The U.S. is entirely alone among major developed countries, its healthcare system functioning like a business.
- Berkeley Economic Review, 2025
Profit maximization has become a dominant organizing principle in U.S. health care.
- HealthCare, 2026
A stunning 77% of Americans believe it is harder now than a generation ago to maintain a middle-class lifestyle, and 65% are so pessimistic that they believe a middle-class lifestyle is “out of reach for most people,” and the American Dream is dead. These grim sentiments primarily reflect the nearly half-century-long stagnation of inflation-adjusted wages and benefits for 111 million working- and middle-class employees - stagnation that has sharply redistributed incomes upward. It has caused the middle class to shrink from 61% of all families in 1971 to just 51% in 2023, while the share of upper-income households nearly doubled from 11% to 19%. Some 30% of all American households are now considered low income, with America’s income disparity more severe even than Russia.
Coupled with inflation, the struggle to achieve a middle-class lifestyle has made affordability a major household concern, especially the cost of health care. Kaiser polling finds that 36% of Americans delayed or skipped needed health care in 2025 due to high costs. And at least before the Iran war spiked gasoline prices, 66% consider health costs more concerning than groceries, housing, or gasoline.
Health care is expensive – embarrassingly expensive. The U.S. is an international outlier. At $14,885 per capita (2024), it is by far the most expensive care on earth, double the $7,371 average of the next 14 richest nations like Australia, Canada, Japan, France, and Germany. Its high cost reflects high prices, not better care – American patients actually average shorter hospital stays and fewer physician visits per capita than abroad.
The U.S. has a few strengths, such as medical research. Yet, despite spending twice as much, the U.S. rationed health care implicitly by cost, resulting in mediocre national outcomes. It is 47th in life expectancy, nearly 4 years shorter on average than other rich nations.
Strong Democracies = Strong Health Systems
While foreign health systems vary in structure, all provide relatively inexpensive, generally high-quality, near-universal public health care. Their lower costs and superior outcomes reflect four seminal differences with America: they do not ration health care by price, they do not trust profit-maximizing firms to supply health care, they have uniform, rigorous regulation of health providers, and their public policies treat health care as a basic human right akin to safe food and water or fire stations. These four differences are a consequence of the higher quality of their democracies - higher quality because their political systems respond effectively to public desires.
In contrast, donor-dominated pay-to-play American politics means policy goals of wealthy elites unsympathetic to workers or government are disproportionately reflected in law. Unlike other rich nations, pay-to-play tarnishes the U.S. as a low-quality, faux democracy on a par with India, Oman, Panama, or Namibia. It is what economists call a Functional Oligarchy.
Opposition from wealthy conservatives, health care providers, and the Republican Party is why America rations health care – why it does not acknowledge health care as a basic human right. This is why 26 million Americans lack health insurance at any point in time, and 100 million lack it at some point every year. That same market ideology is why weakly regulated profit-maximizing corporations provide a majority of America’s health care. It also explains why Republicans fetishize abolishing Obamacare, reject Medicaid expansion at the state level in ten states, are privatizing swaths of the Veterans Administration, and are loosening antimonopoly laws in health care.
Profits over Patients
Profit-maximizing American health providers exhibit behaviors not found in superior health care systems. American providers and insurers, for instance, can profit by overbilling, by refusing claims and pre-authorizations for insubstantial reasons, by charging administrative costs five times higher per capita than in Europe, and by paying executive compensation fourfold higher than in Europe. And they exploit weak regulations to commit fraud and seek oligopoly power to create scarcity.
As the Brookings Institution notes, these rent-seeking, monopoly power, and other flaws in America’s health care markets “have contributed to rapidly rising costs in recent decades.”
In the hospital sector, horizontal consolidation of hospitals has been rapid, raising prices without improving the quality of care. Mega hospital systems now control over 90% of all U.S. hospital beds and 68% of local community hospitals. A 2025 Federal analysis found that such mergers resulted in lower wages for nurses and skilled workers but raised prices from 6% to 65%.
Vertical mergers are also commonplace, with hospitals and insurance companies like UnitedHealth acquiring physicians’ practices. The General Accountability Office (GAO) found that such mergers increased the share of doctors working for hospitals from 30% in 2012 to 47% in 2024. And such consolidation increased physicians’ service fees by 14% on average after acquisition.
Mergers have also created vast hospital deserts. Some 81% of all American counties are officially designated health professional shortage areas, with their 120 million inhabitants lacking proximity or “proper access” to health care providers.
Moreover, America has just 2.7 practicing physicians per 1,000 population compared to an average of 3.8 in Europe. The reason is a residency requirement bottleneck created by law in 1997 that constricts the number of new doctors (while raising their compensation). These pressures are predicted to persist, with estimates of a nationwide doctor shortage within the next decade ranging upward from 86,000.
Private Equity: Buy and Bust
The combination of robust profits on offer and weak regulation has led to a surge in private equity (PE) buyouts in health care. PE firms have been aggressively acquiring hospitals, emergency rooms, physician practices, nursing homes, and hospices, but also less prominent sectors, including veterinary practices and even funeral parlors.
The PE business model focuses on immediately improving profit margins following debt-heavy acquisitions. It prioritizes rapidly compensating limited partners by cost-cutting, reducing staffing, and quickly shedding or mortgaging acquired assets. Critics label the model “Buy and Bust” because acquisitions are typically downsized, dissolved, or rapidly resold – diminishing the quality of patient care in the process. The median holding period for physician practices acquired by PEs is three years.
Analyses find that when the local market share for physician specialties owned by a single PE tops 30%, prices increase an average of 18% for gastroenterology procedures, 13% for dermatology, and 16% for obstetrics and gynecology. And a JAMA article by Harvard and University of Chicago physicians found that hospitals purchased by PEs experienced a 25.4% increase in hospital-acquired adverse medical events (falls, infections), “suggesting poorer quality of inpatient care.”
The elections of 2026 and 2028
The American Health industry delivers inadequate care at exorbitant prices. That extra cost reflects its profit-maximization ethos, fundamentally at odds with superior systems abroad. Those foreign systems (and Medicare) provide lessons for reform. But first, the barrier posed by America’s pay-for-play politics must be overcome – an issue that can only be addressed at the ballot box. Americans are frustrated with their health care system. But reform hinges on the Democratic Party effectively translating that sentiment at the polls in 2026 and 2028.
George Tyler is a former deputy assistant treasury secretary and World Bank official. He is the author of books including Billionaire Democracy and What Went Wrong.
