Joseph Schreiner: Author and Columnist

Why is Medical Care in the United States So Expensive?

Buck Moon, 10 July 2025

Medical care – the leading cause of bankruptcy in the United States, despite the promises of Obamacare. Approximately 17% of the country’s gross domestic product. Why do we spend so much of our wealth on such mediocre outcomes?

Before I explain the real reasons for this travesty, let me dismiss a couple of alternatives. The first misconception, in my opinion, is that insurance companies cause skyrocketing healthcare costs. It is easy to blame insurance companies. They are the interface that patients and healthcare providers must work through to obtain reimbursement. Their rigid, complex procedures make them seem like the bad guys. Insurance companies, however, are just working within a dysfunctional system. Like any company, they need to make a profit to stay in business. Their function is to mitigate the risk of financial catastrophe by spreading that risk over people and over time. The fundamental problem, however, is that medical care itself is unnecessarily expensive. Insurance companies are only trying to manage that expense.

Another popular, yet misguided, culprit for high medical costs is pharmaceutical companies. Pharmaceutical companies have plenty to answer for (deceptive experimental genetic manipulation, emphasizing patented medications over lifestyle changes …), but they are not inherently the cause of high drug prices. They must also work within a dysfunctional system, and that system’s overlord is the Food and Drug Administration (FDA). The FDA imposes ridiculous requirements on pharmaceutical companies trying to bring a new drug to market, and these companies need to recoup their expenses.

Alas, the major reason for skyrocketing medical expenses is the government, at the behest of the American Medical Association, artificially restricting the number of medical schools and forbidding anyone one else but physicians from “practicing medicine”. This restricts the availability of medical services, thus driving up prices. In a free market, supply and demand would reach a reasonable equilibrium. More health care professionals offering more services would lower the cost of such services.

An apt comparison would be to the field of information technology. I feel qualified to comment on both IT and medicine in that I have worked for 40 years in information technology, and nearly half of that in medical research institutions. Information technology has advanced greatly in the past 50 years, arguably more than medical technology. Information technology is at least as complex as medicine, probably more so. Yet the cost of information technology has decreased over those decades, while medical costs increase. Why is this so?

Competition. The free market. Information technology is relatively unregulated. Entrepreneurs bring new technology to the market. And they do so at reasonable prices because of stiff competition. In contrast, medical care is provided by a monopoly that can charge what it wants.

All this sounds harsh. Patients identify with the physicians that treat them. People do not want to regard monopolistic physicians as the cause of outrageous medical costs. I would argue, however, that this is a collective case of the Stockholm Syndrome, where hostages identify with their captors. The ritual of visiting a physician enforces this subservient mindset – long wait times, fancy dress codes, the physicians’ paternalistic, rather than customer-oriented, attitude.

I would like to think that the lockdown debacle of 2020-2023 has made people more aware of the dysfunctional system. Physicians just parroted the lies regarding COVID. They had to. Physicians are not independent professionals. They are an extension of a monopolistic racket. If any physician dared speak the truth, s/he would have lost their government-enforced privilege (license).

To be fair, well-meaning physicians themselves are locked in an abusive system. They are encumbered with ridiculous debt upon graduation from medical school. They are beholden to government licensing authorities for their livelihood, not to curing or mitigating illness. Many served abusive internships and residencies as an initiation rite. Their allegiance is to the system, the authorities, not to patients.

I read about artificial intelligence replacing physicians. I think it would be a great advance, but I doubt that it will happen. Medical profession lobbies have too strong a voice in state legislatures. These lobbyists will make certain that the monopoly continues. Physicians have too much at stake in the system.

The system as it stands is destined to collapse. It will probably collapse when the federal government can no longer fund the outrageous costs of Medicare and Medicaid. Whether that collapse leads to a flourishing of free-market health care or Soviet-style rationing (and an attendant black-market) remains to be seen. The collapse can only be avoided when United States citizens force their legislatures to allow competition in the provision of medical services. The alternative is the collapse of the entire system.