Why Is Healthcare So Expensive?
We pay more and get less. That's not a bug—it's the business model.
TL;DR
America spends 18% of GDP on healthcare. Germany spends 10% and lives longer. The 8% difference isn't care—it's extraction: insurance administration, billing wars, denied claims, and executive compensation. The system wants you sick enough to need it and solvent enough to pay.
1962 — Pittsburgh Steelworker
$87
Broken leg: ER, X-rays, cast, overnight stay, crutches
- ER visit: $15
- X-rays: $12
- Casting: $18
- Hospital room: $28
- Doctor's fee: $14
Out of pocket (20%): $17.40
Less than two days' wages
2024 — Same Injury
$15,000+
Same treatment: ER, X-rays, cast, maybe overnight
- ER visit: $2,000-4,000
- X-rays: $500-1,500
- Casting: $1,000-2,500
- Hospital room: $3,000+/night
- Doctor's fee: ???
Out of pocket: $1,000-7,500
After insurance. If you have insurance.
The broken leg was an inconvenience. Now it's a catastrophe.
The Numbers That Matter
United States
18%
of GDP on healthcare
Germany
10%
of GDP on healthcare
The Gap
8%
~$2 trillion/year
Germans live longer. Their babies die less often.
The 8% isn't care. It's extraction.
The Accidental System
The system we have now was not designed. It was not planned. It emerged from a wartime expedient that no one ever reversed.
The Wartime Loophole
Wages frozen to control wartime inflation. Employers couldn't pay more, so they offered health insurance instead. It wasn't cash—it didn't violate the controls.
The Tax Break
IRS rules employer health premiums aren't taxable income. Overwhelming incentive created.
The War Ends. The Loophole Doesn't.
Wage controls ended. The tax exemption did not. A temporary expedient became permanent policy.
Healthcare Tied to Employment
Lose your job, lose your coverage. Stay in a job you hate because your child has a preexisting condition. You are not a customer—you are a cost center.
The Extraction Machine
The extraction has three arms. They often belong to the same body.
Insurance
They make money by collecting premiums and not paying claims. Every denial is profit.
One insurer's algorithm: 90% reversal rate on appeal
They knew the denials were wrong.
Hospitals
In 1975: 7,000+ independent hospitals. By 2020: half acquired by larger systems. Monopoly pricing.
MRI: $400 (Japan) vs $1,400-$3,000 (US)
Same machine. Same scan. Market power.
PBMs
Pharmacy benefit managers: middlemen between you and drugs. Three companies control 80%+ of the market.
CVS Caremark owns Aetna. OptumRx = UnitedHealth.
Same company denies and prices.
The Trajectory
1960
5%
Post-war baseline
1980
9%
First doubling
2000
13%
Continued climb
2020
18%
One in five dollars
2040?
25%?
If trajectory holds
One in every five dollars the American economy produces now goes to healthcare. Not to health—to healthcare. To the system.
The money does not produce proportionally more health. American life expectancy is lower than in any peer nation. American infant mortality is higher.
We pay more and get less because the system is structured to extract more, not to deliver better.
The Human Cost
66%
of bankruptcy filers cite medical debt
Many had insurance. It didn't protect them.
$1,700
Average deductible (was $303 in 2006)
Before insurance pays anything.
People don't go to the doctor when they should because they can't afford the copay. They don't fill prescriptions because the drugs cost too much. They wait until the problem is undeniable, until the emergency room is the only option.
By then, the treatment costs more and works less.
The Design
The system does not want you healthy. The system does not want you dead.
The system wants you sick enough to need it, solvent enough to pay, and confused enough to accept whatever price is demanded.
The steelworker in Pittsburgh paid $17.40 for his broken leg. His grandson would spend more on healthcare in a year than his grandfather spent in a lifetime.
The deal was that illness would be a hardship.
The system made it a catastrophe.
See the Healthcare Solution →Frequently Asked Questions
Why is healthcare so expensive in America?
America spends 18% of GDP on healthcare. Germany spends 10% and lives longer. The 8% difference isn't care—it's extraction: insurance administration, billing wars, denied claims, appeals, and executive compensation.
Why do insurance companies deny claims?
Health insurers make money by collecting premiums and not paying claims. One major insurer's algorithm denied claims with a 90% reversal rate on appeal—the denials were wrong nine times out of ten. The algorithm was designed to create friction, not make correct decisions.
Why is healthcare tied to employment?
A wartime expedient that was never reversed. In 1942, wages were frozen to control inflation. Employers offered health insurance instead—it wasn't cash, so it didn't violate the controls. The IRS ruled it tax-exempt in 1943. Wage controls ended in 1945. The tax exemption never did.
Why are prescription drugs so expensive?
Three pharmacy benefit managers control 80%+ of the market: CVS Caremark (owns Aetna), OptumRx (UnitedHealth), and Express Scripts (Cigna). The Medicare Modernization Act of 2003 explicitly prohibits Medicare from negotiating drug prices—the largest purchaser forbidden by statute from using its buying power.
What happens if I can't pay my medical bills?
66% of bankruptcy filers cite medical debt. Many had insurance—it didn't protect them. Average deductible: $1,700 (was $303 in 2006). People skip doctors, don't fill prescriptions, wait until the ER is the only option. By then, treatment costs more and works less.
