$14,775 Per Person and Falling Behind

Of the $14,775 per person the United States spent on healthcare in 2024, a 2017 study in the Annals of Internal Medicine found that 34.2% goes to administration. That's $2,497 per person on billing, claims processing, prior authorization, and denials. Canada's entire healthcare administration system costs $551 per person. The US spends more on paperwork alone than Canada spends on admin total, by a factor of more than four.

This is Part 1 of a five-part series on why the US is the only wealthy nation without universal healthcare.

The Paperwork Is the Product

That 34.2% is not waste in the usual sense. In single-payer systems, administrative costs run low because there's one set of billing rules and one claims process. Canada runs at 17%. In the US system, every hospital maintains billing departments that negotiate with dozens of insurers, each with their own prior authorization requirements, coverage rules, and appeals processes. That complexity creates jobs for administrators and revenue for insurers whose business model depends on processing (and denying) claims.

Analysts applying the Himmelstein data estimated that matching Canadian administrative levels would save more than $600 billion annually in 2017 dollars. Private insurance administrative overhead runs approximately 17%, compared to 2-5% for traditional Medicare and Medicaid. The gap between those two numbers is where the insurer's margin lives.

What That $14,775 Actually Buys

US health spending hits 17.2% of GDP. The peer-country average is 11.2%. That gap has been growing for decades with no corresponding improvement in outcomes.

American life expectancy hit a record 79.0 years in 2024 and still trailed comparable countries by 3.7 years, the widest gap among wealthy nations. Infant mortality: 5.6 deaths per 1,000 live births in 2023, ranking 32nd of 38 OECD nations. Norway's rate is 1.6. Maternal mortality: 18.6 per 100,000 in 2023 (down from 22.3 in 2022), still nearly double the OECD average of 10.3.

Among comparable wealthy nations, the US ranked last on avoidable and treatable death rates.

The Denial Machine

In 2023, 20% of all claims submitted through ACA marketplace plans on HealthCare.gov were denied. Separately, Medicare Advantage insurers received over 50 million prior authorization requests and denied 3.2 million. Among Medicaid managed care organizations, HHS OIG found the largest 115 plans denied more than 2 million of 17 million prior authorization requests, with 12 plans running denial rates above 25%.

The AMA's 2024 survey on prior authorization puts the human cost in clinical terms: 93% of physicians say prior authorization causes care delays. 29% report a serious adverse patient event. And 8% report a patient death, disability, or permanent bodily damage while waiting for an insurer to approve treatment.

What "Insured" Actually Means

Even having coverage doesn't necessarily mean access to care. A 2024 Commonwealth Fund report found that 23% of working-age adults with consistent insurance coverage were "underinsured," meaning they couldn't access affordable care despite technically having a plan. That's nearly one in four insured Americans paying premiums for coverage that doesn't actually cover them when they need it.

Meanwhile, the uninsured rate is moving in the wrong direction. Census Bureau data shows it ticking up from 7.9% in 2023 to 8.2% in 2024. Texas leads at 16.7% uninsured; Massachusetts sits at 2.8%. The Medicaid unwinding after pandemic-era continuous enrollment protections ended was a major driver: KFF's tracker shows 25 million people lost Medicaid coverage, and 69% of those disenrolled were removed for procedural or paperwork reasons, not because they were ineligible.

There's a connection here to the administrative overhead in the previous sections. Those 25 million people didn't lose coverage because they got healthier or got a raise. They lost it because the paperwork system flagged them for renewal and they fell through. The bureaucracy that costs $2,497 per person doesn't just inflate spending. It actively removes people from the rolls.

Ten states still refuse to expand Medicaid, leaving more than 2 million adults in a coverage gap where they earn too much for Medicaid but too little for ACA marketplace subsidies. Nearly 60% of those in the coverage gap are Black or Latino.

The downstream result is debt. KFF Health News estimates roughly 100 million Americans carry some form of medical debt. A more conservative KFF/Census figure puts it at about 20 million people owing at least $220 billion. By that same survey, about a third of people with medical debt say they will never pay it off, and among Black Americans, 56% report owing for a medical or dental bill.

Where the Margin Comes From

The administrative complexity, the denials, the coverage gaps, the debt — all of it persists because specific entities profit from the current structure.

Private insurers sit at the center. UnitedHealth Group posted $400.3 billion in revenue in 2024 and $22.4 billion in net income in 2023, according to its SEC filings. CEO Andrew Witty received $26,339,215 in total compensation in 2024, a figure tied to revenue and profitability rather than patient outcomes. Denied claims and prior auth delays discourage patients from pursuing coverage, and both protect the margin.

MedPAC and independent analysts estimate Medicare Advantage plans are overpaid by 22-39% versus traditional Medicare, generating an estimated $83-$127 billion in excess government payments in 2024. A separate HHS OIG investigation found UnitedHealth alone received approximately $3.7 billion in questionable risk-adjusted payments for 2023 through a practice called "upcoding," where insurers use health risk assessments to document diagnoses that inflate their per-patient government reimbursement.

The medical debt collection industry profits on the back end. At least $220 billion in outstanding medical debt creates a secondary market where hospitals sell delinquent accounts at pennies on the dollar and collectors pursue the balance. Private equity firms have invested simultaneously in hospital systems (which generate the debt) and collection agencies (which profit from harvesting it).

The Trade Nobody Made

Every country with universal coverage made a version of this trade at some point: accept lower administrative complexity in exchange for broader access. Canada runs admin at 17% of spending. The US runs at 34.2%. The $600 billion difference is large enough to cover every uninsured American and still have money left over.

Capturing those savings would require eliminating the administrative infrastructure that private insurers built and depend on. The current system pays the people who would have to give something up. Later parts of this series will trace how that happened and who blocked reform each time it got close.