On December 4, 2024, UnitedHealthcare chief executive Brian Thompson was shot and killed outside a hotel in Midtown Manhattan. The killing was indefensible. Yet the public conversation that followed quickly moved beyond the crime itself.
Investigators found words associated with insurance claims-denial tactics written on ammunition recovered after the attack. As reporting on the killing of Brian Thompson spread, so did stories from patients and families who felt they had been failed by insurers, hospitals, drug companies, or a billing system they could not understand.
None of that excuses murder. It does, however, reveal the depth of public anger surrounding American healthcare.
The United States possesses extraordinary medical capabilities. It has advanced hospitals, highly trained specialists, world-leading research institutions, and access to treatments that would have been unimaginable a generation ago.
It also has a healthcare system that routinely confuses, delays, frightens, and financially punishes the people who depend on it.
Americans spend more on healthcare than any comparable country. Yet millions delay treatment because of cost. Patients with insurance can still face enormous bills. Doctors spend hours seeking permission to provide care. Hospitals and insurers employ armies of workers to negotiate payments, challenge claims, document procedures, and navigate rules that vary from one organisation to another.
The problem is not simply that healthcare has become a business. Every healthcare system must decide how to allocate limited money, labour, medicines, and facilities.
The deeper problem is that the American system often rewards behaviour that is rational for each institution but destructive for the system as a whole.
The American Healthcare Paradox
The scale of American healthcare spending is difficult to overstate.
According to the Centers for Medicare & Medicaid Services’ national expenditure data, the United States spent approximately $5.3 trillion on healthcare in 2024. That was about 18% of the country’s entire economic output.
No comparable wealthy country devotes as much of its economy to healthcare.
High expenditure would be easier to defend if it produced clearly superior results for the population. It does not.
A 2026 Commonwealth Fund comparison of the United States with other wealthy health systems found that Americans continue to face unusually high costs, incomplete coverage, weak access to primary care, and poor outcomes on several broad measures.
The OECD’s latest profile of American healthcare shows the same uncomfortable mixture. The United States spends far more per person than the OECD average and has lower life expectancy, while also performing well in areas such as access to advanced technology, screening, and some forms of acute treatment.
That balance matters. Life expectancy is not produced by healthcare alone.
Violence, addiction, road deaths, obesity, poverty, housing conditions, diet, and other social factors all affect how long people live. It would be misleading to attribute every difference between the United States and its peers to hospitals or insurers.
It would be equally misleading to conclude that the healthcare system has little responsibility.
A system can possess outstanding doctors and still fail to provide timely primary care. It can develop breakthrough medicines while making them unaffordable. It can save a critically ill patient and then send the family a bill that destabilises its finances for years.
The central paradox is not that American medicine is uniformly bad. It is that extraordinary medical capability coexists with extraordinary institutional dysfunction.
Nor can the spending difference be explained simply by Americans consuming much more care.
Comparative research on the drivers of US healthcare spending has found that prices, administrative expenditure, pharmaceutical costs, and professional compensation explain far more of the gap than unusually high use of doctors or hospitals.
Americans are not merely buying more healthcare. They are often paying more for each unit of care while supporting a vast administrative structure around it.
To understand why, the system must be examined through its three most powerful groups: insurers, providers, and pharmaceutical companies.
Insurance Turns Care Into Administration
Insurance is essential because medical risk is unpredictable and potentially catastrophic. Most people cannot personally absorb the cost of cancer treatment, emergency surgery, intensive care, or a long hospital stay.
The problem is not the existence of insurance. It is the fragmented structure through which insurance operates in the United States.
Americans may receive coverage through an employer, Medicare, Medicaid, an Affordable Care Act marketplace, a military programme, or an individually purchased plan. Within those categories, they may choose among insurers offering different networks, formularies, deductibles, copayments, approval requirements, and reimbursement rules.
Choice can be valuable. Fragmentation has a price.
The Cost of a Fragmented Multi-Payer System
Every insurer must decide which doctors belong to its network, which medicines it will cover, how much it will pay for thousands of procedures, what documentation it requires, and which treatments need prior approval.
Hospitals and medical practices must build systems capable of responding to all of them.
The same procedure may be billed differently depending on the patient’s insurer. A medicine may be covered under one plan but restricted under another. A specialist may be considered in-network for one patient and out-of-network for the next. A claim may be accepted, rejected, resubmitted, appealed, modified, or sent through another layer of review.
This requires people.
Hospitals employ coding specialists, billing departments, utilisation-review teams, contract negotiators, compliance staff, and collections workers. Insurers employ their own claims processors, network managers, medical reviewers, fraud investigators, and appeals teams. Doctors and nurses spend part of their working day documenting why a patient needs something they have already decided is medically appropriate.
Some administration is unavoidable. Healthcare systems need accurate records, quality controls, fraud prevention, and financial accountability.
But the American system goes far beyond those necessary functions. A Health Affairs analysis of administrative waste in American healthcare shows how billing complexity, insurance-related activity, duplicative processes, and fragmented payment systems contribute substantially to excess spending.
The cost is not confined to salaries in administrative departments. It changes how medicine is practised.
A small independent clinic may need considerable staff and software merely to collect payment from multiple insurers. A physician who wants to prescribe a drug may need to learn which alternatives are preferred by each plan. A hospital may decide which services to offer partly according to the reimbursement rules attached to them.
Over time, organisations adapt themselves to the payment system.
What begins as an insurance mechanism becomes an industry of administrative negotiation surrounding the actual provision of care.
Claim Denials and Prior Authorization
Insurance companies do need mechanisms to challenge wasteful, fraudulent, or medically unnecessary claims. Without oversight, providers could order needless tests, select unnecessarily expensive treatments, or bill for services that were never delivered.
The conflict arises because insurers also benefit financially when they pay less.
That does not mean every rejected claim is improper. It does mean the system creates a persistent tension between cost control and access to care.
The numbers must be interpreted carefully because different datasets measure different things. A post-treatment billing denial is not the same as a refusal to approve treatment before it occurs, and figures from one insurance market cannot be applied automatically to the entire country.
Even with those qualifications, the evidence is troubling.
An analysis of 2024 HealthCare.gov claims found that insurers denied approximately 19% of in-network claims submitted to marketplace plans. Denial rates differed widely between companies, and fewer than 1% of rejected claims were appealed.
The low appeal rate is crucial.
A denial is not necessarily the final word. Patients and providers may have the right to challenge it. But an appeal requires time, knowledge, documentation, persistence, and often professional assistance.
A healthy person may find that process frustrating. A person undergoing chemotherapy, recovering from surgery, managing a chronic illness, or caring for a sick child may find it overwhelming.
When almost no one appeals, an insurer faces relatively little practical resistance to questionable denials. Even if some decisions are overturned later, the patient may already have delayed treatment, paid out of pocket, or abandoned the process.
Prior authorization creates a related problem before treatment begins.
Under prior authorization, a doctor must obtain approval from an insurer before providing certain medicines, tests, procedures, or services. The stated goal is reasonable: discourage unnecessary care, encourage lower-cost alternatives, and make sure treatment meets established clinical criteria.
But prior authorization also gives an insurance company the power to delay a decision made by a clinician who has examined the patient.
A KFF analysis of prior authorization in Medicare Advantage shows how deeply the process has become embedded in private Medicare plans. Millions of medical decisions pass through approval systems that can differ from one insurer to another.
The consequences are particularly serious when timing matters.
In a 2024 survey of radiation oncologists, physicians reported delays, treatment disruptions, and cases in which prior-authorization problems contributed to hospitalisation or permanent harm.
This was a professional survey based on clinicians’ reported experiences, not a national audit of every patient record. It should not be treated as proof that every authorization requirement causes harm.
It does show what can happen when an administrative process is inserted between diagnosis and treatment.
The insurer may view a delay as another file under review. For the patient, it may mean that a tumour continues to grow, pain continues untreated, or a condition that was manageable becomes an emergency.
Consolidation and Vertical Integration
A fragmented insurance system does not necessarily produce vigorous competition.
In many local markets, a small number of insurers dominate. Supporters of consolidation argue that large insurers can negotiate lower prices from hospitals, reduce duplicative administration, spread risk across more customers, and invest in better technology.
Those benefits are possible.
The problem is that stronger negotiating power does not guarantee that savings will reach patients. A dominant insurer may use its position to protect margins, raise premiums, narrow networks, or impose more demanding payment rules.
Research into insurance mergers has repeatedly raised concerns that consolidation can increase premiums without producing corresponding improvements in quality or affordability.
It is also increasingly difficult to describe major insurers as companies that merely reimburse medical care.
Large insurance groups now own or control physician practices, pharmacy benefit managers, pharmacies, data companies, home-care businesses, and other healthcare operations. UnitedHealth Group, for example, has expanded far beyond traditional insurance through its Optum businesses.
Vertical integration can make care more coordinated. An insurer connected to physicians, pharmacies, and data systems may be able to manage a patient’s treatment more efficiently.
It can also create conflicts.
An insurer may be paying one part of its own corporate group for services delivered by another. It may direct patients toward affiliated providers. It may gain access to information or market power that disadvantages independent competitors. The organisation can profit not only by controlling insurance payments, but also by owning more of the businesses receiving them.
The Affordable Care Act requires insurers to spend a minimum share of premium revenue on medical care and quality improvement. That rule was intended to limit excessive administrative spending and profit within insurance products.
It did not eliminate the incentive to seek profit elsewhere in the healthcare chain.
The result is a sector in which the line between payer and provider is increasingly blurred. The company deciding whether care will be covered may also own the clinic, the pharmacy, the data platform, or the benefit manager involved in delivering it.
That concentration of functions may improve coordination in some cases. It also concentrates power over prices, referrals, patient access, and competition.
Provider Market Power Raises Prices
Insurers are not the only powerful actors in American healthcare.
Hospitals, physician groups, specialist practices, nursing facilities, and other providers negotiate their own prices and make their own commercial decisions. In many regions, they have become large enough that insurers cannot realistically exclude them from a network.
A hospital system that controls the main trauma centre, maternity ward, cancer programme, and specialist groups in a city possesses enormous bargaining power. Patients cannot comparison-shop effectively during an emergency, and insurers may have no marketable plan if the dominant hospital is missing from its network.
That makes healthcare consolidation especially lucrative.
America Trains Too Few Doctors
American doctors are paid considerably more than physicians in many comparable countries. Their compensation contributes to high healthcare prices, especially in specialised care.
But physician pay cannot be separated from physician supply.
The United States has fewer practising doctors per person than the OECD average. That shortage is particularly severe in primary care, psychiatry, rural medicine, and some lower-income communities.
The supply problem was not created by one organisation acting alone.
During the late twentieth century, influential forecasts warned that the country might produce too many doctors. Medical-school expansion slowed. Professional organisations, policymakers, hospitals, universities, and federal agencies made decisions within that environment.
The most important bottleneck emerged after medical school.
Doctors cannot practise independently merely because they have completed a medical degree. They must pass through residency programmes, where they receive supervised specialist training. Medicare finances a substantial part of graduate medical education, and the Balanced Budget Act of 1997 effectively capped federal support for many residency positions.
A JAMA analysis of the federal cap on Medicare-supported residency positions documented how the law constrained the training pipeline even as the population continued to grow and age.
Medical schools eventually began expanding again, but residency capacity did not increase at the same pace.
That creates a peculiar situation. The country may produce more medical graduates while still lacking enough training positions in the places and specialties where doctors are most needed.
Restricting supply raises the bargaining power of existing physicians and medical groups. It also increases workloads, limits appointment availability, and makes it harder for rural or low-income areas to recruit doctors.
Yet it would be simplistic to blame individual physicians for exploiting an artificial shortage.
American doctors often graduate with substantial debt, train for many years, work within a highly litigious and administratively demanding system, and spend considerable time on tasks unrelated to direct patient care. Their salaries are one part of a much larger cost structure.
The stronger criticism is institutional: the country has allowed an essential workforce pipeline to remain constrained even while demand has risen.
Hospitals and Physician Practices Keep Consolidating
For decades, independent physicians operated small practices and negotiated separately with insurers. That model has become increasingly difficult to sustain.
A small practice must manage electronic records, billing rules, prior authorizations, privacy requirements, employment costs, quality reporting, technology systems, and negotiations with multiple insurers. Joining a hospital system or corporate group can remove much of that administrative burden.
It can also produce a substantial payment advantage.
Large provider systems have greater leverage when negotiating with insurers. A health plan may be willing to exclude one independent clinic from its network. It may be unable to exclude the hospital system that controls most specialists and essential facilities in a region.
The Government Accountability Office’s review of healthcare consolidation found that at least 47% of physicians were employed by or affiliated with hospital systems in 2024, compared with less than 30% in 2012.
That shift changes the economics of medical care.
When a physician becomes part of a hospital system, the same service may be billed at a higher rate. Consolidated organisations may charge facility fees or negotiate more favourable contracts. Some mergers can reduce duplicated services, support capital investment, or help struggling facilities survive.
The broader evidence, however, consistently shows that provider consolidation tends to raise prices.
Quality results are less uniform. Some systems may coordinate care better or invest in sophisticated treatment. Others may reduce competition without producing measurable improvements for patients.
The crucial point is that higher provider prices do not remain an abstract dispute between hospitals and insurers.
Insurers respond through higher premiums, stricter networks, larger deductibles, or tougher negotiations. Employers absorb part of the increase through benefit costs. Governments spend more through public programmes. Workers may receive lower wages than they otherwise would. Patients pay more directly or indirectly.
The price can move through several institutions before it reaches the household, but it reaches the household eventually.
What Private Equity Changes
Private-equity firms have recognised that healthcare possesses many features attractive to investors.
Demand is persistent. Patients cannot always delay treatment or shop around. Insurance or government programmes often pay much of the bill. Medical practices can produce stable cash flows. Fragmented local markets can be consolidated through repeated acquisitions.
The standard private-equity model involves acquiring a business, often with significant debt, improving or restructuring its operations, and later selling it at a higher valuation.
In healthcare, operational improvement may mean better scheduling, stronger purchasing, modernised technology, or more professional management.
It may also mean seeing more patients per doctor, reducing staffing, centralising decisions, closing less profitable services, increasing prices, or directing attention toward treatments with better reimbursement.
Debt intensifies the pressure. A highly leveraged organisation must generate enough cash not only to operate but also to service the borrowing used to acquire it.
The evidence should not be exaggerated. Private equity operates across hospitals, nursing homes, dermatology groups, emergency departments, dentistry, anaesthesia, and many other settings. Results from one type of facility cannot automatically be applied to another.
Nor does every acquisition produce the same outcome.
Still, the warning signs are serious.
A study of adverse events following private-equity hospital acquisitions, summarised by the National Institutes of Health, found increases in certain hospital-acquired complications, including infections and falls, after acquisition.
The study does not prove that every private-equity-owned hospital provides worse care. It does illustrate how ownership incentives can affect decisions that appear operational but have direct clinical consequences.
Staffing levels, infection-control resources, nurse workloads, supply purchasing, and the time allocated to each patient all influence both costs and outcomes.
A spreadsheet may classify them as expenses. A patient experiences them as care.
Americans Pay More for the Same Medicines
Prescription drugs are not the largest component of total American healthcare expenditure. Hospitals and clinical services account for more spending overall.
Medicines nevertheless provide one of the clearest examples of American price exceptionalism.
A drug may have the same chemical composition, manufacturer, and therapeutic purpose in several wealthy countries while costing far more in the United States.
That difference is not primarily a scientific question. It is a bargaining and policy question.
Why US Drug Prices Are So High
Pharmaceutical companies offer a legitimate explanation for at least part of their pricing.
Drug development is expensive, slow, and risky. Many compounds fail during laboratory testing or clinical trials. Successful products must help finance unsuccessful research, manufacturing systems, regulatory compliance, and future development.
Strong profits can also attract capital into biotechnology and encourage companies to pursue treatments that might otherwise never be developed.
That argument deserves to be taken seriously. The world benefits from pharmaceutical innovation, and the United States plays an unusually important role in funding it.
It does not fully explain why American purchasers pay so much more than purchasers elsewhere for medicines that already exist.
RAND’s international comparison of prescription-drug prices found that prices in the United States were substantially higher than those in other countries, particularly for branded originator drugs. The picture for generic medicines was different, demonstrating that the problem is not simply that every medicine is more expensive in America.
Other wealthy countries negotiate, regulate, or assess drug prices more centrally. Some use national purchasing power. Some evaluate whether a drug’s additional benefit justifies its price. Some set reimbursement limits or negotiate confidential discounts.
The United States historically divided its bargaining power among private insurers, employers, pharmacy benefit managers, Medicare plans, Medicaid programmes, hospitals, and individual patients.
That fragmentation gives pharmaceutical companies more opportunities to preserve high list prices, negotiate different discounts with different purchasers, and shift costs from one part of the market to another.
Even insured patients may not benefit fully from negotiated rebates. Their out-of-pocket payments can be tied to list prices, deductibles, coinsurance rules, or formularies they do not understand.
The rapid growth of GLP-1 medicines has made these tensions particularly visible. The broader pricing and access problems surrounding GLP-1 drugs show how a medical breakthrough can become an economic and ethical conflict over who receives treatment, who pays for it, and how much society should spend.
The United States does not need to pretend research is free in order to challenge excessive drug prices.
The real question is whether American patients must bear a disproportionate share of global pharmaceutical revenue because their purchasing system is less capable of resisting it.
Medicare Negotiation Has Begun, but Only Narrowly
For years, one of the strangest features of American drug policy was the limited ability of Medicare to negotiate prices directly.
When Medicare Part D was created, the federal noninterference provision restricted the government from directly setting formularies or negotiating prices for the programme as a whole. Private plans and benefit managers negotiated separately instead.
That system has now begun to change.
The Inflation Reduction Act created Medicare’s new Drug Price Negotiation Program. Negotiated prices for the first ten selected medicines took effect on January 1, 2026.
This is a meaningful shift. The country’s largest public healthcare purchaser is no longer completely excluded from direct negotiation.
It is not comprehensive national price negotiation.
The programme initially covers a limited number of high-spending medicines that meet specific eligibility rules. It does not allow the government to set a single price for every prescription drug sold in the country. Private insurers, employers, and other purchasers continue to negotiate through their own arrangements.
Its long-term effects also remain to be evaluated. Pharmaceutical companies argue that lower revenue could discourage investment in some new treatments. Supporters argue that the programme corrects an imbalance that allowed manufacturers to charge Medicare more than other wealthy governments would accept.
Both consequences should be examined as evidence develops.
What can no longer be said is that Medicare is entirely prohibited from negotiating drug prices. The system has entered a new, limited phase.
When Industry Payments Create Conflicts
Drug companies do not influence medical care only through prices. They also maintain financial relationships with doctors, hospitals, researchers, and professional organisations.
The federal Open Payments database was created to make many of those relationships visible.
The database includes research funding, consulting fees, speaking payments, meals, travel, royalties, licensing arrangements, and ownership interests.
These categories should not be treated as interchangeable.
A company may fund a legitimate clinical trial, compensate a specialist for technical expertise, license an invention from a physician, or pay for a modest meal during an educational presentation. The existence of a payment does not prove that a doctor prescribed an inappropriate drug or violated the law.
Financial relationships can still influence behaviour, even without an explicit quid pro quo.
A physician involved in company-funded research may sincerely believe in the treatment being studied. A specialist paid to speak about a product may remain clinically independent. But repeated financial ties can shape familiarity, trust, professional networks, and perceptions of evidence.
That is why transparency matters.
Patients should not assume every industry relationship is corrupt. They should be able to know when a company that profits from a treatment also funds the research, education, consulting, or speaking activity surrounding it.
There is also an important distinction between disclosed relationships and illegal kickbacks.
Healthcare fraud and kickback cases do occur, and pharmaceutical companies have paid large settlements for unlawful marketing or payment practices. Those cases require specific evidence. They should not be used to declare every doctor-industry relationship criminal.
The ethical problem is broader and more subtle.
A system can permit individually legal transactions while creating an environment in which commercial influence becomes difficult to separate from medical judgment.
World-Class Care, Unequal Access
It is possible to tell two apparently contradictory truths about American healthcare.
The United States offers some of the best medical care in the world.
It also has one of the most dysfunctional healthcare systems among wealthy countries.
A patient with excellent insurance, substantial savings, access to a major medical centre, and the ability to navigate complex institutions may receive extraordinary treatment. The country has leading cancer centres, transplant programmes, trauma hospitals, medical-device companies, biotechnology firms, and specialist physicians.
American patients often receive rapid access to new medicines and technologies. The country performs well on several forms of screening and acute care. Its research universities and medical institutions contribute discoveries used around the world.
But technical capability is not the same as universal access.
The patient who benefits most from American medicine is often the patient best equipped to enter and remain inside the system.
Insurance status matters. So do income, employment, geography, disability, race, family support, time, health literacy, and the ability to challenge an incorrect bill or denial.
A well-paid professional may be able to call an insurer repeatedly, pay for an out-of-network specialist, travel to a renowned hospital, or absorb a large deductible.
A low-wage worker may lose income by attending an appointment. A rural patient may live hours from a specialist. A person changing jobs may face disruption in coverage or networks. A family may postpone care because it cannot predict what the final bill will be.
Recent evidence on the care Americans postpone because of cost shows that affordability continues to influence whether people fill prescriptions, visit doctors, obtain recommended tests, or seek treatment at all.
Delayed care often appears cheaper only in the immediate term.
A manageable condition may become an emergency. A missed screening may allow a disease to progress. A patient who cannot afford medication may arrive at a hospital needing far more expensive treatment.
Medical debt adds another layer of harm. Even when a patient receives successful care, the financial consequences can affect housing, credit, employment choices, family relationships, and future willingness to seek treatment.
This is why national discussions about quality can become misleading.
A country may have the world’s most sophisticated treatment for a disease while many people struggle to reach the clinician who can diagnose it. It may perform a technically brilliant surgery and still fail the patient through an opaque bill, a rejected rehabilitation claim, or unaffordable follow-up medication.
The problem is not that excellence is absent.
It is that access to excellence is conditional.
The Real Problem Is Misaligned Incentives
The American healthcare system is often described as irrational. From the perspective of patients and taxpayers, it is.
From the perspective of many institutions inside it, the system is behaving exactly as its incentives encourage.
An insurer benefits from controlling payouts, restricting networks, and directing patients toward lower-cost options. Those actions can reduce waste. They can also reward delay and denial when the people affected lack the ability to fight back.
A hospital benefits from acquiring competitors, employing more physicians, and gaining leverage in contract negotiations. Those actions can create scale and support investment. They can also raise prices without producing better care.
A private-equity owner benefits from increasing revenue, reducing costs, and generating cash quickly. Those actions may professionalise a business. They may also place pressure on staffing and clinical decisions.
A pharmaceutical company benefits from strong patents, favourable formulary placement, fragmented bargaining, and high prices in the market most able to pay them. Those incentives can fund innovation. They can also make essential medicines unaffordable.
None of these sectors operates alone.
High provider prices lead insurers to raise premiums or tighten controls. Administrative controls push doctors toward larger organisations capable of managing them. Consolidation gives providers more pricing power. High drug costs lead insurers to impose more formulary restrictions and prior authorization. Patients encounter the combined result as one confusing system, even though responsibility is divided across dozens of organisations.
This is why blaming a single group never fully explains the problem.
It is also why the debate cannot be reduced to whether healthcare should be public or private.
Government programmes can become bureaucratic, politically constrained, and inefficient. Private organisations can innovate, compete, and improve services. They can also consolidate, exploit information imbalances, and maximise revenue from people who cannot behave like ordinary consumers.
The relevant question is not which ideological label sounds best.
It is what the system rewards.
Does an insurer gain by helping a patient receive appropriate care early, or by making an expensive claim difficult to complete?
Does a hospital gain by keeping its community healthy, or by controlling enough of the local market to charge more whenever someone becomes sick?
Does a pharmaceutical company gain by making a medicine widely accessible, or by preserving the highest price each fragmented purchaser will tolerate?
Does a doctor have more time and financial support to treat a patient, or to complete the documentation required to be paid?
A functioning healthcare system does not eliminate trade-offs. It aligns them more closely with the public purpose of medicine.
That means reducing avoidable administrative work, making denials accountable, expanding the supply of clinicians, preserving competition where competition is possible, controlling market power where it is not, and using purchasing power more effectively.
Reform should be judged by practical outcomes: whether people can obtain necessary care in time, whether prices reflect real value, whether institutions can be held responsible for harmful decisions, and whether the country becomes healthier without devoting an ever-growing share of its wealth to the process.
The United States does not lack brilliant medicine.
It lacks a system that reliably connects that brilliance to everyone who needs it.
Last Updated on July 21, 2026 by Aseem Gupta