Why Is Healthcare So Expensive in America?

The United States spends more money on healthcare than any country in human history, and gets worse health outcomes than most wealthy peers. This is not a political opinion. It is documented across every major international health comparison. (Commonwealth Fund, US Health System Performance)

Understanding why requires following the money.

Drug prices. A month of Humira — a common arthritis drug — costs about $6,000 in the US. The same drug costs roughly $1,300 in the UK and $550 in Germany. Same drug, same company, different country. The difference is that every other developed nation has some form of government price negotiation or regulation. The US does not — or did not, until the Inflation Reduction Act allowed Medicare to negotiate a very limited list of drugs, which the pharmaceutical industry is actively lobbying to reverse.

Administrative overhead. The US has hundreds of private insurance companies, each with different coverage rules, billing codes, prior authorization requirements, and claim procedures. American hospitals employ armies of billing specialists just to navigate this system. Administrative costs consume roughly 30% of healthcare spending in the US — compared to 12% in Canada. That gap alone is hundreds of billions of dollars annually that goes to paperwork, not care.

Hospital consolidation. Over the past two decades, independent hospitals have been absorbed into large health systems. In markets where one health system dominates, they charge whatever they want. There is no meaningful price competition. Patients do not shop around for surgery the way they shop for cars.

Physician salaries. US doctors earn significantly more than peers in comparable countries — partly due to medical school debt that can exceed $300,000, and partly due to compensation norms set by a medical culture with limited supply and protected licensure.

None of these problems require a single ideological solution. Allowing Medicare to negotiate all drug prices would cost nothing in government spending and save hundreds of billions. Price transparency requirements would create market pressure. Reducing administrative complexity is something both parties claim to want.

But every one of these reforms has a powerful industry fighting it. Drug companies, insurance companies, hospital networks, and medical associations all lobby intensely to preserve the current system.

The current system is expensive because it is profitable — for them. You are the one paying.