Why is health care in the U.S. so expensive? The simple answer is that prices are extremely high. Interestingly, Americans don’t visit doctors more often or stay longer in hospitals compared to people in other wealthy countries. We don’t have more procedures either. Yet, we pay much more—often two to three times higher than what others do for the same services like office visits or surgeries. This steep pricing is the real cause of the health care crisis in America, not excessive use of services.
So, what drives these high prices? A big part of the problem is the lack of competition in many health care markets. Many areas have consolidated health services into just a few dominant firms. For example, in Massachusetts, two major systems control a significant portion of the hospital beds. This trend isn’t limited to hospitals; it’s happening with insurance companies too. When fewer companies compete, it often leads to higher prices and fewer options for patients.
Competition is crucial for keeping prices in check. A recent survey found that in 2025, the average American family could pay around $35,000 for health care. That’s a big hit to the wallet, largely due to high prices in non-competitive markets.
Some mergers can enhance care by improving coordination or cutting administrative costs. However, many times, the opposite happens. These mergers may result in higher prices and fewer options without improving quality. This issue often arose due to weak regulations over the years. Polices that encouraged consolidation didn’t always succeed in providing better care at lower costs, leading to the regrettable rise in prices.
Insurance markets experienced a similar fate. Lax rules allowed insurers to grow larger while remaining inefficient or uncreative. This situation ultimately left consumers with fewer choices. The idea that large insurers can offset large health systems doesn’t always hold true. Two monopolies don’t create competition; they can solidify one another’s dominance.
Experts commonly agree that if the government wants to rein in health care spending, addressing high prices driven by a lack of competition is a priority. Regulators should analyze the impact of health care mergers more thoroughly before approval. They need to be willing to challenge past mergers that hurt consumers, especially in already concentrated markets.
In cases where monopoly conditions exist, policymakers might consider breaking up the largest systems to restore competition. Nonprofit organizations should also face scrutiny to ensure they provide real community benefits, especially if they start to act like profit-driven firms.
Supporters of consolidation argue that having a larger scale can provide stability. While some scale is beneficial, many health systems have become excessively large, leading to bureaucracy rather than innovation. Competition remains vital for improving care and controlling costs. Restoring competition in health care is not just an ideological issue—it’s about fixing broken markets, providing more choices, and relieving the financial burden on families.
If we truly aim for better health care, a focus on competition and market dynamics will be essential for making meaningful changes.
For additional insights, you can check out the American Hospital Association’s Annual Survey. This data helps to understand the context of hospital market concentrations and their implications for consumers.
