Why Does Medical Care Cost So Much More in the U.S.?

If you’ve ever had a surgery, gotten a CT scan, or picked up a prescription recently, you probably experienced a dose of sticker shock. The cost of healthcare in the United States is often mind-blowing, especially when compared to other developed countries like Canada, Germany, France, or Japan.

Let’s be clear: we’re not talking about quality. In many ways, the U.S. leads the world in medical innovation and technology. But when it comes to affordability and value, we’re falling short, especially for older adults living on fixed incomes.

This post dives into the real reasons why American healthcare, things like surgeries, diagnostic tests, and medications cost so much more than they do elsewhere, without proposing sweeping government-run solutions like Medicare for All. Instead, we’ll look at realistic changes and actions that can help bring down costs, improve transparency, and make life better for seniors and all Americans.

• Transforming American Healthcare for a Healthier Future From Reactive to Proactive

• Re-imagining Our Healthcare System For Seniors

How Much More Are We Paying?

Let’s start with a few comparisons to set the stage:

• Heart valve surgery in the U.S. can easily cost $150,000–$200,000, while in countries like Germany or the Netherlands, the same surgery might cost $40,000–$60,000.

• An MRI scan in the U.S. averages around $1,100, compared to $130 in Australia or $280 in Spain.

• Knee Replacement costs $35,000 in U.S. compared to $16,000 in Canada and $15,000 in UK.

• A common drug like Humira, used for arthritis, costs about $6,000 per month in the U.S., while it's under $1,000 in much of Europe.

Why? Let’s unpack the reasons.

1. The U.S. Healthcare System Lacks Transparency

Most countries set limits on what healthcare providers and drug companies can charge. Not so in the United States.

In countries like the UK or Canada, the government negotiates or sets prices for medical procedures, hospital stays, and prescription drugs. In the U.S., there are no national price limits, and in many cases, no real negotiation between providers and insurers. Each hospital, clinic, and pharmaceutical company can more or less set its own prices, which are often negotiated in secret with insurance companies.

That means:

• One hospital might charge $25,000 for a knee replacement.

• Another, just a few miles away, might charge $75,000.

• You may never know the price until after the procedure.

Seniors bear the brunt of these cost differences. Even with insurance or Medicare Advantage plans, deductibles, copays, and coinsurance can still be significant, and often unpredictable.

What Can Be Done?

• Price transparency laws: Requiring hospitals and providers to publish real prices (not vague estimates) can help consumers make informed choices and encourage price competition.

• Reference-based pricing models: Employers and insurers can limit how much they’ll pay for procedures, using a national average or international standard as a benchmark.

2. Administrative Costs Are Sky High

In most countries, healthcare administration (billing, insurance claims, coding, approvals, etc.) takes up around 5–10% of spending.

In the U.S.? It’s estimated to be as high as 25–30% of every healthcare dollar. Much of this is caused by Government regulation.

Why so much?

• We have thousands of insurance companies, all with different plans and rules.

• Hospitals and doctors have to hire entire departments just to handle billing and insurance claims.

• Government Paperwork and regulations. There’s a layer of bureaucracy for everything, from approving an MRI to coordinating post-op care.

This doesn’t make us healthier. It just adds cost.

What Can Be Done?

• Simplify insurance: Employers and insurers can move toward simplified, standardized plans.

• Encourage direct-pay and bundled care: Instead of dozens of bills from different departments, some providers offer one transparent, all-in price for procedures like knee replacements or colonoscopies.

3. The Power of Lobbying and Industry Influence

Let’s face it, healthcare in the U.S. is a massive business. Hospitals, pharmaceutical companies, insurance firms, and medical device manufacturers make up a multi-trillion-dollar industry.

And they spend billions lobbying Congress and state legislatures to protect their profits.

This has led to:

• Laws that prevent Medicare from negotiating drug prices (though that’s slowly changing).

• Patent laws that allow brand-name drugs to stay expensive for longer by delaying generic competition.

• Hospital consolidation reduces competition and raises prices.

What Can Be Done?

• Support independent providers: Smaller, non-chain clinics and hospitals may offer better prices and more personalized care.

• Use generics and biosimilars: Always ask your doctor or pharmacist if a cheaper version is available and safe for your needs.

• Vote and advocate: Seniors have political power. Supporting candidates and policies that reduce corporate influence can lead to practical reforms.

4. Hospitals and Specialists Charge More—Because They Can

In the U.S., market consolidation has created large hospital systems that dominate entire regions. When there’s little or no competition, they can and do charge whatever the market will bear.

For example:

• A single hospital system might own every ER, imaging center, and surgical suite in a city.

• Independent physicians are often bought out and employed by hospital systems, driving up fees.

• "Facility fees" get tacked onto bills even for simple visits because the practice is now owned by a hospital.

What Can Be Done?

• Shop around: If you're having a non-emergency test or procedure, compare costs across facilities using tools like Healthcare Bluebook or your insurer’s cost estimator.

• Use independent imaging centers and outpatient surgery centers: These can be dramatically cheaper than hospital-based services.

• Encourage state-level antitrust enforcement: Seniors can push their representatives to break up monopolistic hospital systems or at least increase competition.

5. Drug Prices Are Unregulated—and Sometimes Abusive

Unlike most countries, the U.S. does not regulate prescription drug prices. Drug companies can raise prices at will even for older medications. Because of much of the innovation, research and development is done in U.S.these costs are absorbed by the U.S. and have no impact on drug costs in other countries.

For example:

• Insulin, which costs just a few dollars to make, can run $300–$500 per vial in the U.S.

• EpiPens, once $100 for a two-pack, jumped to $600 in just a few years.

• Some cancer drugs cost $10,000–$20,000 per month, with no cheaper alternatives.

What Can Be Done?

• Use online discount programs: Sites like GoodRx, Mark Cuban’s Cost Plus Drugs, or Canada-based services can cut prescription costs dramatically.

• Talk to your doctor about alternatives: Many newer drugs have older, cheaper options that may work just as well.

• Ask about 90-day supplies: Often cheaper per dose, and more convenient for chronic meds.

• Spread out research and development costs to other countries. Their costs will rise while U.S. costs will go down.

6. The Culture of “More Is Better”

American healthcare often rewards doing more, not doing better. Providers are typically paid per service, not based on outcomes.

This leads to:

• Over-testing and over-treatment.

• Duplicate scans and unnecessary procedures.

• More hospital visits than needed.

Seniors, in particular, may be subjected to excessive testing “just to be sure,” which drives up costs without improving health.

What Can Be Done?

• Get a second opinion: Especially before surgeries or major treatments.

• Ask about necessity: Don’t be afraid to ask, “Is this test really needed?” or “What happens if we wait?”

• Work with a primary care doctor you trust: Coordinated, preventive care is almost always less expensive and more effective than reacting to problems after they happen.

7. Lack of Cost Awareness Among Patients

In many countries, patients are much more aware of costs because they see the price upfront or pay directly.

In the U.S., we often don’t know what a test or procedure will cost until weeks later when the bill arrives. Many seniors just assume, “Insurance will take care of it,” but that’s not always true especially with rising copays and coinsurance.

What Can Be Done?

• Ask for prices in advance: For non-emergency services, you have the right to know what it will cost.

• Use tools provided by insurers: Most insurance companies now offer cost estimators online or by phone.

• Consider direct primary care: These membership-based practices often eliminate surprise billing and offer better access to care.

8. Medical Malpractice and Defensive Medicine

Doctors in the U.S. face high malpractice insurance costs and the fear of lawsuits. As a result, they may:

• Order extra tests just to protect themselves.

• Avoid high-risk patients or procedures.

• Refer unnecessarily to specialists.

While the legal system is meant to protect patients, it also adds billions in unnecessary costs each year.

What Can Be Done?

• Support malpractice reform at the state level: Caps on non-economic damages can help lower insurance costs and discourage frivolous lawsuits.

• Work with providers who emphasize evidence-based care: You want thoughtful, not fearful, medicine.

What Seniors Can Do Right Now

Let’s summarize with some practical steps seniors can take today:

1. Compare prices before tests or procedures, use your insurer’s tools or independent websites.

2. Use independent providers for imaging, labs, and outpatient surgeries.

3. Ask for generic prescriptions and check GoodRx or other savings tools.

4. Get a second opinion before major procedures.

5. Join a local or national senior advocacy group to push for real reforms.

6. Educate your family and friends; awareness is the first step toward change.

   
   

Final Thoughts

American healthcare is complex and costly, no doubt about it. But you don’t have to accept sky-high bills as inevitable. By understanding how the system works and where the money goes you can make smarter decisions and demand better value.

While we didn’t discuss sweeping government solutions like single-payer systems or Medicare for All, there are plenty of realistic, market-based, and personal strategies that can help reduce costs for seniors right now.

Let’s keep pushing for change, supporting transparency, rewarding providers who offer high-quality care at a fair price, and looking out for ourselves and each other in the process.

Remember: You’re not powerless in this system. Your voice, your choices, and your example can help build a healthcare system that respects both our health and our wallets.

If you found this helpful, please share it with other seniors in your life. And don’t forget to subscribe to the Senior Empowerment Project newsletter for more practical, commonsense guidance on navigating today’s world smarter, stronger, and healthier than ever.

Let’s keep fighting the good fight. We’ve earned it.