End-stage renal disease (ESRD) is unique in that, in the United States, it is the only disease-specific condition covered by Medicare independently of the age of patients. Medical care to these patients is provided through 2506 facilities, most of which are free-standing. Of these, the majority are operated by profit-making concerns. The total number of patients served by the Medicare ESRD programme has increased each year and in 1995 it is estimated to be approximately 260,000, of which 195,000 are treated with maintenance dialysis, largely in-centre haemodialysis. Total expenditures for the ESRD programme (of which Medicare is responsible for approximately 72%) in 1995 are projected at $12.3 billion, of which Medicare is responsible for approximately $8.9 billion. Close to 50% of the expenditures are related to the provision of maintenance dialysis. The major component of these expenses is attributable to the Medicare 'composite' reimbursement fee, a fee the amount of which is established by Medicare to reimburse dialysis units for the provision of maintenance dialysis, independent of the costs that the unit might incur. This 'composite' fee has decreased substantially in the course of the last 20 years. The mortality of patients on dialysis in the USA remains high. This is in part due to the increasing severity of associated illnesses and more advanced age of the patients. However, the dose of delivered dialysis in the USA remains less than that observed in other industrialized countries. Three factors appear to play important roles in keeping the dose of dialysis low: the Medicare reimbursement method, the fiscal pressure on dialysis units to generate revenues, and patient preferences. There is general agreement that an increase in dialysis dose will be necessary to reduce mortality. However, this increase would be accompanied by increased costs to the providers of treatment. Improvements in the dose of dialysis to patients (and hence, it is hoped, in morbidity and mortality) are not likely to occur unless Medicare reimbursement increases and is designed to provide financial inducements to improve care and outcomes.