Why Healthcare Has Become So Expensive In America

I have spent many years researching this topic, trying to get to the bottom of why healthcare costs have increased overtime. I have come to the conclusion that it is because the definition of “healthcare” was changed.

Do you wonder why you receive healthcare through the corporation you work for, and not on your own in the form of a healthcare service?

Healthcare today is public on the stock market and not private because companies are incentivized to provide healthcare insurance from Wall Street. Prior to 1972 most all forms of healthcare was a public service.

Let’s go on a healthcare history lesson…

America’s Healthcare Roots:

Before the 20th century, Americans paid for healthcare costs out of their own pocket at public hospitals, public dentists, mental health institutions, and public pharmacies funding by local municipalities and state governments. Again you have to remember this was before Wall Street and the stock market even exited in the 19th century. There was no concept of compulsory healthcare unlike in Europe. As medicine and surgical procedures became more complex and legitimate in the 20th century, costs started to rise so America started turning to government for federal funding and cleaner and better standards in a healthcare crisis.

So in 1965 LBJ signed the Social Security Amendments of 1965 building on FDR’s “Fair New Deal”. For the time creating Medicare for all for Americans 65 and older, and Medicaid for Americans who were not privileged enough to afford out of pocket medical expenses. Medicaid was directly tied to the cost of medical care. If you were a middle class kid growing up in the 1960’s, chances are your family was on Medicaid or on private healthcare supplemented by Medicaid and Medicare. Bear in mind at this point, healthcare was not offered by any employer in the country. This concept would not come until much later on.

The Beginning Of The End:

Surprise but no surprise, a lot of people took advantage of it. It was extremely popular. However the federal budget was not expecting so many Americans to use it, so costs skyrocketed in the span of just a few years to the tune of billions over budget. Democrats and Republicans started to split into two factions. There was a few politicians that believed that we could turn to the private sector to solve the crisis. Try to keep in mind the only problem was that it cost too much.

So in 1969 America elected Richard Nixon on the promise that he was going to reform America’s too costly healthcare system. In 1971 he met with Sidney Garfield of Kaiser Permanente Corporation to talk about the economic success of a new and emerging business model called, “for-profit healthcare” that was believed could bring costs drastically down for the middle class.

In 1973 President Nixon signed the Health Maintenance Organization Act of 1973, which for the first time provided hundreds of billions in funding towards companies that would provide HMO’s through your employer. This forced Americans to receive healthcare through their employer in the form of a for-profit company instead of Medicaid whether they wanted it or not. Snopes actually did an article about this. Even they admit that although for-profit healthcare was not illegal before 1973, this played a huge role in creating the environment in which for-profit healthcare has blown up today.

This plan worked temporarily to supply healthcare and did not bring costs up immediately, but as you know the main goal of a business is to make money and that is exactly what would happen. The opposite of the intended results.

The Reagan Years:

Something happened that drastically changed our healthcare system forever. The decade began with Ted Kennedy campaigning for the 1980 election, a promise to adopt a single payer healthcare system for “every man, woman, and child”. However he ended up losing to Reagan.

Reagan stepped into office as a middle finger to the Jimmy Carter administration. The economy was in a recession and oil crisis because of OPEC, and the American people wanted less government and not more.

The year 1982 was a major year for the middle class. It was perhaps the nail in the coffin for our Medicare and Medicaid system. In 1982, President Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982 which included the ban on Medicaid and Medicare departments from paying for your healthcare. I bet you never heard of this before, but you should.


From 1982 and onward, Medicaid and Medicare was tied to a fixed cost instead of allowing public hospitals and care facilities to set the price. So from then on it did not matter how much your medical treatment would cost the hospital, the government would only pay a set amount. This forced hospitals across the country to act as a “for-profit business”. They hard to charge more towards the customer or cut costs if they wanted to break even.

New York Times Interview:

Reagan, Deregulation and America’s Exceptional Rise in Health Care Costs

“If providers could get costs down, they made money. If they couldn’t, they lost money. Hospitals and other providers began to behave more like businesses,” Mr. Gaumer said. “And the culture of health care delivery began to change.”

Now hospitals would more likely use this bill to cut costs which means less care for the patient in the form of outpatient “managed care”, but not health insurance and pharmaceutical companies. They took this as an excuse to raise prices on pharmaceutical drugs including chemotherapy and blood pressure medications. Now that Medicaid would not cover full costs of a medical bill towards an insurance company, an insurance company would take the liberty to increase costs on the customer. We saw this happen in the 1980’s with healthcare costs skyrocketing in just one decade of time.

The Cost of Health Care: 1958 vs. 2012

What are the recent and forecasted trends in prescription drug spending? — Peterson-Kaiser Health System Tracker

Modern Years:

From 1980–2009 the cost of healthcare in the United States rose 700%, more than any other developed nation in the world as corporations realized they could make more money and charge more for medications. This had nothing to do with Obamacare. Before the 1980’s the United States had the most efficient, cheapest, and best health treatment centers in the world under the Medicaid system. Today we have the most expensive and most inefficient.

This has not only made healthcare unaffordable to the average American family, it has made the United States perhaps the most dangerous place to ask for a medical opinion. It’s called “informed consent” Let’s take cancer. It is estimated that 15–20% of all cancers are misdiagnosed every year.

Doing harm in American health care: The case of misdiagnosis

Cancer Misdiagnosis is Alarmingly More Common Than We Thought

12 million Americans misdiagnosed each year

“One study found that about 28 percent of the mistakes made out of 583 cases were life threatening or life altering.” — CBS News

Imagine treating yourself for a cancer that you don’t even have? What if I told you that the third leading cause of death in America is our healthcare system? Every year 12 million Americans are misdiagnosed with a disease. Medical malpractice is the third leading cause of death.

Medical Errors Third Leading Cause Of Death In America

“More than 250,000 people in the United States die every year because of medical mistakes, making it the third leading cause of death after heart disease and cancer.” — CNBC News

The modern healthcare system has created a medical environment in which doctors cannot provide the best care for their patients. The decks are stacked against them. We have allowed special interests to control the narrative.

The more opioids doctors prescribe, the more they get paid

Cancer drug choices tied to drugmaker payouts to doctors

It’s a step on or be stepped on situation. Medical practices could not survive unless they adopted the modern system. America systematically created a healthcare system that turned treatment into a business. If patients are cured, you no longer have any customers. This is the environment we created.

U.S. Health Care Ranked Worst in the Developed World

Opioid death rates soared in communities where pain pills …

Affordable Care Act (ACA) signed by President Obama since 2010 has provided new Medicaid healthcare coverage for 18 million American citizens, and extended the age of family healthcare from 22 to 26.

However it did not reverse us back to the old healthcare system, because it bailed out the insurance companies. Instead of rolling back government subsidies on Wall Street we increased them. Medicaid still does not cover 100% of costs for the patient. It can even be much worse.

ObamaCare Enriches Only Insurance Giants and Their Shareholders

We have to remember what Obamacare is. Obamacare was modeled after Massachusetts MassHealth, which was started by Republican Mitt Romney. You can read about what can happen if you can’t afford your bills on Medicaid. Only in America can your house be taken because someone in your family gets alzheimer’s disease. It’s a scary reality for many.

The misguided — and costly — evolution of ‘Romneycare’ — The Boston Globe

Medicaid’s Dark Secret

“Sure enough, just weeks after Edna entered the nursing home, Tawanda received a notice that MassHealth had put a lien on the house. This went on until the end of 2009, when Edna died, at home, in Oliver’s arms. Afterward, Tawanda received a letter from the Massachusetts Office of Health and Human Services, which oversees MassHealth, notifying her that the state was seeking “reimbursement from [Edna’s] estate for Medicaid payments made on her behalf.” For Edna’s five years on MassHealth, she owed $198,660.26.” — The Atlantic

In 2020 Americans have no choice but to go through their employer for healthcare if they choose to keep a job and not collect welfare. Americans are not allowed to bid on the same plans their employers have access to.

This is also extremely important during a pandemic. Now that we are suffering from COVID-19, we face a public health economic crisis. This is not a joking matter anymore.

Total Cost of Her COVID-19 Treatment: $34,927.43

“Over the next several days, Askini saw her temperature spike and drop dangerously, and she developed a cough that gurgled because of all the liquid in her lungs. After two more trips to the ER that week, Askini was given a final test on the seventh day of her illness, and once doctors helped manage her flu and pneumonia symptoms, they again sent her home to recover. She waited another three days for a lab to process her test, and at last she had a diagnosis: COVID-19. A few days later, Askini got the bills for her testing and treatment: $34,927.43. “I was pretty sticker-shocked,” she says. “I personally don’t know anybody who has that kind of money.” — Time

Veterans under Medicare do not experience this. The VA is allowed to negotiate prices down. In America right now, heath insurance and pharmaceutical companies have no limit on what they can charge. That is why single payer is a very popular option we almost followed in the 1960’s and then again in 1980 if Ted Kennedy had become President, because it’s drastically cheaper than even the current system we have in place. It allows government to negotiate the price of treatment. Then healthcare would no longer be tied to the employer, so you wouldn’t lose your health insurance if you switch jobs. Healthcare would be once again based on quality care first, over profits first which is the legal definition of a for-profit business.

Single-payer health care is better than ObamaCare

Why Single-Payer Health Care Saves Money

The reality is the United States was the first country in the world to almost adopt a single payer healthcare system under LBJ, and today we are the last developed nation in the world without one. What single payer does is a control on prices. In consequence the United States has by far has the most expensive and worst healthcare system of the entire world.

Why don’t we do what President John F. Kennedy wanted to do 60 years ago? Adopt the healthcare system the entire world has already figured out how to accomplish. Let’s return to the great healthcare system we once had. It would be wise for both sides of the aisle to face reality. Americans don’t want Obamacare, they want a single payer healthcare system now.

Independent writer outside of Boston.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store