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Health care costs are surging. ACA Marketplace premiums will rise 18% next year— even more for the millions set to lose their enhanced federal subsidies without congressional action. Meanwhile, big employers expect their premiums — already about $25,000 for family coverage — to increase 9% in 2026. Gargantuan health care profits are the flip side of those unsustainable cost increases. Already, the average American lays out more than $17,000 for health care, a figure that includes the insurance premiums they and their employers pay as well as copayments, deductibles, and the taxes that fund Medicare, Medicaid, and other public programs. Where five decades ago, U.S. health costs were middle-of-the- pack among wealthy nations, today Americans spend about 50% more on health care than the average Canadian, Australian, or European. Advertisement Our exorbitant spending doesn’t buy us better health, or better (or even more) care. Americans die, on average, 4.1 years younger than people in other wealthy nations. We get less hospital care, fewer doctor visits, and fewer prescription drugs. And while everyone in those nations has health coverage, 27 million Americans are uninsured today, a number set to rise to 40 million once the health care cuts in the One Big Beautiful Bill take effect. It’s fashionable to blame out-of-control health spending on our aging population, increasing rates of chronic illnesses, innovative drugs and medical technology, and expanded insurance coverage, but other nations that spend far less also face those cost challenges. Instead, as we highlight in The Lancet this week, the real culprits are huge profits for health care investors, a gigantic bureaucracy deployed to extract those profits, and health services skewed to what’s profitable rather than what’s needed. The market competition, managed care, and “corporate efficiency” that economists prescribed as the cure for health care inflation instead accelerated it, with corporations’ takeover of health care at the heart of the costly bloat. Advertisement Starting in the 1980s, politicians, responding to policy wonks’ advice (and insurance industry lobbyists), subcontracted more and more of Medicare and Medicaid to private managed care insurers. The initial trickle of government dollars flowing to private insurers as “premiums” paid to Medicare Advantage and Medicaid Managed Care plans is now a torrent; $923 billion in 2023. Those subcontracts were touted as money-savers. But we now know (thanks to Congress’ official Medicare payment commission) that Medicare Advantage plans have overcharged Medicare by at least $615 billion. Insurance executives engineered those overpayments by gaming the risk-adjustment system that determines how much the government pays them. First, they cherry-pick enrollees likely to use little care. Then they exaggerate how sick their enrollees are (so-called “upcoding”), boosting their payments from the taxpayers. In 2023 alone, Medicare Advantage plans “pocketed $50 billion from Medicare for diseases no doctor treated.” Today, by our calculations, the majority of private insurers’ revenues come from government coffers, not from selling private coverage. Although ideologues claimed their market-based strategies would unleash the cost-cutting power of competition, the opposite happened; health care competition has all but disappeared. Giant systems have bought up hospitals, clinics, and practices, cornering the market in most regions of the country and creating quasi-monopolies that jack up prices and profits. And the health insurance giants that have come to dominate the market wield even more power. UnitedHealth, once mainly an insurer, has turned itself into a vast health care conglomerate — employing tens of thousands of doctors, running pharmacies and home care agencies, and processing payments for a third of Americans. CVS Health, and recently Amazon, have followed the same playbook. This “vertical integration,” in which the same corporation owns the insurer, the doctors, and the pharmacy, turns every part of care into a profit center and lets companies reward their own clinics, punish independent doctors who advocate for patients, and steer prescriptions to their own pharmacies that pocket drug rebates— all at patients’ expense. Advertisement Between 2001-2022, health care corporations diverted at least $2.6 trillion from patient care to shareholder payouts. But market-driven health care wastes money in other ways too. The drive for profit has bred useless but expensive bureaucracy. More than 900,000 insurance and health care workers do tasks that help no one — upcoding, marketing, billing, denying coverage. Private insurers’ overhead (the share of their premiums that doesn’t pay for care) averages 10.3%, five-fold higher than the 2% overhead of traditional Medicare in the U.S. and Canada’s Medicare for All system. And hospitals and clinics deploy an army of clerks and managers (costing billions) to maximize billings and fight with insurers. Overall, nearly one-third of the dollars Americans spend on health care goes for administration, twice as much as in Canada. Profit-driven distortions in care waste billions more, and — even worse — cost thousands of lives each year. A raft of studies show that primary care saves lives, but it’s a money-loser for hospitals and clinics; profits are much higher for expensive services like hip replacements and cancer chemotherapy. That’s why, in Boston you can get an appointment with an orthopedic surgeon in 12 days but have to wait 69 days see a family doctor, and why one Boston hospital (where thousands are on waiting lists for primary care) is building a new cancer hospital next door to an existing top-ranked one. Almost all Americans agree that our country faces a health care cost crisis. Addressing that crisis will require recognizing that our failed experiment with profit-driven health care brought us to this point. The remedy is straightforward: decommercialized national health insurance: a single, public insurance plan that covers everyone, financed through progressive taxes, with no copayments or deductibles. Administrative costs would plummet, savings could be redirected to strengthen primary care and public health, and health — not profit — would again be the system’s organizing principle. That kind of reform would save both money and lives, and it would put communities, not investors, in control of health care. Advertisement Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D., are both general internists, distinguished professors of public health at the City University of New York’s Hunter College and lecturers in medicine at Harvard Medical School. Adam Gaffney, M.D., M.P.H., is a pulmonary and critical care physician at the Cambridge Health Alliance and an assistant professor of medicine at Harvard Medical School. Danny McCormick, M.D., M.P.H., is a primary care doctor at the Cambridge Health Alliance and associate professor of medicine at Harvard Medical School.
