The Price Is Too High

Lasik eye surgery cost $2,180 per eye in 1998. It costs roughly the same today. Adjusted for inflation, the price fell 51 percent. The technology improved every year. Blade gave way to laser. A single measurement became twelve hundred data points per eye. Success rates climbed past 96 percent. The procedure got better and cheaper at the same time.

Hospital services, over the same period, tripled.

The consumer price index for medical care overall rose 132 percent. General inflation rose 66 percent. Over the same twenty-three years, cosmetic procedures rose 38 percent. Botox fell 3.5 percent in nominal dollars. Not inflation-adjusted. The sticker price went down. Laser hair removal fell 63 percent. Chemical peels fell 24.7 percent. Laser skin resurfacing fell 47 percent. These are nominal prices that dropped while everything else in healthcare tripled.

Insurance does not cover any of them. Botox for cosmetic use, Lasik, laser hair removal. The patient pays directly. The patient sees the number before the procedure, compares it across providers, and decides. The provider has to compete for that patient on price and quality because the patient is spending their own money and can see the alternatives.

In hospital care, none of that happens. The patient does not see the price before the procedure. Often does not see it after. The insurance company negotiates a rate the patient never learns. The bill arrives weeks later, coded in language designed for the insurer, not the patient. If the patient cannot pay, it goes to collections.

The service is the same profession. The country is the same country. The patients are the same people. The price signal is the only variable.

The hidden number

An insurer pays a Michigan hospital $728 for a colonoscopy. Humana pays the same hospital $1,801 for the same procedure in the same building. The patient does not know either number. Neither insurer knows what the other pays. The hospital negotiates each rate separately, in private, under confidentiality agreements that prevent disclosure.

A RAND Corporation study published in December 2024 found that private health plans pay hospitals an average of 254 percent of what Medicare pays for the same services. In some states the figure exceeds 300 percent. The variation is not driven by quality. It is driven by negotiating power. Each hospital negotiates a different rate with each insurer. The patient has no access to any of these numbers. The system is not broken. It is working exactly as the people who benefit from the opacity designed it to work.

In February 2025, JAMA published the most comprehensive study of geographic healthcare spending ever conducted. Researchers analyzed 40 billion insurance claims across 3,110 US counties, covering Medicare, Medicaid, private insurance, and out-of-pocket spending. Nassau County, New York: $13,332 per capita. Clark County, Idaho: $3,410. Same country. Same insurance system. Four times the cost. A family in Nassau County could move to Clark County and spend one quarter as much on the same healthcare. The procedure does not change. The building does not change. The number on the invoice does.

The variation does not follow any simple demographic or geographic pattern. Miami is one of the most expensive healthcare regions in the country. Rochester, Minnesota, home of the Mayo Clinic, is among the most efficient. The variation follows beds per capita, specialist density, and practice culture. Where there are more hospital beds, more people are admitted. Where there are more specialists, more procedures are ordered. In most markets, more supply means lower prices. In healthcare, more supply means more consumption. Because the doctor decides what the patient needs, and the doctor gets paid per procedure.

The United States spent $5.3 trillion on healthcare in 2024. That is $15,474 per person. Eighteen percent of GDP, growing 7.2 percent in a single year. That growth rate is the sharpest in more than thirty years.

The Affordable Care Act cut the uninsured rate from 16 percent to 8 percent. Twenty million people gained coverage. That is real. It did not fix the price. A National Bureau of Economic Research study found that individual market premiums increased 24.4 percent more than they would have without the ACA. The law expanded who could buy insurance. It did not change what insurance costs. It added twenty million people to the demand side of a system where no buyer controls the price. More demand into the same broken mechanism. Prices rose.

Family health insurance premiums: $6,438 in 2000. $13,770 when the ACA was enacted in 2010. $25,572 in 2024. $26,993 in 2025. The average deductible was $584 in 2006. It is $1,886 in 2025. That is a 223 percent increase. In 2006, 52 percent of covered workers had a deductible. Now 90 percent do. The patient pays more before insurance covers a dollar than the total annual premium cost a generation ago.

Ninety-seven percent of commercial insurance markets are now classified as "highly concentrated" by federal antitrust standards. Three companies dominate. The post-ACA cost slowdown that economists debated for a decade is over. Premium growth re-accelerated to 7 percent in 2024 and 2025, outpacing both wages and inflation.

The cascade

The hidden price is the root. Underneath it, a cascade of structural costs grows unchecked because nobody is watching the meter.

American hospitals spent $687 billion on administration in 2023. They spent $346 billion on direct patient care. A two-to-one ratio. More money on billing than on treating. The ratio has been growing for over a decade, and the administrative share is still increasing.

Duke University Hospital has 900 beds and 1,300 billing clerks. The clerks exist because every insurance company has different forms, different codes, different coverage rules, and different pre-approval requirements. A single patient visit can generate a claim that passes through multiple departments, gets coded, submitted, denied, resubmitted, appealed, and eventually paid at a rate nobody outside the billing department will ever see. That process requires people. Lots of them. The United States spends 4.5 times more per capita on healthcare administration than Canada. If the US reduced administrative costs to Canadian levels, it would save $600 billion a year. That is more than the entire defense budget.

Physicians grew 150 percent from 1975 to 2010. Healthcare administrators grew 3,200 percent. There are now roughly ten administrators for every physician. American physicians spend between $83,000 and $100,000 a year on insurance-related paperwork alone. That is the cost of one full salary devoted entirely to navigating a billing system, not treating patients.

The American Medical Association surveyed physicians in December 2024 and found the average doctor completes 39 prior authorizations per week. That is 39 times a week a physician asks an insurance company for permission to treat a patient. The process consumes 13 hours of every working week. Not treating patients. Asking permission to treat patients. Forty percent of physicians employ staff who do nothing else. Ninety-four percent of doctors said prior authorization has a negative impact on patient outcomes. Twenty-nine percent said it caused a serious adverse event.

American doctors earn significantly more than their peers in comparable countries. An orthopedic surgeon in the United States earns $558,000. In Germany, roughly $280,000. In the United Kingdom, $108,000 to $144,000 on the NHS base. The gap is not entirely a market outcome.

In 1997, the American Medical Association and the Association of American Medical Colleges recommended reducing medical residency positions by 25 percent. Not because patients did not need doctors. Because these organizations predicted a "physician oversupply." Medicare froze funded residency slots at 1996 levels. The first increases came 24 years later, in 2021. The United States now has 2.6 physicians per thousand people. The OECD average is 3.7. Germany has 4.7. The organization that represents doctors engineered a shortage of doctors. Then the price of doctors rose. And the conversation about healthcare costs moved on to other explanations.

Malpractice is the explanation everyone reaches for first. It accounts for roughly 2.4 percent of total healthcare spending. Texas enacted comprehensive tort reform in 2003. Capped non-economic damages. Limited liability. Healthcare costs kept rising. The explanation that satisfies is not the one the numbers support.

The federal government required hospitals to post their prices in January 2021. Four years later, 79 percent of hospitals remain non-compliant. The government issued penalty notices to 14 hospitals through 2023. The maximum fine is $5,500 per day. For a hospital generating millions per day, that is not enforcement. It is the cost of non-compliance priced into the operating budget. Only 2 percent of consumers use available price transparency tools. Seventy-three percent of Americans do not know they can look up hospital prices at all. The tools exist. The information exists. Nobody uses them because the system was never designed for the patient to see the number.

Seven countries

Japan spends $5,790 per person. The United States spends $14,885. Japan lives to 84.95 years. The United States lives to 78.4. Japan spends roughly 40 percent of what the United States spends and lives six and a half years longer.

The United States has the highest maternal mortality rate in the developed world. 22.3 per 100,000 live births in 2022, declining to 17.9 in 2024. Norway reported zero. The US is the only wealthy country where maternal deaths are increasing. It is also the only wealthy country where a medical bill can bankrupt you. The Commonwealth Fund ranked it last among high-income countries in overall health system performance in 2024.

The obvious counterargument is scale. The United States is 330 million people spread across 3.8 million square miles. Japan is 125 million in 145,000 square miles. The UK is 67 million in 94,000. Serving rural Montana and downtown Manhattan are fundamentally different infrastructure problems. A homogeneous population concentrated in a small geography is easier to organize than a diverse country spanning a continent. This is real. But it does not explain the gap.

The difference is not utilization. Americans actually use less healthcare than residents of most comparable countries. Fewer doctor visits. Fewer hospital days. Shorter average stays. Australia is also geographically vast, culturally diverse, and spread across a continent. It spends $5,627 per person. Less than half the US figure. The Peterson-KFF Health System Tracker identified the driver with a sentence that should have ended the debate: prices. Not overuse. Not geography. Not population diversity. Prices. American prices for the same services are simply higher than anywhere else. The same MRI. The same hip replacement. The same overnight stay. The procedure is the same. The price is not.

Every country on this list has a buyer who controls the price. Japan assigns every medical procedure a government price in a national fee schedule. The schedule is revised every two years through negotiation between the health ministry and physician groups. When MRI volume surged because physicians were ordering scans at a rate the system could not sustain, the government cut the MRI fee by 35 percent at the next revision. Physicians adapted. Volume normalized. The system self-corrected because the price signal carried consequences. If physicians game the fee schedule, the government changes the fee schedule. The correction is built into the design.

Germany caps patient copays at 2 percent of gross annual income. After that, everything is free for the rest of the year. Norway caps annual out-of-pocket costs at roughly $270. After that, patients receive an exemption card and pay nothing. These are not unlimited systems. They set boundaries. But the boundaries are defined, visible, and predictable. The patient knows the maximum cost before the year begins.

Canada pays through taxes. A Canadian family of four earning an average income pays roughly $19,000 a year toward healthcare through the tax system. That cost has risen 2.2 times faster than the cost of food since 1997. The patient sees nothing at the doctor's office. No bill. No copay. No deductible for medically necessary care. Universal does not mean everything. Prescription drugs, dental, and vision are not covered. Those come out of pocket or through employer benefits, on top of the tax. The care that is covered is free at the point of service. The price is real. It is in the tax return, not on a receipt.

The cost that disappeared from the receipt reappeared as absence.

One in five Canadians does not have a family doctor. Six million people without reliable access. The country is short 22,823 family physicians, a 49 percent gap. If you do not have a doctor, you cannot get a referral. If you cannot get a referral, the wait time has not started. The 28.6-week median from referral to treatment is the wait after you have already found someone willing to refer you. For six million Canadians, that clock has not begun. They go to the emergency room instead. In Ontario, patients waited an average of 22 hours before being admitted in December 2025. Three times the provincial target. The emergency department became the primary care system for millions of people who do not have a primary care provider.

Canada spends $9,626 per person. More than the United Kingdom, France, or Australia. Among 30 countries with universal healthcare, it ranks 27th for physicians per capita and 25th for hospital beds. 2.5 beds per thousand people against an OECD average of 4.2. The money goes in. The capacity does not come out.

The national benchmark for hip replacement is 182 days. One-third of patients wait longer. In Nova Scotia, the specialist consultation alone takes 164 days. Then the surgery queue adds another 91. The referral that starts the process may itself have taken months. The total journey from the day a hip starts hurting to the day it is replaced can stretch to two or three years. An MRI takes 18 weeks in most of the country. In Prince Edward Island, it takes 52. A full year to receive a scan that takes thirty minutes to perform.

In Ontario, a family earning over $200,000 pays a marginal tax rate above 50 percent. A teenager with an injured ankle goes to the doctor. The doctor orders an MRI. The queue is months long. The ankle does not heal on its own schedule. The family watches their daughter move through eleven months of discomfort, favoring one side, missing activities, managing pain that an imaging scan could diagnose in fifteen minutes. The scan is free. The wait is not. The system that promised to remove the financial barrier replaced it with a different kind of cost. A cost that does not appear on any bill and cannot be appealed.

2.2 times the cost. 4.2 fewer years of life.

This is not a comparison of quality. The patient does not see the real price in any of these systems. In Japan the patient pays a 30 percent copay but does not set the fee. In Germany the patient pays ten euros per quarter. In Canada the patient sees nothing at all. The difference is not what the patient sees. The difference is whether a disciplined buyer is in the room controlling the price behind the scenes. Six countries have one. The United States does not.

Canada's buyer controls the price. Canada spends $5,905 per person, in line with the six-country average. Canada's problem is not price. Canada's problem is capacity. The government controls what things cost but does not invest enough in doctors, beds, or equipment to deliver them on time. That is a real failure. But it is a different failure from the American one. Canada has a capacity problem. The United States has a price problem. Both are broken. They are broken in different places.

The same molecule

GLP-1 receptor agonists are the most prescribed drug class in the country. Semaglutide is sold as Ozempic for diabetes and Wegovy for weight loss. Tirzepatide is sold as Mounjaro and Zepbound. Same molecules, different brand names, same manufacturers. Their pricing history is the entire thesis of this piece compressed into three years.

For years, GLP-1s were diabetes drugs. Insurance covered them. The list price was $1,000 to $1,500 per month. Nobody questioned it. The insurer paid the manufacturer. The employer paid the insurer through premiums. The employee paid the employer through lower wages. The price was real. It was just invisible to the person taking the drug.

Then the weight-loss effect went mainstream. Demand exploded. But insurance often would not cover the drugs for weight loss. Only for diabetes. Millions of people wanted semaglutide and could not bill it to their insurer. For the first time, the patient was the buyer. A cash-pay market formed.

Compounding pharmacies saw the margin and entered. They offered compounded semaglutide at $199 to $400 per month. The brand charged $1,500. The compounders charged $200. Both stayed in business. The compounders proved something the manufacturers did not want proven: the production cost supports a fraction of the list price. The margin was visible for the first time.

Then the manufacturers responded. Not because the market corrected itself. Because the compounders threatened the market. Novo Nordisk launched NovoCare with direct-to-consumer pricing at $349 to $499 per month. Then the political pressure arrived. In November 2025, Novo Nordisk and Eli Lilly negotiated with the federal government. Medicare price: $245 per month. An oral version: $149. In France, the same molecule costs $83. In the United Kingdom, $93. In Germany, $103.

The price dropped 75 to 85 percent once someone started looking at the number. Not because the drug changed. Not because the manufacturing cost changed. Because the buyer changed. When the buyer was an insurer, nobody pushed back. When the buyer was a patient, a compounder, or a government, the price moved.

The same pattern repeated in December 2025 when the 32BJ Health Fund, representing 200,000 building service workers, signed the largest direct healthcare contract in the United States. They cut out the insurance intermediary entirely and contracted directly with Northwell Health, a system of 28 hospitals and over 13,000 providers. Year one savings: $46 million, a 20 percent reduction. Inpatient copays dropped from $1,000 to $100. Outpatient copays dropped from $250 to $75. Annual fee increases capped at 5 percent. The intermediary was the cost.

The Surgery Center of Oklahoma has published all-inclusive cash prices online since 2009. Carpal tunnel release: $2,750. The national average: $6,928. A California patient paid $5,700 at the center for a procedure quoted at $30,000 in his home state. One-fifth the price. Same surgery. Same outcome.

In January 2026, Medicare began paying negotiated prices for ten drugs for the first time. Januvia went from $527 to $113. A 79 percent cut. Enbrel went from $7,106 to $2,355. A 67 percent cut. The negotiation saved an estimated $6 billion per year. These were the first ten. Fifteen more are scheduled for 2027.

The strongest counterargument is research. The United States accounts for 52 percent of global pharmaceutical sales despite representing 4 percent of the world's population. American drug prices fund a disproportionate share of global pharmaceutical R&D. Manufacturers spent $71 billion on domestic research in 2023. Other countries negotiate prices down and benefit from the drugs those prices helped develop. This is a real structural cost. The US is carrying a heavier burden, and the only way to recoup R&D in a system without price negotiation is to charge what the market will bear.

Two things complicate the argument. The National Institutes of Health, funded by American taxpayers, contributes $47 billion a year in basic research that pharmaceutical companies then commercialize. The taxpayer funds the science. The company funds the trials. The company captures the margin. And some drugs are not funding any research at all. Insulin was discovered in 1921. The patents have expired. The manufacturing process is well understood. A vial costs $2 to $4 to produce. It sells for $242 in the United States and $23 in the United Kingdom. That is not a research premium. That is a visibility premium. The margin exists because nobody in the transaction is looking at the number.

This is not an argument for any particular system. Single-payer has trade-offs. The Canadian waiting room is real. Seven months from referral to treatment. The British rationing is real. The Japanese fee schedule produces its own distortions. Every system that controls prices controls access in some form. Nobody has solved this cleanly.

The observation is narrower. Across every market in this piece, the same pattern holds. When a buyer sees the price and controls it, costs moderate or fall. The patient in Lasik. The government in Japan. The compounders who entered the GLP-1 market. The 32BJ fund that cut out the intermediary. When no buyer controls the price, costs compound until the system consumes everything around it. $5.3 trillion. 18 percent of GDP. Growing 7.2 percent a year. One-fifth of the economy within a decade.

Sowell had a name for what a price does. It compresses knowledge about scarcity, demand, and alternatives into a single number that coordinates decisions no committee could track. Suppress the number and you do not eliminate the scarcity. You destroy the information that would organize a response. Every market in this piece that suppresses the price proves him right.

The United States does not have the most expensive healthcare system because Americans are sicker, or because American doctors are greedier, or because American hospitals are more advanced. It has the most expensive system because it is the only wealthy country where no buyer controls the price. Not the patient. Not the government. Not a disciplined negotiator of any kind. The number exists. It is negotiated in private, varies by insurer, differs by hospital, changes by county, and reaches the patient only after the service has been delivered and the decision has been made.

Japan controls the price and adjusts it every two years. Germany controls the price and caps what the patient can owe. France controls the price and negotiates GLP-1s down to $83 a month. Canada controls the price through fee schedules, though it fails to invest the savings into capacity. Every country with a buyer in the room spends less. Every one.

The price is too high. It will be too high for as long as no buyer controls it.