Health Care Costs – Newsletter 2-5

Your doctor’s bill comes To $4,900,000,000. Would you like use cash or a card?

This newsletter dives into the costs and outcomes of health care in the US. It’s broken into three sections:

1. Factors driving costs
2. Where the money comes from
3. Resulting health outcomes

Spoiler alert: Americans pay nearly double the per-capita average for worse outcomes than comparable countries.

These funds go to administrative waste ($265b), failures of care delivery ($166B), and operational waste ($214b), among other unhelpful activities, bringing the total to $935 billion a year.

Care in the last month of life often exceeds $30,000 in the hospital, or $17,000 for hospice. Average medical spending in the last 12 months of life exceeds $80,000, and over 60% of Americans die in acute care hospitals, and Medicare funds most of these costs.

A heart transplant costs between $1.5 and $2m. Usually, neither patients, doctors, nor insurers know these costs up front — it’s hard to tell what your insurer will cover until you get a “Statement of Benefits” after service is provided. “SOB” seems an ironic acronym.

In many cases the Federal Government pays insurers who then pay providers. “Administrative costs…” cost as much as actually providing clinical services (20% each). US health insurance companies showed 2024 profits of $71.3 billion. 

Reasonable profit drives innovation and solutions. However, profiteering off a broken system, which we see currently, drains off funds.

Also, the CEO of Anthem Blue Cross (now “Elevance Health”) earned approximately $21.5 million in 2023.

Furthermore, profits are made by vendors in every corner of the industry, including, for example:

• Equipment manufacturers (e.g., MRI machines, elevators, and heart monitors)
• Drug companies
• Real estate and construction companies
• Computer and software systems vendors
• Patient and worker vehicles (ambulances, trucks, heavy equipment)
• Medical instrument and single-use device (SUDs) purveyors 
• Food services, cleaning, security… and so on.

• Six, seven & eight figure salaries across the industry
• Acute treatment of chronic conditions (EDs instead of primary care)
• Obesity, diabetes, malnutrition, and other morbidities caused by the American diet and sedentary lifestyle
• High-cost drugs
• Free-market (demand/supply) economics and a lack of legislated price controls
• Estimates are not provided before care, and denial of claims can lead to medical bankruptcy and uncollectable hospital bills
• Wildly varying rates are negotiated using Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), and PMPM (Per Member Per Month) models

The US pays almost double other countries for significantly worse health outcomes.  4.4 million US children (5.8%) had no health coverage in 2023.😢

“The social determinants of health are the conditions in which people are born, grow, work, live and age, and the wider forces that shape the conditions of daily life. Most of our health is determined by these non-medical root causes of ill health, which include quality education, access to nutritious food, and decent housing and working conditions.”

Annually the US spends $4.9 Trillion for unsatisfactory outcomes — twice as much for worse health and shorter lives than in comparable countries.

Those without access both suffer from curable disease and become increasingly costly over time. One way or another, we pay the costs. 

• New figures show 4.4 million children without health insurance from First Focus on Children
• National Health Expenditures Fact Sheet from CMS.gov
• How does the quality of the U.S. health system compare to other countries?By Imani Telesford, Emma Wager Twitter, and Cynthia Cox forHealth System Tracker, Peterson KFF, 10/6/25
• Mirror, Mirror 2024: A Portrait of the Failing U.S. Health System by the Commonwealth Fund
• Social determinants of health World Health Organization
• Health Care Company Payouts Favor Shareholders, New Research Shows by Freda Kreler for Yale School of Medicine, 2/10/25
• How does U.S. life expectancy compare to other countries? By Shameek Rakshit and Matthew McGough for Health System Tracker, Peterson KFF, 1/31/25