Why U. S. Health Care Is So Expensive

Health care in the United States costs almost one‑fifth of the country’s economic output, far more than other rich nations. The reasons lie in how the system is organized, funded and run, rather than in medical technology alone. Across the world there are four main ways to deliver health services. Britain’s NHS builds and owns hospitals, hires doctors, and pays for everything with taxes – a model called Beveridge. Germany’s system uses social insurance funds paid by workers, employers and the self‑employed; doctors are private but heavily regulated – the Bismarck model. Canada mixes a national insurance plan funded by taxes with private providers, while many poorer countries have no formal system at all and people pay out of pocket or rely on charity. In the U. S. , no single model covers everyone. Seniors go to Medicare, a federal program financed by payroll taxes and delivered through private providers. Low‑income families may get Medicaid, funded jointly by states and the federal government with varying rules. Veterans, Native Americans and inmates receive care directly from the government, similar to Britain’s system.Most workers obtain insurance through their employers. This resembles Germany’s model but lacks the strict standardization and coordination found in that country. A smaller group remains uninsured, a percentage that fell from about 15 % before the Affordable Care Act to around 8 % after subsidies were added. The high price tag comes from several factors. First, the U. S. system is highly fragmented: many rules, paperwork and billing practices create administrative costs that could account for 15 % to 25 % of total spending. Second, because not everyone is required to buy insurance or pay taxes for it, costs spill over into the community. Hospitals often charge higher rates to those who can pay or use local tax programs to cover the uninsured, shifting the burden back onto society. Other countries keep costs down by simplifying procedures and ensuring everyone contributes to a national pool. Their unified systems reduce paperwork, negotiate lower prices for drugs and services, and spread risk evenly across the population. Thus, while medical advances are shared worldwide, the U. S. pays a premium for its complex, mixed approach to health care delivery and financing.