The U. S. health care system is in the midst of a severe crisis. More than 50 million Americans are uninsured or underinsured. Medicare and Medicaid are not adequately serving populations in need. Analyses and reform proposals are often based on biased interpretations of data, resulting in confusion and heated debate. To avoid jeopardizing psychiatric care in a national health care reform movement, we must understand the causes of the national crisis. In the first part of a two-part paper, the author describes factors such as demographic trends and limitations in public health coverage that have contributed to the crisis. Outcomes of the current system include higher morbidity and mortality among the uninsured and a high prevalence of untreated illness. The author reviews direct and indirect costs of health care and concludes that in attempts to solve the difficult equation of access, cost, and quality, mental health services are in serious jeopardy.