What is the US healthcare system actually optimizing for?: The Story
New to public policy
The $4.3 trillion question
On December 4, 2024, UnitedHealthcare CEO Brian Thompson was shot outside the New York Hilton. Within hours, the internet filled with people who were not exactly sad about it. The manifesto cited denied claims, delayed approvals, and a system where the people paying for care and the people deciding what gets covered have opposite incentives.
The United States spends more per person on healthcare than any country on earth. $4.3 trillion a year. Roughly 18 percent of GDP. For that money it gets life expectancy below Cuba, Slovenia, and Costa Rica. Infant mortality higher than any peer nation. And a system so baroque that a significant portion of what it spends goes to the administrative work of figuring out who owes what to whom.
Where the money goes
About 30 percent of US healthcare spending — over a trillion dollars — goes to administration. Billing, coding, prior authorization, claims processing, appeals. Duke University Hospital has 900 beds and 1,300 billing clerks. A Canadian hospital of the same size needs a fraction of that because there’s one payer and one set of rules.
The market defenders say this is the price of choice and innovation. The US produces more new drugs and devices than anywhere else. The single-payer advocates say you’re paying a trillion dollars a year to maintain the illusion of a market in a sector where you can’t shop while having a heart attack. The structural critics think both sides are missing the point — the system isn’t broken, it’s working for the people it was built to serve, and those people aren’t patients. The patient-choice advocates want to skip the ideological fight and just give people transparent prices and let them decide.
The bottleneck nobody names
Healthcare employs one in eight American workers. $4.3 trillion flows through an ecosystem of insurers, hospitals, pharma, device makers, and administrators who are all doing fine. Every one of them has lobbyists. Every one of them has a reason the current system, whatever its flaws, shouldn’t be the thing that changes. The bottleneck isn’t ignorance about what works. Other countries figured this out decades ago. The bottleneck is that fixing it means shrinking a $4.3 trillion industry, and the people who’d have to vote for that are funded by the people who’d lose.
Perspectives:
- Market defenders
- Single-payer advocates
- Structural critics
- Patient-choice advocates