Structurally Expensive: The Durable Drivers of High United States Healthcare Spending

U.S. healthcare spending has remained persistently high despite repeated efforts at correction. This essay offers a structural explanation. Waste, excess prices, and administrative complexity matter, but much spending growth reflects durable features of the sector that cannot be readily eliminated. Baumol's cost disease provides the core framework: in labor-intensive services with limited productivity gains, costs rise because wages in them must keep pace with more productive sectors. Medical technology more often expands capacity, utilization, and clinical expectations than it reduces labor inputs. The U.S. physician training pathway is unusually long and expensive, and federal residency caps have artificially constrained physician supply, reinforcing a high compensation floor. The healthcare and social assistance sector functions as a de facto industrial policy, as it is the nation's largest employment sector and the top employer in 38 states, making aggregate cost compression politically costly in ways that are structural, not incidental. Domestic multiplier effects deepen that political durability. Five distinctively American features further limit centralized cost control: population scale and decentralization, higher per capita income, a heavier chronic disease burden, the absence of a national health technology assessment authority, and weaker redistributive institutions. Given the constraints, the aspiration to make American healthcare dramatically cheaper without major disruption is unrealistic. A more credible agenda is to foster local stewardship within a structurally high-cost system.