Solutions Economic and Market Watch

Hello, and welcome to the Economic and Market Watch podcast for the week of May 4, 2026 This is John Suter of CFC.

Did you know that housing makes up the lion's share of the CPI index, which includes rent, owner equivalent rent, or OER, and utilities? Owners equivalent rent is a hypothetical economic measure representing the monthly rent a homeowner would have to pay to live in their own home. Transportation is second, food and beverage is third, and medical care expenses would rank fourth.

Medical care expenses is where I'm going to focus today. Medical care represents approximately six to 7% of the total consumer price index, the CPIU, basket for all urban consumers. This index includes medical care services like hospital visits and medical care commodities like prescription drugs. While costly, one needs it because if something unexpected were to happen, medical costs can easily ramp up quickly. It's just one more area that businesses, like cooperatives, spend a considerable amount of time evaluating, and it is an extremely important benefit that cooperatives use to recruit and attract future employees.

That said, why does the U.S. spend so much on health care? I once told an audience that I wanted to be a PhD economics professor while finishing graduate school. Instead, I decided to enter the workforce versus obtaining additional schooling. Upon hearing my comment, a member of the audience said, "You probably made the smarter choice because there are only two kinds of doctors in this world, an MD, which stands for money doctor, and a PhD, which stands for poor doctor." And thus, this is my segue into reasons why our health care in the U.S. is so expensive.

If you didn't know it, Americans spend more on health care than anyone else in the world. For example, in years 2025 to 2026, the average annual cost of employer sponsored health insurance for a family of four is approximately $27,000 to $31,000 Of this total, families typically pay roughly $6,850 to $8,000 plus per year in premiums, while the employer covers the rest. Total costs often exceed $31,000 annually when factoring in premiums, deductibles, and out of pocket expenses.

Virtually every member cooperatives serve are facing these increasing health care costs. Unfortunately, one would think that the level of service is top notch to match the high costs, but often, the effort one has to go through to schedule appointments, share notes amongst multiple doctors, and deal with all the insurance nuances can be daunting for many of us, especially for the elderly. It can be very frustrating and complicated, let alone expensive.

To put simply, the main cause: prices are far higher in the United States for the same medical products and services, from surgeries to drugs, compared to other nations.

Let's take a look at some factors that compare what it costs in the U.S. compared to a peer nation, where the peer nation is the median of the eight other nations in the dataset that was comprised by the Healthcare Affordability Lab at Yale.

Two of the most frequent surgeries that occur in the U.S. are cesarean sections and joint replacement. Most of my friends are out of the baby making business, so I'm going to focus on joint replacement. About half of my friends I socialize with outside of work have had joint replacement done.

With people living longer, wear and tear on joints have made joint replacement surgeries, particularly hip and knee replacements, exceptionally common. Over one million replacement surgeries are performed each year, with hips and knees being the most frequently replaced joints. These procedures are especially prevalent among older adults and can significantly improve mobility and quality of life for those with severe arthritis.

For an inpatient procedure, a total hip replacement cost in the United States is $29,000 compared to peer of $10,000. Likewise, a total knee replacement cost in the United States is $26,000 compared to peer of $11,000. Both surgery type costs more than double.

A couple of important points to note about the high cost of surgery: Many cities and communities are now dominated by a single hospital system, partly because hospitals have been merging in recent years. This is particularly acute in rural America and communities electric cooperatives tend to serve. The main focus is to consolidate staff and cut expenses while still maintaining a high level of service quality. It all sounds great, but consolidation in the hospital industry has given them leverage to command higher rates during negotiations with health insurers. The insurers would lose business if powerful hospitals shut them out. It's a catch-22 with the hospitals in the driver's seat.

Let's now turn our focus on the health care providers that work at these hospitals. American doctors and nurses generally make more than their counterparts in other countries another factor that can drive up the cost of care.

Ironically, one could say that The US economy might be in the hospital.

Amid all the hand wringing about a decline in job openings and rising layoffs, one labor market trend that sometimes goes unnoticed is that health care and social assistance jobs have boomed, even as most others have not.

For example, in the past three years, health and social assistant employment grew 12.3%, while growth in every other job category has been less than 2%. Another interesting statistic, if you look up the top single employer in each US state, in many it's a health care company. Only Walmart is the top employer in more places. And of course, the best jobs in any town are working for the electric co-op.

Moreover, prescription drugs cost significantly more in the United States. Most other nations force drug makers to accept lower rates, while the U.S. government generally does not, even though the current administration is making an effort to reduce costs in this area.

Lastly, the U.S. spends more than other countries on administration costs. They represent 25% of the United States' health care spending. These costs include functions like billing, claims processing, and customer service. You may have to wait several months to see a doctor specialist, but once you do, it doesn't take several months to get the bill. And you better pay on time doctor office collections can be aggressive.

In summary, the overall United States health care system compared to other nations is more costly in every category mentioned above. When combined with the fact that Americans are using more health care these days, it's easy to understand why so much money is being used in this sector and why health care costs will continue to be a drag on youth's competitiveness going forward, because there's not much left in the pocketbook or piggy bank for many Americans to undertake enhancement endeavors such as additional education or job skills training.

That's it for today, but before I go, this podcast is available on many podcast apps including Apple Podcasts, Spotify, and Podcast Addict and other platforms. If you don't subscribe already, please subscribe, rate us, and leave a review.

As always, we thank you for listening. Be sure to download the Economic and Market Watch dashboard and intelligence brief. We'll talk to you soon.