would argue that the associated expenditures are rising. Historical estimates attribute 3–10 % of rising costs simply to increases in administrative and support functions in the sector. The CBO found that administrative costs have escalated from approximately 7 % year between 1995 and 2005 to nearly 13.8 % in 2013 as a result of ACA-associated increased enrollment in Medicare and Medicaid [10].

In the USA, health-care resources are not distributed equally among the population. To the contrary, the sickest 5 % of the US population accounted for nearly half of all health spending in 2008 and 2009, and just 30 % of the population account for nearly 90 % of aggregate US health expenditures. The elderly are disproportionately represented among this top decile of spenders, comprising 13.2 % of the population but 42.9 % of the heaviest consumers. Not surprisingly, chronic diseases are more prevalent in the older population, and their presence increases and maintains the elevated costs of health care in this portion of the population [17].