America’s Fiscal Crisis Is Rooted in Health Care Costs, Not Just Government Waste

April 26, 2026 - 02:59

For decades, policymakers have debated the root cause of America’s unsustainable federal spending. While many point to entitlement programs, defense budgets, or general bureaucratic inefficiency, economist Veronique De Rugy argues that the real culprit is far more specific: the nation’s health care system. According to De Rugy, the United States does not simply have a spending problem; it has a health care spending problem that distorts the entire federal budget.

The numbers support this claim. Health care expenditures, driven largely by Medicare and Medicaid, consume an ever-growing share of federal outlays. Unlike other categories of discretionary spending, health care costs rise automatically due to aging demographics, medical inflation, and a system that rewards volume over value. De Rugy contends that this structural imbalance is not a natural law but a result of cronyism—where government policies, subsidies, and regulations favor entrenched interests such as large hospital systems, pharmaceutical companies, and insurance giants. These players benefit from a complex web of tax breaks, patent protections, and reimbursement rules that stifle competition and innovation.

The good news, De Rugy emphasizes, is that reforming this cronyism requires no new spending or bureaucracy. Instead, it calls for removing barriers to market-based solutions: allowing price transparency, reducing occupational licensing restrictions, and ending tax preferences that insulate consumers from real costs. By untangling the government’s role in propping up inefficient health care delivery, the United States could curb its runaway spending without raising taxes or slashing popular programs. The challenge, however, remains political—vested interests have little incentive to relinquish their advantages, even when the nation’s fiscal health hangs in the balance.