Affordable Healthcare

America has the highest per-capita healthcare cost and the lowest life expectancy in the developed world.[i] In 2025, America spent an estimated $5.6 trillion on healthcare, or $16,570 per person, or over $66,000 for a family of four.[ii] The $16,570 is six and a half times the inflation-adjusted per-capital cost in 1971.[iii] In 2024, the federal government spent $1.9 trillion on healthcare and services, which was more than twice what was spent on defense.[iv] A 2021 poll revealed that voters’ number one priority was reducing healthcare costs.[v] 

Healthcare has become so expensive that by 2022, employers paid more for healthcare as a percent of total employee compensation (7.9 percent) than they did for Social Security, Medicare, unemployment insurance, and worker's compensation benefits combined (7.2 percent). To reduce cost, employers have increased the share of premiums that employees pay and increased deductibles. These cost reduction tactics harm low-income workers the most.[vi] Small businesses have been especially burdened. From 2000 to 2023, the percentage of small businesses that offer healthcare to employees fell from 47 percent to 30 percent.[vii]

This paper presents ideas for reigning in drug companies and hospitals that overcharge and stopping fraudsters from stealing from Medicare and Medicaid.

Reduce Prescription Drug Costs

In 2022, U.S. prescription drug prices were, on average, 2.78 times higher than the average prices in thirty-three other developed countries, as noted.[viii]

Eighty-three percent of Americans want the government to lower the prices of prescription drugs.[ix] The first law that significantly addressed prescription drug costs is the Inflation Reduction Act of 2022. The law amended the non-interference clause by requiring the Secretary of HHS to negotiate prices with drug companies for a small number of single-source brand-name drugs or biologics without generic or biosimilar competitors covered under Medicare Part D (prescription drugs) and Part B. These are typically drugs with very high prices.[x]

The number of drugs selected for price negotiation is ten Part D drugs for 2026, another fifteen Part D drugs for 2027, another fifteen Part D and Part B drugs for 2028, and another twenty Part D and Part B drugs for 2029 and later years. The law also required that Part D plans limit the copayment to $35 per month for at least one type of insulin in at least one of each dosage form (vial, pen) and insulin type (rapid-acting, short-acting, intermediate-acting, and long-acting).[xi]

The first ten drugs selected for negotiation are projected to save $6 billion in 2026, a 22 percent reduction in spending across these medications. In 2026, Medicare beneficiaries are expected to save $1.5 billion in out-of-pocket costs.[xii] On January 17, 2025, CMS announced the selection of fifteen drugs covered under Medicare Part D for the second cycle of price negotiations that would go into effect in 2027. Ozempic and other weight loss drugs head the list. For the fiscal year from October 2023 to September 2024, weight loss drugs cost Medicare over $14 billion.[xiii]

Accelerating the number of drugs negotiated from fifteen to thirty beginning in 2027 could add $50 million in savings annually to Medicare. Extending negotiated drug prices to Medicaid and private insurance plans could bring annual savings to $100 million.[xiv] It is recommended that Congress pass a law to accelerate and extend prescription drug price negotiation as described above.

Reduce Hospital Costs

In 2022, spending on hospital services accounted for 42 percent of total healthcare spending among the 160 million Americans with private insurance. The price paid to hospitals for privately insured individuals was, on average, 2.54 times what Medicare would have paid. Hospital costs are the primary reason healthcare costs cause financial distress and bankruptcy.

Hospital costs vary widely among states and among hospitals. Arkansas, Iowa, Massachusetts, Michigan, and Mississippi had prices under twice what Medicare would have paid. California, Florida, Georgia, New York, South Carolina, West Virginia, and Wisconsin had prices above three times what Medicare would have paid. Maryland was the only state where privately insured and Medicare recipients paid the same price.[xv]

The financial industry has driven much of the cost increases in certain hospitals. Wall Street firms, such as private equity firms, have bought hospitals and raised prices. In 2022, one of every three medical personnel working in America’s emergency rooms worked for two private equity companies: Blackstone and Kohlberg Kravis Roberts & Co. With private equity in charge, emergency room doctors ordered more expensive tests and surprised patients with out-of-network costs.[xvi] According to the Wall Street Journal, “price increases are a key tool for private equity firms to boost profits at companies they acquire.”[xvii]

Seventy-eight percent of voters support a law that limits hospitals from charging more than twice what Medicare allows.[xviii] This would save $100 billion per year. However, limiting hospitals from charging more than one and a half times what Medicare allows would save $200 billion per year by 2032.[xix] It is recommended that Congress limit what hospitals can charge to twice what Medicare would pay after two years and one and a half what Medicare would pay after five years. Hospitals that fail to reach these goals would face fines.

Stop Medicare and Medicaid Fraud

Medicare and Medicaid fraud are estimated to exceed $100 billion per year. There are two primary types of Medicare and Medicaid fraud. First is making claims for services not rendered. All it takes is a street address, patient information, doctors’ signatures, and the government-issued Medicare and Medicaid handbooks that explain how to charge the government for services rendered or, in this case, not rendered. Fraudsters can purchase patient and doctor information, and corrupt doctors can be part of the scheme. Fraudsters merely invoice Medicare and Medicaid for tests, medical equipment, and treatments that never took place. Clinics with empty storefronts and no employees are found in strip malls across America.[xx]

The second type of Medicare and Medicaid fraud is insurance provider overbilling. Medicare pays private insurance companies that offer Medicare Advantage plans more for patients with conditions that are expensive to treat. For instance, Medicare pays private insurers an annual base rate of $3,735 for a healthy person. But if someone is diagnosed with morbid obesity, Medicare adds $2,370 for a total of $6,105.[xxi]

According to the New York Times, several private insurance providers have asked their doctors to find more illnesses and rewarded them when they did. Many patients and their doctors never found out that they have been misdiagnosed by their insurers. Six of the ten largest health insurance companies have been accused of fraud by either whistleblowers or the U.S. government. Eight of the ten biggest Medicare Advantage insurers, representing more than two-thirds of the market, have submitted inflated bills to Medicare according to federal audits. Overbilling estimates are as high as $25 billion per year. For comparison, NASA’s budget is $21.5 billion.[xxii]

It is recommended that Congress prohibit insurance providers from adding maladies to patients’ records. If Medicare Advantage insurance providers believe patients have additional maladies, they should contact the patients, and patients can ask their doctors. This could save up to $25 billion per year.

There are 450 federal agents assigned to Medicare and Medicaid fraud, but they can’t begin to keep up.[xxiii] This book recommends that Congress fund more agents. Because agents would likely recover more money than they cost, this investment could be cash positive.

$400 Billion in Annual Savings

These ideas would reduce the cost of healthcare by roughly $400 billion per year by 2032. Most importantly, the burden of large medical bills would be reduced, resulting in fewer healthcare bankruptcies. This law would also reduce employer healthcare costs and shore up Medicare, Medicaid, and other government-funded healthcare.

[i]       “Mirror, Mirror 2021: Reflecting Poorly Health Care in the U.S. Compared to Other High-Income Countries,” The Commonwealth Fund, August 4, 2021, https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly.

[ii]       Sean P. Keehan, Andrew J. Madison, John A. Poisal, Gigi A. Cuckler, Sheila D. Smith, Andrea M. Sisko, Jacqueline A. Fiore, Kathryn E. Rennie, “National Health Expenditure Projections, 2024–33: Despite Insurance Coverage Declines, Health To Grow As Share Of GDP,” Health Affairs, June 25, 2025, https://www.healthaffairs.org/doi/10.1377/hlthaff.2025.00545

[iii]      Matthew McGough, Emma Wager, Aubrey Winger, Nirmita Pancal, and Lynne Cotter, “How Has U.S. Spending on Healthcare Changed Over Time?,” Peterson-KFF Health System Tracker, December 20, 2024, https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Total%20national%20health%20expenditures,%201970-2023

[iv]      Juliette Cubanski, Alice Burns, and Cynthia Cox, “What Does the Federal Government Spend on Health Care?,” KFF, February 24, 2025, https://www.kff.org/medicaid/issue-brief/what-does-the-federal-government-spend-on-health-care/.

[v]       Erica Socker, “New Poll: Majority of Voters Want Congress to Take Action to Lower Health Care Prices,” Arnold Ventures, June 30, 2021, https://www.arnoldventures.org/stories/new-poll-majority-of-voters-want-congress-to-take-action-to-lower-health-care-prices.

[vi]      Sam Hughes, Emily Gee, and Nicole Rapfogel, “Health Insurance Costs Are Squeezing Workers and Employers,” The Center for American Progress, November 29, 2022, https://www.americanprogress.org/article/health-insurance-costs-are-squeezing-workers-and-employers/.

[vii]     Amy Skinner, “How Rising Healthcare Costs Have Caused Small Businesses to Eliminate Benefits,” TakeCommand, accesses June 11, 2025, https://www.takecommandhealth.com/rising-healthcare-costs-small-business#:~:text=Rising%20healthcare%20costs%20have%20put,sponsored%20insurance%20at%20small%20firms.

[viii]     Kavita K. Patel and Kevin A. Schulman, “Policy Options to Reduce Prescription Drug Costs Across Medicare, Medicaid, and Commercial Insurance,” Stanford Medicine, Department of Medicine News, accessed March 27, 2025, https://medicine.stanford.edu/news/current-news/standard-news/policy-options-white-paper.html#:~:text=While%20cost%2Dsavings%20in%20Medicare,market%20more%20transparent%20and%20accessible.

[ix]      Emma Wager, Cynthia Cox, and Krutika Amin, “What Are the Recent and Forecasted Trends in Prescription Drug Spending,” Health System Tracker, September 15, 2023, https://www.healthsystemtracker.org/chart-collection/recent-forecasted-trends-prescription-drug-spending/#Total%20out-of-pocket%20retail%20prescription%20drug%20spending,%20projections%20before%20&%20after%20passage%20of%20the%20Inflation%20Reduction%20Act.

[x]       Juliette Cubanski, Tricia Neuman, and Meredith Freed, “Explaining the Prescription Drug Provisions in the Inflation Reduction Act,” KFF, January 24, 2023, https://www.kff.org/medicare/issue-brief/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act/#:~:text=The%20law%20that%20established%20the,require%20a%20particular%20formulary%20or

[xi]      Ibid.

[xii]      Patel and Schulman, “Policy Options to Reduce Prescription Drug Costs Across Medicare, Medicaid, and Commercial Insurance,” see note viii.

[xiii]     “Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2027,” CMS.Gov – Medicare Drug Price Negotiation Program, January 2025,  https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2027.pdf.

[xiv]     Patel and Schulman, “Policy Options to Reduce Prescription Drug Costs Across Medicare, Medicaid, and Commercial Insurance,” see note viii.

[xv]     “Private Health Plans During 2022 Paid Hospitals 254 Percent of What Medicare Would Pay,” Rand, accessed April 1, 2025, https://www.rand.org/news/press/2024/05/13.html#:~:text=Even%20as%20the%20number%20of,to%20254%20percent%20in%202022.

[xvi]     Peter Goodman, Davos Man: How the Billionaires Devoured the World (Custom House, 2022).

[xvii]    Matt Wirz, “Private Equity’s Food Binge Goes Sour,” Wall Street Journal, February 18, 2021, https://www.wsj.com/articles/private-equitys-food-binge-goes-sour-8f830dd4?gaa_at=eafs&gaa_n=ASWzDAjYiRe4SCFGboJ1X7c_tvCy-iBE--SigerotuMCoXyv10G8KImrYMaLxERZB9A%3D&gaa_ts=683a5e55&gaa_sig=aPAoy0N7dTvceXwzPknM1KPsUUfyQuM51L-xDFdJ4kgT5hlrsS6Ff2e-08sUvIyqGXSjdVMOOimakjJqDxr9Ag%3D%3D

[xviii]   Socker, “New Poll: Majority of Voters Want Congress to Take Action to Lower Health Care Prices,” see note v.

[xix]     “Capping Hospital Prices,” Committee for a Responsible Federal Budget, Feb 23, 2021, https://www.crfb.org/papers/capping-hospital-prices

[xx]     Scott Zamost, “Inside the Mind of Criminals: How to Brazenly Steal $100 Billion from Medicare and Medicaid,” CNBC, March 9, 2022, https://www.cnbc.com/2023/03/09/how-medicare-and-medicaid-fraud-became-a-100b-problem-for-the-us.html.

[xxi]     Christopher Weaver, Tom McGinty,  Anna Wilde Mathews, and  Mark Maremount, “Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated,” Wall Street Journal, July 8, 2024, https://www.wsj.com/health/healthcare/medicare-health-insurance-diagnosis-payments-b4d99a5d.

[xxii]    Reed Abelson and Margot Sanger-Katz, “‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions,” New York Times, October 8, 2022, https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html.

[xxiii]   Zamost, “Inside the Mind of Criminals,” see note xx.