How health insurance may have made health care more expensive

Widespread medical debt is a uniquely American problem. About 40 percent of American adults have at least $250 in medical debt, according to a survey conducted by the Kaiser Family Foundation.

“The story of medical debt is basically a story of the changing answer to the next question: When the patient can’t pay the bill, who pays it?” said Dr. Luke Messac, an emergency physician at Brigham and Women’s Hospital in Boston who is writing a book on the history of medical debt.

As health care prices rose over the past fifty years, patients were asked to pay more out of pocket when they received care.

There are many complicated reasons for the rising cost of care, such as not prioritizing preventive care or a lack of transparency in pricing, but one of the biggest catalysts for inflation was rising medical insurance.

“That’s when we got this third-party payment system where the patient doesn’t have to pay the full cost directly, the insurer pays a portion of it,” he said. Dr. Peter Kongstvedt, senior faculty member for health policy at George Mason University. “That puts relentless upward pressure on you on prices, because if you’re getting paid, why aren’t you getting paid more?”

In the early 2000s, federal legislation led to a major restructuring of how insurance plans shared costs, with the Medicare Modernization Act of 2003 spurring a boom in high-deductible health insurance plans .

A deductible is the amount the policyholder must pay up front before their health insurance plan starts. The average deductible for an individual in 2022 is about $1,760, which is double what it was in 2006 when adjusted for inflation.

About 70% of lower-income adults said they could not afford an unexpected $500 medical bill. Nearly a quarter of households with incomes of at least $90,000 also said they could not be afforded immediately.

“It really doesn’t take a Nobel Prize in economics to realize that if most people can’t afford a $500 bill, and the average deductible for a health plan someone gets at work is more of $1,500 now, that’s going to create a problem,” said Noam Levey, chief correspondent for Kaiser Health News. “You can’t walk into an emergency room or a hospital in this country and walk out normally for less than a few thousand dollars.”

look at the video above to learn more about how medical debt became so common in America’s health care system and what we can do to change it.

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