People often blame one president or one political party for today’s healthcare mess.
But the truth is far bigger than any single administration or election cycle.
As someone who began my healthcare career in 1976, moved into middle management a few years later, and eventually spent decades leading and managing a community hospital, I feel a responsibility to explain how we arrived here — and why costs keep rising no matter who is in office.
1️⃣ Healthcare Spending Has Exploded Over Five Decades
When I started in 1976, total U.S. healthcare spending was about $180 billion.
Today — 48 years later — it is nearly $4.9 trillion, a staggering 2,600% increase.
We now spend 19% of our GDP on healthcare — more than any other country — yet our outcomes still lag behind many developed nations.
Every administration has simply kicked the can down the road, while the system has grown more expensive, more fragmented, and far more difficult to manage.
2️⃣ DRGs: The Biggest Shift in Hospital Payment (1983)
A major turning point came in 1983, when Medicare and Medicaid introduced Diagnosis Related Groups (DRGs) to control runaway inpatient spending.
Before DRGs
Hospitals were paid based on length of stay.
Longer stays = higher reimbursement.
This encouraged unnecessarily long hospitalizations.
Costs grew without limits.
After DRGs
Every admission was assigned to one of 100+ DRG categories (pneumonia, kidney disease, heart failure, etc.).
Each DRG had a fixed payment, regardless of length of stay.
Hospitals had to manage care efficiently or absorb financial loss.
Unintended Consequences
Earlier discharges
New or worsening conditions
Rising readmissions
To address this, Medicare added a new rule:
If a patient is readmitted for the same condition within a set number of days, the second admission is reimbursed poorly or penalized.
Hospital Response: Expansion and Diversification
Hospitals expanded:
rehab units
home health
outpatient clinics
ambulatory surgery centers
skilled nursing units
disease-specific programs
and massive administrative teams to meet constant regulatory demands
Today, U.S. hospitals must comply with over 1,000 federal standards just to remain certified and reimbursed.
A CMS survey can cost millions in preparation, staffing, documentation, and compliance work.
At times, it feels like we provide more paper care than patient care.
3️⃣ A Personal Example From My Hospital (Pre-DRG Era)
To understand why Medicare changed the system, consider one case from the early 1980s:
We admitted a patient with severe COPD whose family refused to take him home. Before DRGs, there were no limits on reimbursement, and he remained hospitalized over two years.
During this time he suffered:
repeated hospital-acquired infections
multiple comorbidities
repeated failures to come off the ventilator
Hospital-acquired infections (HAI) are illnesses picked up inside the hospital — pneumonia, bloodstream infections, UTIs, etc.
Longer stays dramatically increase this risk.
Comorbidities are additional illnesses (diabetes, heart failure, renal disease, malnutrition) that complicate treatment and prolong recovery.
Medicare absorbed enormous costs.
Our hospital carried major financial strain.
After more than two years, he was discharged — and tragically passed away the next day at home.
Cases like this pushed Medicare toward the DRG system.
4️⃣ ACA (ObamaCare) Helped Millions — But Costs Still Rose
The Affordable Care Act expanded coverage to millions and protected people with pre-existing conditions.
It also introduced quality-based reimbursement systems, meaning Medicare began paying hospitals and doctors partly based on:
readmission rates
infection rates
patient outcomes
preventive care
coordinated follow-up
These ideas led to the creation of Accountable Care Organizations (ACOs).
What Are ACOs?
ACOs are networks of hospitals and physicians who:
coordinate care under one umbrella
share responsibility for patient outcomes
share in savings if they improve care
absorb losses if performance falls short
The intention was admirable — better care and lower costs — but many ACOs struggled because:
Patient care and financial gains don’t always rhyme.
Insurance Companies and the ACA
When ACA launched, major insurers joined because they were guaranteed millions of new customers and federal subsidies.
But many enrollees were older and sicker, while younger healthy adults stayed out.
To protect themselves, insurers raised premiums and deductibles year after year.
Insurers stayed profitable, but families faced higher costs.
ACA Challenges That Increased Premiums
imbalanced risk pools
rising medical inflation
younger adults opting out
subsidies not keeping pace
ACOs struggling to meet savings targets
ACA helped millions, but it could not reverse 50 years of structural cost increases.
5️⃣ Massive, Unvetted Immigration Adds Unavoidable Pressure
Millions entering the country without medical screening place heavy strain on:
emergency rooms
Medicaid
public health departments
state budgets
disease surveillance systems
More uninsured patients means:
more uncompensated care → higher premiums for everyone.
Hospitals must treat all patients — they cannot turn anyone away — so these costs eventually get passed along.
6️⃣ EMTALA: A Noble Law Without Matching Funding
EMTALA (1986) requires hospitals to treat anyone who arrives at the ER:
regardless of insurance
regardless of ability to pay
regardless of immigration status
Hospitals are supposed to be reimbursed through:
Medicaid federal/state matching funds
Disproportionate Share Hospital (DSH) payments
What Are DSH Payments?
DSH payments are extra Medicaid funds for hospitals that treat large numbers of uninsured or low-income patients.The federal government covers 50% to 78% depending on the state, and the state must pay the rest.
If a state cannot afford its share, hospitals receive less funding — even when uncompensated care rises.
Why It Still Falls Short
state budgets cannot keep up
DSH funds are unpredictable and often reduced
ERs become overcrowded
wait times grow
community hospitals weaken financially
This leads to:
fewer resources for poor and middle-class families
delayed care
higher insurance premiums
and sometimes hospital closures
7️⃣ The Perfect Storm Behind Today’s Premium Increases
Combine all these forces and the outcome is predictable:
48 years of rising costs
DRG ripple effects
ACA structural challenges
uncompensated care linked to immigration
underfunded state and federal matching
EMTALA obligations without resources
massive regulatory burden
workforce shortages
fraud and inefficiency
Premiums rise because the system is stretched beyond its limits.
Early ACA promises —
“You can keep your doctor.”
“Premiums will go down.” —
were nearly impossible to keep during an era of 2,600% growth in spending.
Final Thought
This crisis was not created by one president or one political party.
It is the result of:
five decades of systemic weaknesses
political avoidance
regulatory complexity
demographic shifts
workforce shortages
rising uninsured populations
a payment system patched together in fragments
After living through every major healthcare reform since 1976, I believe:
We cannot fix the system until we fully understand how we got here
Joseph Chandy Kanjooparampil
