People often blame a single president or political party for today’s healthcare crisis.But the truth is far more complex than any one administration or election cycle.As someone who began my healthcare career in 1976, moved into middle management soon after, and eventually spent decades leading and managing a community hospital, I feel a responsibility to explain how we arrived at this point — and why costs keep rising no matter who is in office.
1976–1982: The Foundation of a Cost Crisis
In 1976, total U.S. healthcare spending was roughly $180 billion.
By 2024–2025, it has soared to $4.8–$4.9 trillion — an increase of more than 2,600%.
Today, the U.S. spends about 19% of GDP on healthcare, the highest in the world, yet our outcomes still lag behind many developed nations.
Across multipl administrations, both parties largely kicked the can down the road while the system became more expensive, more fragmented, and more difficult to manage.
1983: DRGs — The Biggest Turning Point in Hospital Payment
A major structural shift occurred in 1983, when Medicare introduced Diagnosis Related Groups (DRGs) to rein in uncontrolled inpatient spending.
Before DRGs
• Hospitals were reimbursed based on length of stay.
• Longer stays meant higher payments.
• Hospitals had incentives to keep patients longer.
• Costs rose without any practical ceiling.
After DRGs
• Each admission is assigned to a fixed DRG category (pneumonia, CHF, renal disease, etc.).
• Payment became fixed, regardless of how long the patient stayed.
• Hospitals had to manage care efficiently or face financial losses.
Unintended Consequences
• Early discharges
• Unresolved symptoms
• Higher readmissions
To counter this, Medicare introduced 30-day readmission penalties.
How Hospitals Adapted to DRGs (1983–1990s)
To sustain themselves under fixed payments, hospitals expanded into:
• rehabilitation units
• home health agencies
• outpatient clinics
• ambulatory surgery centers
• skilled nursing units
• disease-specific programs
• long-term ventilator facilities
• “preventive” or “prophylactic” outpatient procedures
• massive administrative, regulatory, and compliance departments
Today, hospitals must comply with 1,000+ federal standards just to remain certified.
A single CMS survey can cost millions in preparation, staffing, and documentation.
Often, it feels like we deliver more paperwork than patient care.
A Real Case From the Pre-DRG Era (Early 1980s)
To understand why Medicare changed the payment system, consider any one of the following scenarios. A patient with severe COPD remained hospitalized for over two years because the family refused discharge after multiple failed ventilator-weaning attempts.
He developed:
• multiple hospital-acquired infections
• worsening comorbidities
• repeated respiratory failures
Longer hospitalizations increase the risk of HAIs (pneumonia, bloodstream infections, UTIs).
Comorbidities like diabetes, heart failure, and renal disease complicate recovery.
Medicare absorbed enormous costs, and the hospital suffered financially.
Tragically, he passed away at home the day after discharge.
Other examples from that era:
• An inguinal hernia repair could require 9 days of hospitalization for minor fever.
• Open-heart surgery required three weeks of inpatient recovery (compared to 4 days today).
These realities pushed Medicare toward DRG-based payment.
1990s–2000s: Repeated Attempts to Reduce Costs (All Administrations)
Every administration — Republican and Democrat — attempted some form of cost control:
• managed care
• HMO models
• insurance competition
• quality-linked reimbursement
• fraud reduction
• Part B and D adjustments
But none meaningfully curbed the decades-long growth of spending.
The system continued to expand:
• more specialists
• more procedures
• more technology
• more regulations
• more administrative staff
By the early 2000s, healthcare spending was consuming an increasing share of GDP.
2010: The Affordable Care Act (ACA) — A Major Reform Era
The Affordable Care Act (ACA), also known as Obamacare, was signed into law on March 23, 2010.
Most major provisions rolled out between 2010–2014, with insurance marketplaces officially launching in 2014.
ACA Helped Millions
• expanded coverage
• protected individuals with pre-existing conditions
• emphasized preventive care
• improved care coordination
It tied reimbursement to:
• readmission rates
• infection control
• patient outcomes
• care coordination metrics
These led to the development of Accountable Care Organizations (ACOs).
Insurance Companies and the ACA
Insurers entered the ACA marketplaces expecting:
• millions of healthy enrollees
• steady federal subsidies
Instead, many enrollees were older and sicker, while younger adults opted out.
Insurers responded by:
• raising premiums
• raising deductibles
• narrowing networks
Insurance companies stayed profitable — families did not.
Why ACA Premiums Increased
• imbalanced risk pools
• rising medical inflation
• low enrollment of younger adults
• subsidies not keeping pace
• ACOs unable to generate expected savings
ACA expanded coverage — but it could not undo the 50-year structural cost growth already baked into the system.
What Are ACOs? (2010–Present)
ACOs were intended to:
• coordinate care
• improve outcomes
• share savings
• absorb losses when targets were unmet
The goal was excellent.
But better clinical outcomes do not always translate into lower costs, and many ACOs struggled financially.
Unvetted Mass Immigration (2019–2025): A New & Growing Burden
Millions of individuals entering the U.S. without medical screening or insurance add unavoidable pressure to:
• emergency rooms
• Medicaid
• state budgets
• communicable disease monitoring
• uncompensated care
Hospitals must treat all patients, regardless of status, under federal law.
More uninsured patients → more uncompensated care → higher premiums for everyone.
EMTALA (1986–Present): A Noble Law Without Adequate Funding
EMTALA requires hospitals to treat any patient who arrives at the ER, regardless of:
• insurance
• ability to pay
• immigration status
Hospitals depend on:
• Medicaid matching funds
• Disproportionate Share Hospital (DSH) payments
What Are DSH Payments?
DSH funds help hospitals with high volumes of uninsured/low-income patients.
Federal contribution: 50–78%
States must pay the rest.
When states cannot meet their share:
• DSH payments shrink
• hospitals absorb losses
• ER overcrowding increases
• wait times rise
• premiums increase
• rural and community hospitals suffer
This chronically underfunded mandate strains poor and middle-class families the most.
2020–2025: The Perfect Storm
All these forces converged into today’s premium crisis:
• nearly 50 years of rising costs
• DRG ripple effects
• ACA structural limitations
• unprecedented uncompensated care
• unvetted mass immigration
• state underfunding of Medicaid/DSH
• EMTALA obligations without proper financing
• massive regulatory and compliance workloads
• workforce shortages
• fraud, waste, and inefficiency
Premiums rise because the system is stretched to its limits.
The early ACA promises —
“You can keep your doctor.”
“Premiums will go down.”
— were impossible to achieve against a backdrop of 2,600% spending growth.
Final Thought
This crisis was not created by one president or one political party.
It is the result of:
• decades of systemic flaws
• political avoidance
• regulatory complexity
• demographic changes
• workforce shortages
• rising uninsured populations
• a payment structure built in disconnected patches
After witnessing every major reform since 1976, I genuinely believe:
We cannot fix the system until we fully understand how we got here.
And we may now need to apply the brakes on this runaway roller-coaster of healthcare spending by developing an alternative, sustainable model — one that reduces waste, prevents fraud, and still protects patient safety.
Yes, it may bring growing pains.
But without bold, clear-headed reform, the system will continue drifting toward unaffordability for millions of Americans.
Joseph Chandy Kanjooparampil
