Priced Out? American Healthcare and the Cost Structure
Exploring the policy foundations behind rising costs and the path toward a transparent system.
In 2026, the United States does not suffer from a lack of medical innovation, it leads the world in pharmaceutical R&D, advanced cancer treatment technologies, and medical research. What it does suffer from is a lack of affordable access to that innovation. Healthcare spending continues to rise exponentially while household income growth has stagnated relative to healthcare spending since the 1980s. Insurance premiums strain families, deductibles discourage treatment, and despite advancements in medicine, millions of Americans hesitate to seek care because it is unaffordable.
This contrast defines the modern American healthcare system: the most advanced in the world, yet increasingly out of reach for the people it is meant to serve. This can be attributed to a failure of structure. Overtime the system has evolved into a bloated, part government, part private insurance network where the consumer is largely disconnected from prices, value and freedom to choose.
This structural failure is reflected in the large scale of spending, in 2025 18% of US GDP was made up of healthcare expenditures, on a per capita level this exceeds any other developed nation without producing consistently superior outcomes. The issue is how inefficiently the money is being spent.
The structure is a result of decades of federal policy that have flawed incentives but layered with good intentions. The creation of Medicare and Medicaid in 1965 expanded access to care for seniors and low-income Americans. However, it also established large-scale third-party payment, fundamentally changing the transactions for healthcare. Patients no longer directly paid for the service of care and providers increasingly responded to reimbursement rather than competitive pricing.
The Affordable Care Act of 2010 built on this structure by expanding coverage through mandates, subsidies, and regulated exchanges. While it reduced the number of uninsured Americans, it also increased complexity and contributed to rising premiums, especially for middle-class households. More recent reforms have addressed symptoms but have left the underlying structure unchanged.
The result is a system defined by third-party dominance and limited supply. Patients often do not know the cost of care until after receiving it, while insurance companies and government programs drive decisions, and regulation limits competition and innovation.
What must be fixed is that the burden falls most heavily on the people it is intended to help: lower to middle income Americans, who do not have full government support and are unable to absorb rising costs. This leads to delayed care, worse long-term outcomes, and growing medical debt. Meanwhile federal health spending continues to rise, and health expenditures continually grow, placing increasing pressure on the national debt.
At the Federal level, reform should shift toward a system of defined healthcare support with clear objectives. Instead of acting as the direct payer, government would provide individuals with fixed, income-adjusted vouchers to purchase insurance or pay for care directly. This preserves access, restores consumer choice, and lowers unnecessary costs once firms are liable to consumer demand.
But reform alone is not enough. What is required is a fundamental shift in how both government and private companies approach healthcare and the services they provide.
Government must move away from managing outcomes through endless spending, instead focus on promoting networks where competition, transparency, access, and choice can function. The role of government in our healthcare system must not be to control, but to set the necessary conditions to enforce clear pricing, removing unnecessary regulation, and ensuring support reaches those who truly need it without distorting prices for the entire market.
At the same time, the private sector must return to serving its clients, not navigating the system to ensure necessary compliance with endless regulation and administrative tasks. Healthcare providers, insurers, and pharmaceutical companies must operate with total transparency, accountability, and price their services to demand. When patients are treated as customers rather than claims, innovation becomes accessible to most Americans.
The future of American healthcare depends on balancing necessary government intervention and incentivizing private companies to compete for consumers based on prices and choice. Affordability is not just an economic issue but a national concern, without it even the most advanced system prices out those it is designed to help.
American healthcare has the innovation, the resources, the economy, and the capability to lead the rest of the world. To make healthcare great for future generations will require a balance between policy and incentives, patients and providers, and an accessible system for the people it is meant to serve.
Health Expenditures (% of GDP)