Why U. S. Health Care Is So Expensive

Health care in the United States consumes almost one‑fifth of the country’s economic output, far exceeding other wealthy nations. The culprit lies not in medical technology alone but in how the system is organized, funded, and run.

Global Models of Health Delivery

The U.S. Mosaic

• Medicare – federal program for seniors, financed by payroll taxes and delivered through private providers.
• Medicaid – state‑federal joint program for low‑income families, with varying rules.
• Veterans, Native Americans, inmates – government‑directed care similar to the UK.
• Employer‑based insurance – resembles Germany’s model but lacks its strict standardization and coordination.
• Uninsured population – dropped from ~15 % pre‑ACA to ~8 % post‑subsidies.

Why Costs Are So High

1. Fragmentation – 15–25 % of total spending is administrative overhead from rules, paperwork, and billing.
2. Optional coverage – uninsured individuals shift costs onto the community; hospitals charge higher rates to those who can pay, using local tax programs to cover the uninsured.

Other countries keep costs low by:

• Simplifying procedures and reducing paperwork.
• Negotiating lower drug and service prices through a unified national pool.
• Spreading risk evenly across the population.

Bottom Line

While medical advances are shared globally, the U.S. pays a premium for its complex, mixed approach to health care delivery and financing.