Why Your Medical Costs are So High

By Kim Brant-Lucich and Alexander Nury, co-authors of Survival Guide to Caring for Aging Parents

You did everything right. You picked a plan during open enrollment. You checked that your doctor and/or hospital was in-network on your plan. You even called ahead to confirm your procedure was covered. And then — weeks later — an envelope arrived that made your stomach drop.

Sound familiar? You’re not alone. Like you, every year, millions of Americans are blindsided by medical bills that seem to have no rational explanation. The frustrating truth is that much of what drives up your healthcare costs has almost nothing to do with your choices — and almost everything to do with a system that was quietly designed to work against you.

The Chargemaster: A Secret Price List Nobody Talks About

Every hospital in America maintains something called a “chargemaster.” This is an internal master list of prices for all services, supplies, and procedures the hospital provides. A bag of IV saline that costs a hospital roughly $1 to produce? It might appear on that list at $150 or more. A routine blood panel? Hundreds of dollars for something that takes a lab only minutes to process.

Here’s the thing: those prices are largely made up. They’re not based on the actual cost of care. They’re inflated starting points that hospitals use to negotiate with insurance companies. The insurers push back, they settle somewhere in the middle, and the hospital still walks away with far more than what the service actually costs.

But if you’re uninsured — or if something slips through the cracks of your coverage — you can find yourself being billed at or near those chargemaster rates. Full price. No negotiation. No explanation. Just an amount that could derail your finances

Surprise Billing: The Ambush You Never Saw Coming

You go to an in-network hospital. Your surgeon is in-network. You’ve checked twice. What nobody told you is that the anesthesiologist who put you under — the one you never chose and never even met before you counted backward from ten — is out of network. And they just billed you $4,000 for that physician portion of your care.

This is called surprise billing, and while federal law (the No Surprises Act, passed in 2022) has made some progress in limiting it, gaps remain. Certain providers — particularly specialists who staff in-network facilities but aren’t employed by them — can still bill separately. This will show up on a bill as “professional fees.” Ground ambulance services also remain largely exempt from the law. All of these can arrive in your mailbox as surprise bills. And navigating a dispute with a provider over a surprise bill can feel like a part-time job you never applied for.

This happened to me when my son, who was born prematurely, needed respiratory treatment for his undeveloped lungs. A third-party provider was brought in for three or four two-minute treatments, and I received a bill for an outrageous $100K. I fought the bill, which went to arbitration twice, but the doctor refused to budge. I finally contacted my lawyer who threatened the doctor with the loss of his license, and we worked out a reasonable payment plan.

The system wasn’t built with transparency in mind. It was built around negotiating leverage, and patients have almost none.

Facility Fees: Paying for the Building when you Just Walked Through the Door

Here’s one that most people are unaware of: facility fees. When a hospital buys a private medical practice or clinic — which has been happening at a staggering rate — that location often gets reclassified as a hospital outpatient department. Nothing changes about the building. Nothing changes about the staff. Even your doctor is the same. But now, in addition to your physician’s bill, you’re being charged a separate “facility fee” just for the privilege of being seen there.

That fee can range from a few hundred dollars to more than a thousand, depending on the visit. Many patients have no idea this is happening until the bill arrives. You can’t always tell from the outside that the friendly neighborhood clinic you’ve been visiting for years is now technically a hospital facility — and is billing you accordingly.

The Hospital Consolidation Problem

Speaking of hospitals buying up everything in sight — the past decade has seen an unprecedented wave of healthcare consolidation. Hospitals are merging with other hospitals. Health systems are absorbing independent physician groups. Private equity firms are snapping up specialty practices. This consolidation results in less competition.

When there’s less competition in a market, prices go up. Study after study has confirmed this. In regions where a single health system dominates, prices for the same procedure can be 40 to 50 percent higher than in markets with meaningful competition. And as a patient, you generally can’t shop your way out of it. Your insurance network may give you one option within a reasonable driving distance — take it or pay out-of-network rates.

Drug Costs That Nobody Can Fully Explain

Your doctor prescribes a medication. Your pharmacy tells you the cost. You nearly fall over. What most patients don’t realize is that the price you’re paying often has almost no relationship to the cost of manufacturing that drug. It’s shaped by patent protections, pharmacy benefit manager contracts, rebate arrangements, and a pricing system so complex that even healthcare economists struggle to fully map it.

For example, a friend of mine takes a daily medication for a chronic condition. It’s not a new drug. It’s been around for decades. In Canada, he could get a month’s supply for about $12. Here, without insurance, it runs over $400. With insurance, after his copay and deductible, he’s still paying $80 a month. Nearly a thousand dollars a year for a drug that costs pennies to manufacture and is sold for a fraction of the price in countries around the world.

Brand-name drugs can cost 10 to 30 times more in the United States than the same medication sold in Canada or Europe. And while generic drugs are often a lifesaver, for newer medications — biologics, specialty drugs, newer cancer treatments — generics may not exist yet, leaving patients at the mercy of a single manufacturer’s pricing decisions.

What You Can Do (And What You Can’t)

I don’t want to leave you feeling like there’s nothing in your hands at all, because that’s not entirely true. There are some things within your control. You can request itemized bills and dispute charges. You can ask about financial assistance programs — most nonprofit hospitals are legally required to have them. You can appeal insurance denials and often win. You can use tools like GoodRx to comparison shop for prescriptions.

But the biggest drivers of your medical costs — the chargemaster rates, the facility fees, the consolidation, the drug pricing system — are structural. They were built over decades by powerful industries with enormous lobbying budgets, and individual consumer choices won’t dismantle them.

That doesn’t mean you’re powerless. It means that beyond protecting yourself at the individual level, the most meaningful change comes from staying informed, demanding transparency from providers, and supporting policies that bring real accountability to healthcare pricing.

You deserve to know what something costs before you receive it. You deserve a bill that makes sense. You deserve a system that isn’t quietly working against you.

What can change this system? — slowly, imperfectly, but eventually — are people who understand what’s happening and refuse to stay quiet about it. People who tell their stories. People who ask hard questions of their elected officials. People who support transparency legislation and push back on the idea that this is simply “how it has to be.”

We’re not there yet — but knowing how the game is rigged is the first step to changing it.