There is something terribly wrong with the way our healthcare system functions, and only a complete overhaul will save it.
Sometimes anecdotes are more helpful than data and analytics, so I’ll relate a personal story. Three years ago, I needed an MRI for a shoulder injury. I was then between health insurance plans, and told the provider I would pay out-of-pocket. The imaging cost me $250, the cash-pay price I negotiated in advance. Last month, I went back to the same provider for the same work, i.e., a shoulder MRI. This time, now insured, I provided my policy information upfront. I didn’t ask about price, mistakenly assuming it would be similar. This time, my insurance company was billed $1900, of which it paid $1700, and I received a bill for $200. Yes, inflation has been high, but certainly not a near eight-fold increase in 36 months. What was the right (i.e., market) price? Who knows.
There is no price transparency in U.S. healthcare, and there are wide discrepancies in prices charged for the same procedure depending on who is making the payment. While the taxpayer ultimately pays regardless of intermediary, there is little incentive for the patient to make the same cost-benefit analysis that he or she uses daily for most other purchase decisions. Nor is such analysis possible given the opacity of the healthcare billing system. Hospital CFOs are financial magicians whose billing and accounting wizardries are indecipherable to all but a select caste of initiates.
I chose to go without health insurance for several years because the math didn’t make sense. I don’t advise this, and recognized I was running a calculated financial risk if I suffered a serious health crisis. I’m healthy, self-employed, without dependents, and could manage. I had looked into purchasing insurance through the open enrollment process under what is referred to as Obamacare. The annual premiums I would have had to pay for decent but not stellar individual coverage were in the neighborhood of $25,000 per year, plus deductibles, an amount that well exceeded—by a multiple—my typical annual healthcare costs.
I was informally advised by others that I could pay substantially less simply by providing a low estimate of my expected future income for the following year. This would require writing in a fraction of what I thought I would likely earn. But, since the number is a projection, it can’t be verified. I got the impression that this is a generally-acceptable fraud that many Americans knowingly commit in order to lower their health insurance costs. I chose not to participate in the ruse, or to pay the astronomical price asked, and went without coverage until I was eventually folded into my wife’s employer plan. My point is that when the incentives to cheat are built into the design, the model is doomed to systemic corruption.
The dysfunction is endemic. The U.S. healthcare system’s cure is worse than the disease. The U.S. has the most expensive healthcare in the world, while producing substantially worse outcomes. For example, the U.S. spends nearly $15,000 per person per year on healthcare, nearly double the advanced nations’ average. This spending represents 16.7 percent of total U.S. Gross Domestic Product, the highest proportion of national income among peer nations. The U.S. has one of the lowest life expectancy rates of any advanced nation, with higher infant mortality, and three times the average maternal mortality.
Despite these failures, recent cost inflation in healthcare has been substantially higher than general levels of inflation. For example, premiums on family health insurance have increased by an estimated 24 percent since 2021, while hospital services costs have increased by 18.5 percent over the same period. Insurance premiums are expected to rise an additional six percent in 2025, about double the overall Consumer Price Index. Along with housing, healthcare is an area in which many Americans feel priced out of the market. Government involvement is the cause, not the cure, of the dislocation.
The Social Security Administration estimates that Medicare fraud and improper payments costs taxpayers an estimated $60 billion a year. Beyond just Medicare, the National Institutes of Health estimate that up to ten percent of annual healthcare expenditures, or nearly $300 billion, “may be lost to waste, fraud, and abuse across all healthcare programs.” On top of this are the costs of healthcare services provided to tens of millions of uninsured illegal immigrants brought into the country during the Biden administration. Healthcare demands of non-citizens are straining public resources and substantially increasing the cost burden to American taxpayers.
Our healthcare system has become a “sickcare” system, with perverse incentives detrimental to public health and human flourishing. Healthcare providers, like any for-profit company, are incentivized to keep their customers coming back for more of their products and services. Pharma companies rely on doctors to prescribe and refill orders for their products, often when better or less expensive options exist. More money is spent on direct-to-consumer advertisements by pharmaceutical companies that by any other industry. This practice (of marketing prescription drugs directly to the patient) is illegal in nearly every country in the world outside of the U.S.
Americans were rightly shocked in 2024 by the murder of Brian Thompson, the CEO of UnitedHealthcare, the nation’s largest health insurance provider. (Thompson was shot dead in midtown Manhattan in broad daylight while making a morning coffee run.) Many Americans were disgusted by what appeared to be widespread popular sympathy for Luigi Mangioni, Thompson’s cold-blooded assassin, especially among younger generations who venerated the privileged Ivy Leaguer turned avenger as an anti-establishment folk hero. Mangioni had long-decried the insurance industry, accusing it of systematically denying claims and withholding payments. One doesn’t need to approve of his actions to recognize that many young people saw it as a justified attack on a leader and symbol of the entire corrupted system. This should give us pause—not to defend violence or vigilantism—, but to seek to understand motivations and what may be a much deeper issue tearing at our social fabric.
I can only scratch the surface here in describing what is a profoundly broken system. Many readers have had much worse experiences in the healthcare system that the minor one I described. There is a well-fund industry and powerful political lobby whose motivations run against the interests of ordinary Americans. These enterprises and those who feed off of them have little incentive to change a very profitable model that thrives in the darkness of mountains of indecipherable red tape. Nonetheless, Americans need to take a more vigorous stand in resistance to the madness.
The healthcare system is itself a terminally ill patient that should be taken off of life support. Only in the death of the current system will something new be born. In short, Obamacare should be abolished. Rather than increasing government control, the marketplace should be allowed to function without price distorting interventions that reduce, not enhance, access to services. In the meantime, we need to keep the pressure on our elected leaders, the insurance companies, and healthcare providers to come clean, acknowledge the disease, and work for real reform … including price transparency.