How Health Insurance Made Health Care Less Affordable

By Consumers for Quality Care, on February 1, 2023

As health care costs for insurance companies have risen, so have out-of-pocket expenses for consumers. These costs are a major contributor to the medical debt crisis, according to an analysis from CNBC.

Approximately 40 percent of adults in the U.S. have at least $250 in medical debt, according to Kaiser Health News. “The history of medical debt is basically a history of the changing answer to the following question: When the patient can’t pay the bill, who foots it?” said Dr. Luke Messac of Brigham and Women’s Hospital.

While lack of price transparency and not prioritizing preventative care has certainly contributed to the rise in health care costs, the biggest reason for this increase was the rise in health insurance.

Federal legislation in the early 2000s caused a major restructuring of how insurance plans shared costs. The 2003 Medicare Modernization Act popularized high-deductible insurance plans, in which a consumer must pay a certain amount upfront before their health plan starts to cover any medical expenses.

Since 2006, the average deductible for an individual has doubled to $1,760.

Approximately 70 percent of low-income adults say they would not be able to afford an unexpected $500 medical bill, and a quarter of households earning more than $90,000 said they wouldn’t be able to afford paying that amount either.

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

High-deductible health insurance plans make health care prohibitively expensive for many Americans, who find themselves either deterred from seeking the medical care they need or forced into accumulating massive amounts of medical debt. Having insurance is not enough. CQC urges lawmakers and insurers to find solutions to make sure that insurance actually acts like insurance and work together to prevent consumers from going into medical debt for seeking the care they need.