American healthcare does not feel like a single system because it is not one. It is a dense web of payers, contracts, benefit designs, coding rules, claims formats, network restrictions, and paperwork workflows that sit between patients and care. For most people, the most reliable part of the experience is not clinical excellence or continuity. It is the administrative grind, the intake forms, the surprise bills, the denials, the phone trees, the “we need prior authorization,” the “that code is not covered,” and the inevitable question that hangs over nearly every visit: what is this going to cost me, and when will I find out?
That reality is not an accident. In the United States, healthcare is engineered to move money, allocate risk, and document transactions at scale. Healing happens inside that machinery, but it is rarely what the machinery is optimized for.
A system built for payment workflows
Start with a simple observation. The U.S. spends an enormous amount on healthcare, and a significant portion of what happens day to day is not care delivery but financial processing. Nationally, total health spending reached about $5.3 trillion in 2024, or 18.0 percent of GDP, according to the Centers for Medicare and Medicaid Services.
Big numbers like that create an unavoidable institutional fact: when trillions of dollars flow through a fragmented payer landscape, the incentives naturally prioritize billing accuracy, revenue capture, and payment rules. If your organization survives on reimbursement, then the work of documenting, coding, and “proving” the visit to multiple payers becomes central. The patient encounter becomes not only a clinical moment but also a financial artifact that must be formatted correctly for the entity that pays.
This is how billing becomes structural. It is not simply paperwork that clings to care. It is a core function that care is routed through.
Administrative spending is not a rounding error
When people say the U.S. healthcare system is “expensive,” they often picture high drug prices or hospital charges. Those are real. But the administrative layer is also enormous.
A widely cited analysis comparing the United States and Canada estimated that U.S. insurers and providers spent hundreds of billions on administration and that administrative costs made up a large share of national health expenditures. Even in more narrowly defined research discussions, the same theme appears: administrative spending is both massive and structurally embedded. A JAMA commentary discussing national administrative spending referenced estimates on the order of roughly a trillion dollars annually.
At the provider level, administrative overhead is not theoretical. A recent peer-reviewed analysis using Medicare hospital cost report data estimated hospital administrative expenses at a scale that is hard to ignore. CMS itself describes the Medicare cost report system as a standardized annual financial reporting requirement for certified institutional providers, illustrating how deeply reporting and accounting are baked into healthcare operations.
If you build institutions around revenue flows, you should not be surprised when those institutions act like revenue-processing organizations.
Coding is the language the system actually speaks
In clinical terms, a doctor sees a problem and treats it. In U.S. payment terms, a visit becomes a collection of codes that must match policy, documentation rules, and payer logic.
Even when reforms attempt to reduce burden, they do so by changing documentation requirements within the billing framework, not by removing the billing framework itself. Consider evaluation and management visits. CMS maintains extensive guidance on documentation and payment under the Medicare Physician Fee Schedule for E/M visits. Professional associations describe recent E/M changes as an effort to reduce administrative burden by shifting what must be documented for code selection.
That is revealing. The reform is not “document less because patients need care.” The reform is “document differently so the billing rules are satisfied with less waste.” It is a burden reduction project inside an architecture that still makes clinicians translate care into reimbursement units.
In a billing-centered system, the medical record is not only a clinical tool. It is also a compliance document and a payment justification. That dual purpose shapes how care is delivered, how time is spent, and what gets prioritized.
Prior authorization is rationing through paperwork
If you want to see billing logic override healing logic in real time, look at prior authorization. Prior authorization is a utilization management tool that requires providers to get insurer approval before delivering certain services or prescriptions. In theory, it controls inappropriate spending. In practice, it often functions as rationing by delay and administrative exhaustion.
The American Medical Association’s annual survey data has repeatedly documented how much time physician practices spend completing prior authorizations and how frequently it delays care.
It is tempting to treat prior authorization as a discrete policy flaw that could be fixed with better software or better staffing. But it is more than that. Prior authorization makes sense only in a system where payers are incentivized to reduce paid claims and where providers must constantly prove that a service fits a payer’s coverage criteria. It is a billing-first mechanism: the question is not only “Is this clinically appropriate?” but also “Will the payer agree to pay for it under these rules?”
A system optimized for healing would treat unnecessary friction as a patient safety hazard. A system optimized for billing treats friction as a cost-control strategy.
Even “simplification” reveals the real priority
Defenders of the current architecture often point out that there are efforts to standardize transactions and reduce paperwork. That is true. HIPAA administrative simplification established national standards for electronic transactions, code sets, identifiers, and operating rules, explicitly framed as a way to reduce paperwork and streamline processes.
Those initiatives matter, but they also underscore the deeper point. If the system needs a decades-long federal project to standardize basic transactions like eligibility checks, claim status, and remittance advice, it is because billing is not peripheral. Billing is central enough that the federal government has to manage the plumbing.
Administrative simplification is not evidence that billing is a distraction from care. It is evidence that billing is one of the primary activities the system must coordinate.
The patient becomes the unpaid billing coordinator
In a billing-designed system, the patient is often forced into an administrative role that should not exist. People with chronic conditions and complex care needs quickly learn that medicine is not just appointments and prescriptions. It is also referrals, network verification, record requests, explanation-of-benefits interpretation, and appeals.
This is why American healthcare feels like a series of negotiations rather than a service. Patients are not simply receiving care. They are navigating contractual relationships they did not design between organizations whose incentives do not align with their well-being.
The cruelty of this design is that it treats failure as individual. If you cannot interpret your bill, you did something wrong. If your claim is denied, you must not have followed the process. If you cannot find an in-network specialist, you chose the wrong plan.
But those “choices” are often illusions. In a system optimized for billing, complexity is not only tolerated. It is functional.
Why the system keeps drifting toward billing
So why does billing remain the center of gravity? Because the U.S. does not run healthcare primarily as a public utility. It runs it as a multi-payer marketplace layered with public programs, employer-sponsored insurance, contracted networks, and private administration. That structure produces predictable behaviors.
Insurers compete in part by managing medical loss and administrative cost targets. Providers compete and survive in part by mastering revenue cycle management and negotiating payer rates. Hospitals invest heavily in billing infrastructure because reimbursement is how they keep the lights on. Everyone builds systems to reduce their own exposure, and that exposure is often financial.
Clinical excellence does not disappear in this environment. Many clinicians deliver extraordinary care. But the macro-design tells people what matters most by where time, labor, and engineering effort go. In the U.S., an enormous amount of that effort goes into categorizing, coding, authorizing, documenting, appealing, and collecting.
What “designed around healing” would look like
A healthcare system designed around healing would still need accounting. But accounting would not be the organizing principle of the patient experience.
It would minimize the number of payer rulebooks that clinicians must satisfy. It would reduce the frequency with which care is delayed for administrative approval. It would treat the administrative burden as a safety and quality problem, not merely an efficiency problem. And it would align incentives so that preventing harm and delivering effective care are not constantly subordinated to transaction management.
Even within the existing architecture, the direction of travel is clear. When policymakers and institutions talk about reducing burden, they repeatedly point to the same culprits: documentation requirements, transaction complexity, and utilization management friction. CMS’s administrative simplification work exists because the current transaction environment creates systemic burden and cost. The debate is not whether billing is central. The debate is how much damage we are willing to accept from that centrality.
The bottom line
U.S. healthcare is not “accidentally complicated.” It is complicated because its core task is not merely delivering care. It is coordinating payment across fragmented payers and shifting financial risk through contracts, codes, and coverage rules.
When a system is built to answer “Will this be paid?” it will inevitably treat healing as something that must be justified inside the billing apparatus. That is why people experience healthcare as paperwork first and medicine second.
If we want a system that feels like it is designed around healing, we have to be honest about what we built instead. We built a billing machine that delivers care along the way, and we keep trying to solve that mismatch with tweaks. The deeper question is whether we are ready to redesign the premise, not just the forms.
—Greg Collier
