Jan 17, 2026 11:00:00

Graphing the flow of money in America's $5 trillion healthcare system

The American healthcare system is a complex and tangled system that requires roughly $5 trillion annually. Columnist Andrew Tsang describes the system's structure as 'the abominable monster we've created,' and attempts to visualize the whole picture.

An Abominable Creature - by Andrew Tsang

https://healthisotherpeople.substack.com/p/an-abominable-creature

Below is Tsang's Sankey diagram , which shows the $4.9 trillion (approximately 778 trillion yen) in healthcare spending in the United States in 2023, including all medical decisions. The arrows represent the type of flow by color and the thickness of the arrows represents the amount of flow. The four axes on the far left indicate the source of healthcare spending, or 'who is paying first.' The top axis represents 'Taxpayers' (government insurance and welfare systems), the second axis represents 'Employers' (employers), welfare benefits and employee health insurance, etc., the third axis represents 'Individuals & Families' (individuals & families), representing the portion directly borne by households, and the bottom axis represents 'Philanthropy & Research Grants' (medical research, new drug development, etc.). Tsang described the situation in which funds collected through these different logics flow into a single healthcare system and become intricately intertwined as an 'abominable monster.'

Tsang points out that the first problem with American healthcare spending is that it 'forces individuals to make double payments.' For example, employers pay healthcare costs in multiple places: general taxes, taxes deducted from their paychecks, and insurance premiums paid from their paychecks. In addition, they have to pay out-of-pocket expenses, which makes the system 'inefficient' compared to countries with single-payer systems, Tsang says.

To illustrate the anomaly of the American healthcare system, Tsang also presents the following Sankey diagram of the UK's National Health Service (NHS). The UK healthcare system is based on the '

Beveridge model ,' which is based on the idea that healthcare should be a right, funded by taxation, and free at the point of delivery. 81% of the UK's healthcare expenditure of approximately £317 billion (approximately 60 trillion yen) in 2024 will be funded by general taxes. Therefore, Tsang says that the structure is simpler than the US Sankey diagram.

Germany also uses the ' Bismarck model ,' in which citizens pay into a fund that then pays for medical services. Under the Bismarck model, employers and employees contribute 14.6% of their salaries toward medical expenses and choose from 140 competing health insurance plans. Competition ensures universal coverage, while German government regulations keep costs down, preventing unfair pricing. Most of the costs are covered by workers and employers, as shown in blue in the diagram below. Those with a certain annual income can enroll in private insurance (purple). Long-term care (orange) is operated as a separate system, preventing household bankruptcy and hospital overcrowding.

Although not included in Tsang's diagram, Japan lies somewhere between the simplicity of the UK and Germany and the complexity of the US. Japan has adopted a universal health insurance system similar to the Bismarck model, which is made up of taxes and 10-30% self-payments in addition to insurance premiums. Although there are multiple funding streams, price controls and universal health insurance provide a fairly organized overall structure.

So why has the US ended up with an overly complex healthcare system rather than one as simple as those in the UK or Germany? Tsang responded, 'Technically, the US could choose a simpler system, but politically, it's impossible.' In the Beveridge model, the system is funded jointly through tax revenue, so the public must agree on measures such as large tax increases and the abolition of private insurance. In the Bismarck model, government price controls play an important role, but it would be difficult for the US federal government to impose similar regulations uniformly. 'We've never agreed on what we prioritize,' Tsang said, pointing out that this pluralism, a core American philosophy, is why the healthcare system has such complex options.

'We've built a system where everything costs money, everywhere,' Tsang said of the American healthcare system. The UK introduced a single-payer system in 1948, and Germany established a regulated competition model in 1883. These are historically deeply rooted systems, and trying to 'improve the healthcare system' in an already complex system will only change the flow somewhere, not fundamentally improve it. 'The question isn't whether this creature-like diagram is beautiful or monstrous. It's what we create as a diagram and then what we want to do about it,' Tsang said.