Why American Health Care Feels Like Mercantilism in a Lab Coat

Hatched by Gerold

May 01, 2026

9 min read

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The Strange Price of Being Sick

What if the reason American health care feels so punishing is not just that it is expensive, but that it is priced like a system built to extract value from dependency? That question matters, because once you look at medical bills through that lens, the numbers stop feeling random and start looking historical. A specialty drug climbing from nearly $18,000 to more than $52,000 in a decade is not just a market event. It is a signal that pricing power, not only medical progress, is doing a lot of the work.

There is a familiar modern story about health care costs: complexity, innovation, administrative overhead, aging populations. All true, at least partly. But they do not fully explain why the people with the least freedom to shop, compare, delay, or refuse are often the ones facing the most aggressive prices. The deeper issue is not simply that health care is a market. It is that it is a market where the seller often has more power than the buyer can ever hope to have.

That makes American health care feel less like a normal consumer market and more like an old economic regime in modern clothing.

The Hidden Logic of Controlled Trade

To understand that regime, it helps to step back from medicine and look at an older economic idea: mercantilism. In the colonial era, trade was not imagined as a neutral exchange between equals. It was a system designed to concentrate advantage, direct flows of goods, and keep value moving toward the center of power. Commerce was not just commerce. It was a tool of control.

That logic survives whenever a system becomes so asymmetrical that one side does not meaningfully negotiate, only comply. In health care, patients rarely arrive as informed shoppers making discretionary purchases. They arrive in pain, afraid, time constrained, and often under physician referral or emergency conditions. The market still exists, but it behaves less like a bazaar and more like a toll road controlled by a few gatekeepers.

This is why the phrase “providers decide what to charge” is more revealing than it first appears. In an ordinary market, buyers can walk away, compare alternatives, or substitute another good. In health care, price often arrives after the moral and physical pressure to accept care has already done its work. The transaction is not free, because refusal is frequently too costly. That is the core structural advantage.

A market with no real exit is not really a free market. It is a hierarchy with invoices.

Specialty drugs show this with painful clarity. When a medication is rare, life sustaining, and tied to a particular condition, it behaves like a controlled trade route. The manufacturer may be just one node in a chain of patents, insurers, pharmacy benefit managers, hospitals, and regulatory barriers. Each node can extract a slice, and the patient often cannot substitute away from any of them. The final price is not merely the cost of making a drug. It is the sum of everyone’s leverage.

That is the mercantilist resemblance. Value is not created and then freely exchanged. Value is channeled, restricted, and captured.

From Colonial Trade Routes to Modern Medical Gatekeepers

Mercantilism depended on chokepoints. Whoever controlled ports, shipping lanes, tariffs, and permissions could shape who prospered. The system did not need to be efficient to be profitable. It only needed to be controlled. That idea maps unnervingly well onto parts of modern health care.

Consider three gatekeeping functions in medicine:

Access gatekeeping: Who can even reach the treatment?
Knowledge gatekeeping: Who understands what the treatment costs and why?
Substitution gatekeeping: Who has a real alternative if the price is too high?

Patients usually have weak control over all three. Doctors influence access. Insurers influence what is covered. Formularies influence substitution. Hospitals influence site of care. Pharmaceutical firms influence the origin price. This web does not just create complexity. It creates a system where pricing power survives because no single buyer sees, controls, or negotiates the full transaction.

That is why health care often feels offensively expensive even when the underlying science is impressive. The public sees the miracle and the bill at the same time. A therapy that saves a life can still be priced in a way that reveals less about its therapeutic value than about the seller’s ability to capture willingness to pay under conditions of distress.

The comparison to colonial trade is useful because it shifts the question from “Why does this cost so much?” to “Who has the power to set the terms of exchange?” That is a different and sharper question. It forces us to look beyond moral outrage and into structure.

Imagine two farmers markets. In one, every stall sells tomatoes, customers can walk around, compare quality, and leave. In the other, a single booth sits at the entrance to a town during a drought, and everyone must buy there to survive the week. The second is still a sale, but nobody would confuse it with ordinary competition. American health care often resembles the second market more than the first.

Why Expensive Care Keeps Getting More Expensive

Once a system rewards control over exchange, prices tend to rise in ways that feel disconnected from production costs. That is what makes the specialty drug figure so striking. An increase from nearly $18,000 to more than $52,000 in a decade is not just inflation. It is evidence that the system can tolerate, and perhaps even normalize, rapid price escalation when the product sits inside a protected channel.

This is the key pattern: when buyers are fragmented and sellers are concentrated, prices do not merely reflect value, they reflect leverage.

Specialty drugs are especially useful for seeing this because they combine several features that weaken buyer power:

They may treat rare or serious conditions.
They often require physician involvement to access.
They are hard to substitute.
They can be covered or excluded through complicated insurance rules.
Their benefits are enormous, which makes refusal emotionally and medically difficult.

In a standard consumer market, high prices eventually invite substitution, competition, or demand reduction. In medicine, high prices can persist because the consumer is not sovereign in the usual sense. The patient is often a captive participant in a chain of decisions.

This is why cost debates that focus only on consumer behavior miss the point. Telling patients to “shop around” for surgery or prescription drugs can be a little like telling a shipwreck survivor to negotiate with the nearest lifeboat. The sentence assumes optionality that often does not exist.

The real question is not whether consumers are shopping badly. It is whether the system ever allowed them to be real shoppers in the first place.

That is also why the public conversation often becomes confused. People hear that hospitals, doctors, and pharmaceutical companies decide what to charge, and they instinctively think of separate culprits. But the deeper problem is not isolated greed. It is a market architecture that lets each actor defend a piece of the value chain while no actor bears responsibility for the total burden.

This resembles mercantilism not because hospitals are colonies or pharmacies are ports, but because the system is organized around controlled access and extraction through chokepoints.

The Real Reform Question: Can We Build Markets That Patients Can Actually Use?

If the problem is structural power, then the solution is not simply to shame the players. Shame can be morally satisfying and economically irrelevant. The harder task is to redesign the market so that it behaves less like a toll system and more like a genuine exchange.

That means asking a different set of questions:

Can patients see prices before they are trapped in treatment decisions?
Can substitute therapies or sites of care actually compete on equal footing?
Can insurers and intermediaries simplify, rather than obscure, the decision path?
Can patent, reimbursement, and contracting rules reduce the ability to command monopoly style pricing?
Can care be delivered in ways that lower dependence on the most expensive gatekeepers?

The goal is not to pretend medicine is a normal consumer good. It is not. People do not choose chemotherapy the way they choose coffee. But that does not mean every price must be detached from any meaningful constraint. A humane system can still discipline leverage.

One useful framework is to ask whether a health care cost is arising from value creation or value capture.

Value creation means better outcomes, more access, more convenience, fewer complications.
Value capture means pricing power, opacity, contractual complexity, and dependence.

Both can be present at once. A drug can be genuinely transformative and also priced in a way that exploits the absence of alternatives. A hospital can provide excellent care and still operate inside a system that multiplies costs through site based billing, consolidation, and opaque negotiations. The task is not to deny the good, but to stop confusing the good with the price structure attached to it.

This is where the mercantilist analogy becomes more than a clever comparison. It reminds us that systems can be technically productive and socially extractive at the same time. Empires built ports, ships, and trade networks, but they also concentrated wealth through control. Modern health care can save lives and still function as a mechanism of extraction if the rules let power outrun accountability.

Key Takeaways

Stop treating high prices as proof of high value. In health care, prices often reflect leverage, not just innovation or cost.
Look for chokepoints. If patients cannot meaningfully compare, delay, or substitute, the market is operating like controlled trade, not open competition.
Separate value creation from value capture. A treatment can be medically valuable while its pricing remains structurally excessive.
Focus reform on power, not just behavior. Better shopping is not enough when buyers are not free to shop.
Ask who controls the route, not just who sets the price. In complex systems, the real power often lies upstream and downstream, not at the final invoice.

Reframing the Cost Crisis

The deepest mistake in talking about American health care costs is assuming the problem is mainly arithmetic. It is not. It is political economy in a clinical setting. The prices look outrageous because the system allows essential goods to be traded under conditions that resemble controlled passage rather than open exchange.

That is why the mercantilist analogy matters. It gives us language for a reality we often sense but cannot quite name: health care is expensive not only because medicine is advanced, but because access is organized around power. And once power enters the room, price stops being a neutral number. It becomes a statement about who is trapped, who is insulated, and who gets to capture the surplus when people are at their most vulnerable.

If we want to make care affordable, we cannot just ask how much a pill costs to produce. We have to ask who owns the gate, who controls the route, and why sickness still comes with a tariff.