The United States health care system is a unique and uncoordinated combination of private and public programmes involving employers, government, insurance companies, and individual consumers. Although spending on health care comprised 12% of the US gross domestic product in 1990, it is estimated that 35–7 million Americans are uninsured, three quarters of whom are fulltime workers and their dependents.¹ Also, it is estimated that as many as 40 million people have partial but inadequate health insurance.

Currently, employed persons and their families are most likely to obtain health insurance through a group policy that is purchased by the employer from a private insurance company. The federal government has been heavily involved in financing the provision of medical care since 1966 through enactment of Medicare, which provides health care for the elderly. Medicaid, which is a joint federal-state health insurance programme, funds the provision of care for the indigent.

Health insurance, whether purchased by the private employer or paid for by the public sector, has traditionally been designed to pay for high cost, unpredictable medical expenses associated with acute illness, such as stays in hospital and services of a physician. The health insurance policy stipulates the specific health care services that are covered. Hospitals, health care facilities, and individual providers submit claims to the insurance company in order to be reimbursed for the services provided to the patient. Because of recent dramatic rises in costs of health care, patients are increasingly required to contribute more to the cost of the premium paid to obtain the insurance, and to the cost of the specific services provided once they have been delivered. The amount of copayment required of the employee or health insurance enrollee for either the payment of the premium or the service provided has been used as an incentive for …