Healthcare is so expensive mainly due to several intertwined factors including the way insurance pays providers (quantity over quality), a rising unhealthy population, high administrative costs, expensive medical technologies, profit- driven corporate motives, lack of price regulation, and fragmentation of the healthcare system. In the U.S., this results in high prices for hospital care, prescriptions, and medical services that are often not controlled or negotiated at a governmental level, unlike in other wealthy nations.
Key reasons include:
- Insurance mostly pays by fee-for-service, incentivizing more treatments rather than better health outcomes.
- An aging and increasingly unhealthy population raises demand for costly medical care.
- High administrative overhead related to billing, insurance, and compliance.
- Corporate profit motives drive up costs in pharmaceuticals, hospitals, and healthcare systems.
- Extensive use and overuse of advanced medical technologies.
- Lack of federal regulation or negotiation of prices, leading to inflated costs.
- Fragmented healthcare system causing inefficiencies and duplication of services.
These factors collectively result in the U.S. spending far more on healthcare per capita than other developed countries without necessarily achieving better health outcomes.
