What Are We Spending Our Money On?

The trillion-dollar administrative state that ate American medicine

The United States continues to spend more on health care than any other country, yet the relationship between expenditure and outcome remains stubbornly misaligned. National health expenditures (NHE) reached $4.9 trillion in 2023, or 17.6% of GDP, marking the fastest growth since the acute pandemic years. Forecasts anticipate further acceleration—7.1% in 2025—placing U.S. health care on a trajectory well above pre-COVID baselines. Despite this expansion, U.S. life expectancy in 2023 stood at 78.4 years, a modest recovery from pandemic lows but still below the 2019 level of 78.8 years. The paradox is rather simple: expenditures climb, but improvements in health outcomes are marginal and in some cases deteriorating.

I believe the persistence of this imbalance is not due to a lack of clinical expertise or capital—America’s physicians and clinical workforce re among the best in the world and the sector is well-resourced—but rather to how resources are structurally allocated. While health systems and payers often cite competing investment priorities, the real issue is in the frameworks and incentives that shape these decisions and determine whom they benefit. Comparative analyses consistently show that the U.S. spends disproportionately on administration. Studies estimate administrative functions—spanning billing, coding, eligibility verification, payer overhead, and compliance—as consuming 15–25% of total expenditures, or approximately $1 trillion annually at current levels. By contrast, peer nations direct a significantly smaller fraction of resources to non-clinical functions while achieving longer life expectancy and lower preventable mortality. This suggests not a scarcity of resources but a clear misdirection of investment.

The infrastructure crisis

Cancer care and research offer clear examples of the consequences of resource misallocation. Despite ongoing scientific advances, participation in cancer clinical trials remains low: recent estimates suggest that at most ~7% of adult cancer patients in the U.S. enroll in treatment trials—far below the level needed to translate innovation into meaningful patient impact through clinical research and evidence generation. The barriers are largely infrastructural: trial sites are geographically concentrated, and interoperable systems for patient screening and consent are lacking. Although investment in clinical research technologies are often discussed in recent years, the foundational elements—such as digital pre-screening integrated into community EHRs, standardized eConsent, and reimbursement for trial navigation—are still sporadically implemented, leaving real progress elusive.

This challenge extends far beyond clinical trials and care delivery, with significant implications for the broader adoption of AI-driven technologies in biomedicine. The promise of artificial intelligence—from advanced diagnostics to workflow automation—depends on robust infrastructure capable of supporting seamless data integration, reliable storage, and interoperable clinical workflows. Digital pathology is a telling example: although the FDA has cleared whole-slide imaging for primary diagnosis and a growing ecosystem of AI-assisted diagnostics, routine adoption remains limited. The barriers are not technological capability—digitization is hardly cutting-edge science—but rather financial and organizational priorities. High storage costs, inconsistent reimbursement, and capital budgets focused on immediate throughput rather than long-term infrastructure continue to impede widespread implementation and, as a result, the full realization of AI’s transformative potential in clinical care.

The evolution of cancer therapeutics highlights just how far our infrastructure has lagged behind clinical innovation. Modern oncology now extends well beyond the infusion chair: subcutaneous biologics allow for home-based treatment, oral targeted therapies shift care from the clinic to the patient’s home, and antibody-drug conjugates offer unprecedented precision but require complex, multidisciplinary coordination. Their side effects can span multiple organ systems—ocular toxicities require immediate ophthalmologic assessment, cardiac effects call for cardiology intervention, and dermatologic reactions demand prompt attention from specialists. Yet, our current infrastructure is built on outdated assumptions: that all cancer care happens within specialized centers, that oncologists manage every aspect, and that referrals can wait weeks. In reality, without structured pathways for rapid specialist access and reimbursement for multidisciplinary monitoring, patients are left with fragmented, ad hoc care that undermines both efficiency and safety. Our science has leaped forward; the systems to deliver it have not.

The scale of misallocation

The scale of potential resource reallocation is rather striking. Redirecting even one percentage point of NHE—roughly $50 billion in 2024 terms—from administrative overhead to infrastructure could fund nationwide digitization of pathology, build interoperable trial access networks, and establish compensated multispecialty toxicity management frameworks. The measurable outputs would include higher trial accrual velocity, reduced diagnostic latency, and fewer avoidable emergency department visits. These are not speculative benefits but quantifiable improvements in efficiency and outcomes.

Capital is by no means the binding constraint. Private equity and venture capital firms currently hold "mountainous and aging" levels of dry powder, with deployment slowed by narrower deal theses and herd behavior around familiar asset classes. The reluctance is structural: shared infrastructure that produces sector-wide positive externalities does not fit neatly into conventional fund-return models. Yet analogous sectors at inflection points—information technology during the internet protocol standardization of the 1990s, or aviation during the development of interoperable safety protocols—achieved successful infrastructure build-out through coalition funding and public–private incentives, delivering substantial returns for those playing the long game.

The provocation

With national health expenditures nearing $5 trillion, we should expect more than administrative complexity and modest, incremental improvements in outcomes. Redirecting spending toward tangible, verifiable infrastructure may not yield immediate cost reductions—real progress is a long game—but it would transform financial outlay into measurable gains in health. History shows that those willing to invest with patience and vision can realize substantial returns, both in value and in impact.

We have built an administrative state in the biomedical enterprise that consumes resources while producing paperwork. Every administrator hired to navigate complexity is a clinician not hired to reduce suffering. The American health care system now stands at a true inflection point.

We can continue to feed the administrative apparatus—layering on complexity and cost while outcomes stagnate or deteriorate. Or we can choose to redirect that trillion-dollar stream toward infrastructure that actually improves health: diagnostic networks that catch disease early, trial platforms that match patients to breakthroughs, and coordination systems that ensure comprehensive care. The alternative is more of the same—expecting different results from the same misdirected investments.

The choice is not about spending more or less, but about spending wisely and intentionally. The question is urgent and unavoidable: What are we spending our money on—and what do we want that investment to achieve?