The US spends 17.2% of its GDP on healthcare, nearly double the 9.3% average across developed nations, yet Americans live shorter lives, skip care because of cost, and carry billions in medical debt. There is no single fix, but several concrete reforms, some already underway, target the biggest sources of waste, overpricing, and access failure in the system.
Cut Administrative Waste
Administrative spending accounts for 15 to 30 percent of all US healthcare dollars. The country spends $1,055 per person on administrative costs alone, more than three times what Germany spends ($306) and far beyond any other wealthy nation. US hospitals and physician offices employ 44 percent more administrative staff than their Canadian counterparts, and American doctors spend about 13 percent of their working hours on paperwork compared to 8 percent in Canada. That time isn’t treating patients.
Much of this waste flows from the sheer complexity of billing across hundreds of private insurers, each with different coverage rules, prior authorization requirements, and claims processes. A single hospital might negotiate with dozens of payers, each demanding different documentation. Standardizing billing codes, streamlining prior authorization, and moving toward unified claims processing could recover tens of billions annually without cutting a single medical service. Some proposals go further, advocating for a single national payer to eliminate duplicative overhead entirely, though that remains politically contentious.
Make Prices Visible and Negotiable
One reason US healthcare costs so much is that prices for the same procedure vary wildly between hospitals, sometimes by a factor of ten within the same city. Federal rules now require hospitals to publish their negotiated prices online, but compliance has been slow. The Centers for Medicare and Medicaid Services audits a sample of hospitals and can issue civil monetary penalties, with updated enforcement rules taking effect in April 2026. Until price transparency is widespread and usable by patients, the market pressure that drives prices down in other industries simply doesn’t exist in healthcare.
On the drug side, the Inflation Reduction Act gave Medicare the ability to directly negotiate prices for high-cost medications for the first time. The Congressional Budget Office projected $98.5 billion in Medicare savings over the law’s first decade from negotiation alone. Expanding that authority to cover more drugs faster, and eventually extending negotiation power beyond Medicare, could meaningfully slow pharmaceutical spending across the system.
Expand Coverage Through Public Options
Several states are testing a middle path between fully private insurance and a national single-payer system: regulated public option plans sold alongside private ones on insurance marketplaces. The results so far are mixed but instructive.
Washington State’s public option has gained real traction. As of the 2026 enrollment period, about 40 percent of the state’s marketplace customers (roughly 115,000 people) chose a public option plan. Premiums on those plans are meaningfully lower than private alternatives, and the competitive pressure has pulled down prices on non-public-option plans as well.
Colorado took a different approach, requiring insurers to offer plans meeting state-set premium targets. Half of marketplace enrollees chose public option plans by 2026, up from 15 percent in 2023. But the model hit a snag: for 85 percent of individual-market residents, public option plans are now more expensive than alternatives. Nevada’s version is still small, with only about 10,700 enrollees, and hospitals have only recently begun offering the discounts the program depends on.
The takeaway is that public options can lower premiums and increase competition, but design details matter enormously. A public option that simply adds another plan without controlling underlying provider prices may not deliver the savings people expect.
Address the Physician Shortage
The US faces a projected shortfall of 42,600 to 121,300 physicians by 2030, with primary care accounting for 14,800 to 49,300 of those missing doctors and surgical specialties short by 20,700 to 30,500. You can redesign payment and coverage all you want, but if there aren’t enough doctors, wait times grow and rural communities go without care.
Fixing this means expanding medical school class sizes, funding more residency slots (the federal government caps how many it pays for, creating a bottleneck), and removing barriers for internationally trained physicians. It also means making primary care financially competitive with specialties. Right now, a new doctor carrying $200,000 or more in student debt has strong financial incentives to specialize rather than practice family medicine. Loan forgiveness tied to primary care and underserved-area practice has shown promise in filling gaps, but current programs remain too small relative to the shortage.
Nurse practitioners and physician assistants can absorb some of the demand, particularly for routine and preventive care. States that allow these professionals to practice more independently tend to have better access in rural areas.
Rein In Private Equity in Healthcare
Private equity firms have acquired hundreds of hospitals, physician practices, and nursing homes over the past two decades. The financial logic is straightforward: cut costs, increase margins, and sell. A Health Affairs study found that after private equity acquisition, hospitals cut total staff by about 5 percent and nursing staff by roughly 4.4 percent. Bed counts dropped. Operating margins rose. The financial engineering works for investors, but fewer nurses per occupied bed raises serious patient safety questions.
Regulatory responses could include requiring advance notice and review of healthcare acquisitions above a certain size, mandating minimum staffing ratios that survive ownership changes, and increasing transparency about who actually owns a healthcare facility. Some states have begun requiring attorney general approval for hospital sales, but federal oversight remains limited.
Relieve the Medical Debt Burden
About 15 million Americans have had medical bills on their credit reports. In 2022, the three major credit bureaus voluntarily stopped reporting certain medical collections, and the share of consumers with medical debt on their credit records dropped from around 14 percent to about 5 percent by mid-2023. That change alone didn’t erase the debt, but it stopped old medical bills from destroying people’s ability to rent apartments, get car loans, or pass employment credit checks.
Addressing medical debt at the source means tackling surprise billing (partially addressed by the No Surprises Act), expanding charity care requirements for nonprofit hospitals that receive tax exemptions, and capping out-of-pocket costs more aggressively. Some states and municipalities have used public funds to buy and forgive medical debt portfolios at pennies on the dollar, a strategy that could scale with dedicated funding.
Shift Toward Preventive and Primary Care
The US system is built around treating illness after it becomes serious, which is the most expensive way to deliver care. About 86 percent of healthcare spending goes toward people with chronic conditions, many of which are preventable or manageable with early intervention. Redirecting even a fraction of spending toward community health workers, diabetes prevention programs, blood pressure management, and mental health access would reduce the expensive hospitalizations that drive so much of the cost curve.
Value-based payment models, where providers are paid for keeping patients healthy rather than for each individual test and procedure, are one mechanism for this shift. Medicare has piloted several such models with mixed results: some reduce spending, others don’t. The ones that work tend to invest heavily in care coordination, keeping a nurse or social worker in regular contact with high-risk patients to catch problems before they become emergencies. Scaling those successes system-wide requires changing incentives for thousands of hospitals and physician groups that currently profit from volume.
No single reform will close the gap between what the US spends and what it gets. But the combination of cutting administrative bloat, making prices transparent, expanding affordable coverage, training more doctors, and shifting incentives toward prevention represents a realistic path. Several of these changes are already in motion at the state and federal level, producing early data on what works and what needs redesigning.