Why is Healthcare Becoming More Expensive?

One of the biggest expenses for those living in the United States is the cost of healthcare. In fact, the cost of healthcare here is much higher than it is in any of the other G7 countries. Before the Covid pandemic, the U.S. was spending almost 17% of its GDP on health, which was 8% higher than the average spent by other OECD countries. But why is healthcare so expensive here, and why does it seem to keep rising?

Reasons Why U.S. Healthcare Is So Expensive

One of the main reasons why healthcare is so expensive here is the fact that insurance companies, as well as government agencies, pay for every test that is carried out. The more services that a doctor, medical facility, or hospital carry out, the more they are paid by the insurance company. This means that oftentimes tests not entirely necessary will be carried out.

Patients are often overtreated because facilities get paid for quantity rather than quality. Furthermore, the fact that healthcare providers in the U.S. do not always communicate with each other regarding a patient’s care means that duplicate testing is commonplace.

According to the folk at Find-A-Code, many people simply don’t understand what treatment they are getting or why, and they never think to question it. The CPT codes they see on their Explanation of Benefits or medical bill means nothing, and they just go with it, never even questioning why a treatment was actually needed.

An ageing, unhealthier population is also contributing to the price of healthcare. With chronic diseases such as diabetes, asthma, heart disease, and high blood pressure becoming ever more prevalent, ongoing treatment costs are pushing up the price of health insurance.

Something that you might not realize is that employers often pay for higher healthcare plans because the amount that they pay towards cover for their employees is tax deductible. The employee who is covered through their job will have no choice over their insurance plan because it has already been chosen by the employer. When an employment plan has small co-payments or low deductibles, overuse of care is encouraged. This will then drive up the cost of insurance and healthcare.

Sadly, the fact that lawsuits are so commonplace here in the U.S. can lead to many doctors practicing what is known as ‘defensive medicine’. Their fear of being sued for malpractice will encourage them to carry out unnecessary tests or procedures. Defensive medicine costs billions of dollars every single year.

Furthermore, when it comes to treatments and procedures, most people are of the opinion that the newest technology will mean better care, so they will expect it. But with the newest technology comes a higher price.

Will Healthcare Get Cheaper?

With so many distinct reasons for the rising cost of healthcare in this country, it is difficult to see how prices could come down. Nevertheless, if more people took advantage of health screenings, it is likely that health problems would be caught earlier and so the cost of treatment would come down.

Switching to generic medications could also be way to reduce healthcare costs, as branded medications cost far more than generic alternatives (despite containing the same active ingredient).


Healthcare in the United States is massively expensive, and it continues to rise. There are many reasons for this, including defensive medicine and the overuse of unnecessary treatments and tests. However, if health problems were diagnosed and treated earlier, it could help to lower the cost. The good news is that annual checkups, health screenings, and vaccinations are usually fully covered by healthcare plans with no copays.