The United States spends more on healthcare than other wealthy countries.

The harder question is: why?

John McDonough, a professor of the practice of public health at the Harvard T.H. Chan School of Public Health, believes part of the answer can be found in a major shift in American economic and political policy that began more than four decades ago.

In his new book, America’s Wrong Turn: US Health Care in the Neoliberal Era, McDonough argues that changes beginning around the 1980s helped create a healthcare system increasingly shaped by consolidation, privatization, market power and commercial incentives.

His conclusion is not modest.

McDonough believes meaningful reform will require substantial structural change.

The U.S. Began Pulling Away From Its Peers

The starting point for McDonough's argument is a striking long-term trend.

Around 1980, U.S. healthcare spending was much closer to spending levels in other wealthy countries. Over the decades that followed, the gap widened considerably.

By 2024, U.S. healthcare spending reached about $14,775 per person, substantially above countries such as Switzerland and Germany.

The difference cannot simply be explained by Americans receiving dramatically more healthcare.

Research comparing the U.S. with other wealthy countries has repeatedly found that higher prices play an important role. Americans may have shorter hospital stays and fewer physician visits in some comparisons, yet the prices charged for many services are considerably higher.

At the same time, the United States continues to face significant challenges involving affordability, insurance coverage and health outcomes.

For McDonough, the timing of the widening spending gap raises a broader question:

What changed?

McDonough Looks to the Political Shift of the 1980s

McDonough traces part of the transformation to the economic philosophy that gained influence during the Reagan era.

His book examines a period characterised by greater faith in markets, deregulation, privatization, lower taxation and a reduced role for government in some areas of economic life. He argues that these ideas continued to influence American policymaking long after Ronald Reagan left office, including under administrations with very different political identities.

This is an interpretation of healthcare history rather than a universally accepted single explanation for America's healthcare costs.

But McDonough argues that the policy environment created during this period made several developments within healthcare easier to accelerate — particularly corporate consolidation and the increasing influence of financial investors.

Healthcare Became Increasingly Consolidated

One of McDonough's central concerns is consolidation.

Hospitals, physician practices, insurers and other healthcare businesses have increasingly combined into larger organizations.

Supporters of consolidation often argue that larger organisations can coordinate care more effectively, eliminate duplicated costs and gain efficiencies through scale.

But the evidence on cost savings is far less reassuring.

A major RAND review concluded that horizontal hospital consolidation is strongly associated with higher prices paid to healthcare providers, while evidence that consolidation consistently improves quality is much weaker.

That matters because competition works differently when only a small number of organisations control a local healthcare market.

A hospital system with substantial market power may be able to negotiate much higher payments from insurers. Those higher costs can eventually affect employers, taxpayers and patients through premiums, cost sharing and public spending.

Private Equity Adds Another Layer to the Debate

McDonough is also critical of the increasing role of private equity in healthcare.

Private equity firms typically acquire companies, seek to increase their value and later sell them or otherwise realise a return on the investment.

That model is not automatically incompatible with good healthcare.

However, critics — including McDonough — argue that problems can arise when pressure for rapid financial returns conflicts with investment in staffing, patient care or long-term organisational stability.

The debate has become increasingly important as investors have expanded into physician practices, hospitals and other parts of the healthcare industry.

For McDonough, the question is ultimately one of priorities:

What happens when healthcare institutions are expected to maximise financial returns while also being responsible for patient wellbeing?

The Problem Is Bigger Than Hospital Prices

McDonough's diagnosis of the U.S. system extends beyond consolidation.

He highlights a collection of structural problems, including:

  • High administrative complexity
  • Fragmentation between different parts of the healthcare system
  • Unequal access to care
  • Significant patient cost sharing
  • Medical debt
  • Underinvestment in public health and prevention
  • Uneven quality of care
  • Growing pressure on healthcare workers

The financial burden is significant even before insurance premiums are considered. Average U.S. out-of-pocket healthcare expenditure reached $1,632 per person in 2024, according to Peterson-KFF Health System Tracker data.

Taken together, McDonough argues that these problems are not isolated defects.

He sees them as symptoms of a system that has gradually shifted away from treating healthcare primarily as a public and social good.

What Would Reform Look Like?

McDonough argues that correcting course will require more than small adjustments.

Among the approaches discussed are stronger antitrust enforcement, tighter scrutiny of healthcare consolidation, greater regulation of prescription drug pricing and a renewed policy focus on affordability, access, quality, equity and population health.

None of these changes would be politically simple.

Healthcare reform involves hospitals, insurers, pharmaceutical companies, physicians, employers, patients, state governments and the federal government — all with different interests and incentives.

That helps explain why even widely recognised problems can survive for decades.

The Bigger Question: What Should Healthcare Be Designed to Do?

McDonough's argument raises a question that goes beyond individual policies.

What should the primary purpose of a healthcare system be?

Should healthcare operate primarily according to ordinary market incentives?

How much competition is necessary to control prices?

Where should government intervene?

How should profit be balanced against access, affordability and patient care?

Reasonable people will disagree on the answers.

But the underlying problem is increasingly difficult to ignore.

The United States spends considerably more on healthcare than its economic peers, and higher spending has not automatically translated into superior outcomes.

McDonough's contribution to that debate is to argue that today's problems cannot be understood simply by looking at today's hospital bills.

To understand how the system became so expensive and fragmented, he says, Americans also have to examine the policy choices that shaped it over the previous four decades.

Why It Matters

Healthcare costs are not only a government budget issue.

They influence household finances, wages, employer costs, insurance premiums, access to treatment and the financial stability of families.

The policy solutions remain deeply contested.

But one lesson from McDonough's argument is difficult to dismiss:

Healthcare systems are shaped by policy choices — and changing their direction requires understanding how those choices accumulated over time.

What Do You Think?

Does fixing U.S. healthcare require major structural reform, or can the existing system be improved through smaller, targeted changes?