America’s $5.6 Trillion Healthcare Gorilla: Why We’re Blind to the Real Crisis

In the late 1990s, two Harvard psychologists ran a now-famous experiment. In it, students watched a short video of six people passing basketballs. They were told to count the number of passes made by the three players in white shirts.

Halfway through the film, a person in a gorilla suit walks into the frame, beats its chest, and exits. Amazingly, half of viewers — both then and in later versions of the study — never notice the gorilla. They’re so focused on counting passes that they miss the obvious event happening right in front of them.

The authors call this “inattentional blindness.” And its impact isn’t limited to research labs. You can see it everywhere in American healthcare.

Today, policymakers and business leaders are focusing on healthcare metrics like subsidies, premiums, and enrollment numbers. Understanding these details matters, but not nearly as much as confronting medicine’s “invisible gorilla”: the $5.6 trillion our nation spends on healthcare each year. For perspective, that expenditure exceeds the total economic output of every nation except China.

As a country, we need to stop counting passes long enough to see how the gorilla is impacting life everywhere.

1. The gorilla in Washington, D.C.

U.S. lawmakers spent 43 days debating how to reopen the federal government. The fight centered on whether to continue funding the premium tax credits that help 20 million Americans afford coverage through the online health exchanges.

Democrats said ending those payments in 2026 would cause premiums to spike and make coverage unaffordable. Republicans warned that continuing them would add nearly $400 billion to the federal deficit. Both were right. If the underlying cost of medical care isn’t reduced, neither the federal government nor the average family will be able to afford it.

The United States spends $14,885 per person each year on medical care. Switzerland, the second most medically expensive nation, spends $9,963. If the U.S. could close half that spending gap, we’d save $700 billion annually.

But the gorilla’s impact in Washington extends far beyond Affordable Care Act subsidies. Between federal funding changes and eligibility tightening, analysts warn that millions of Americans enrolled in Medicaid will become uninsured starting in 2026. Meanwhile, because Medicare payment growth is capped at the inflation rate, hospitals make up the difference by charging private insurers far more (already about 250% of Medicare prices).

Ultimately, unless we control the cost of care delivery, all Americans will pay the price.

2. The gorilla in the workplace

Employers and workers are counting passes of their own. They focus on premiums, deductibles, and network size while failing to tackle the root problem: the rising costs of care itself.

Without structural reform, no insurance plan will remain affordable. The average cost of family health coverage will reach nearly $30,000 next year, with employers covering about $24,000 and workers responsible for the rest. A projected 9% premium increase means employers and employees together will spend roughly $2,500 more per worker.

For many companies, rising medical costs make labor increasingly unaffordable. As a result, businesses are turning to automation and generative AI to replace jobs. More than 1 million positions have already disappeared in 2025, with more expected in 2026.

When workers lose employer-based coverage, they don’t stop getting sick. They turn to Medicaid or subsidized exchange plans, further straining state budgets and prompting insurers to raise commercial premiums even higher.

3. The gorilla in rural America

The cost crisis is felt acutely in rural communities. Over the past two decades, 150 rural hospitals have closed or stopped inpatient services, and another 700 facilities (nearly one-third of those remaining) are at risk.

Small patient populations and high fixed expenses have made the cost of inpatient care unsustainable in many rural communities. Local leaders focus on added revenue through federal grants or stopgap funding, but those efforts don’t address the underlying cost crisis driving today’s problems.

Addressing the gorilla everywhere

The United States can dramatically reduce healthcare spending while improving quality. But doing so will require a structural overhaul, not incremental tweaks. Three major opportunities already exist.

1. Shrink our hospital footprint

America maintains far more hospitals than it needs, with many offering duplicate services at high fixed costs. A more sustainable system would:

• Consolidate low-volume hospitals.
• Build regional centers of excellence that achieve better outcomes at far lower cost.
• Eliminate overlapping specialty programs in crowded markets.

Small rural hospitals could transition into 24-hour emergency and urgent-care hubs supported by telemedicine and reliable, low-cost transportation to larger facilities.

2. Prevent diseases before they happen

According to the CDC, more effective control of chronic diseases would reduce medical costs up to $1.8 trillion by preventing as many as half of all heart attacks, strokes, cancers, and kidney failures. Three pragmatic opportunities include:

• Expand the primary-care workforce.
• Allow Medicare to negotiate all drug prices, including GLP-1s.
• Use generative AI to empower patients and expand at-home monitoring.

Every complication avoided is a hospital admission, ICU stay, or surgery that never happens and is never billed.

Pay for value, not volume

Healthcare’s fee-for-service payment system rewards doing more, not doing better. Capitation — fixed monthly payments to physician groups and hospitals — flips the incentive structure, rewarding improved health, not just disease treatment.

Under capitation, prevention becomes financially rewarded, chronic diseases are managed earlier and more effectively, and care shifts to high-quality, cost-efficient settings, including outpatient facilities and virtual platforms.

The result is a virtuous cycle: healthier patients, fewer complications, and significantly lower costs.

No single group — government, employers, patients, or clinicians — can solve this crisis alone. Success will require all stakeholders to overcome their inattentional blindness and confront the gorilla together. The only question is how much worse things must become before we do.

Robert Pearl, the author of “ChatGPT, MD,” teaches at both the Stanford University School of Medicine and the Stanford Graduate School of Business. He is a former CEO of The Permanente Medical Group.