In 1961, President John F. Kennedy launched the Apollo program, a mission driven not just by inspiration, but by the existential fear of falling behind the Soviet Union in the Cold War. History shows that “moonshots”—massive, transformative leaps in technology or social structure—rarely occur simply because they are “the right thing to do.” They happen when a nation is moved by either intense fear or massive financial incentive.
Today, the United States is facing a crisis that demands a similar level of radical ambition: the skyrocketing cost of healthcare. Despite decades of policy tweaks, the gap between the cost of medical care and the ability of Americans to pay for it continues to widen. To close this gap, the U.S. cannot rely on small adjustments; it needs a systemic overhaul.
The Scale of the Crisis
The numbers surrounding American healthcare are staggering and reflect a profound inefficiency compared to other developed nations:
- Total Spending: The U.S. spends over $5.6 trillion annually, accounting for roughly 19% of its GDP.
- Per Capita Cost: Americans spend more than $15,000 per person each year—nearly double the average of other wealthy nations.
- The Burden on Families: Average annual premiums for family coverage are approaching $27,000, with employees often footing $7,000 of that cost out of pocket.
- The Employer Dilemma: With medical costs rising by 7% to 9% annually, businesses are increasingly forced to choose between raising wages, offering benefits, or cutting staff.
For years, the industry has attempted “small fixes”: insurers use stricter authorization processes, employers shift costs to workers via high-deductible plans, and systems invest in better primary care. While these address symptoms, they fail to touch the root cause: the fundamental economics of how healthcare is paid for.
The Two Broken Models
The American healthcare system currently operates under two primary payment structures, both of which are failing to deliver the promised results.
1. The Fee-for-Service Trap
Currently, over 90% of private insurance claims are processed through the fee-for-service model. In this system, providers (doctors and hospitals) are paid for every individual action—every test, visit, and procedure.
This creates a “perverse incentive”: volume equals revenue. The more services a doctor provides, the more they earn. Because patients have little control over their own care and little transparency regarding pricing, there is no natural market pressure to keep costs low. Furthermore, industry consolidation has reduced competition, allowing large hospital systems to maintain high prices without fear of losing patients.
2. The Flawed Promise of “Value-Based Care”
To fix the flaws of fee-for-service, policymakers introduced pay-for-value (or value-based care). The goal is to reward doctors for keeping patients healthy rather than just performing procedures. The ideal version of this is capitation, where a provider receives a fixed payment to manage a patient’s total health.
However, the reality is often different:
* Misaligned Incentives: In many cases, insurers receive the “value” payments, but they continue to pay doctors using the old fee-for-service model.
* The Revenue Threshold: Research suggests that doctors don’t truly change their behavior until a massive portion of their revenue (roughly 63%) comes from these fixed payments. Until then, the financial pull of performing more procedures remains too strong to ignore.
What Will Trigger the Shift?
A true “healthcare moonshot” requires a catalyst. Based on historical patterns, this change will likely be driven by one of two forces:
- Fear of Collapse: An economic downturn could force employers to slash health benefits for the 160 million Americans who rely on job-based insurance. This could trigger a political wave where voters demand radical reform to protect their families’ survival.
- The Promise of Profit: If the system successfully shifts to preventing chronic diseases—like heart attacks and strokes—the savings could reach $1 trillion. For insurers and large-scale providers, the financial reward for “keeping people healthy” could eventually outweigh the profits from “treating people when they are sick.”
The Bottom Line: The U.S. healthcare system is currently caught in a cycle of inefficient spending and misaligned incentives. Real change will only arrive when the cost of maintaining the status quo becomes more painful than the risk of overhauling the entire system.
