Even Insured Americans Can’t Afford Medical Bills

Authored by George Citroner via The Epoch Times (emphasis ours),

Millions of Americans are struggling under the crushing weight of rapidly rising health care costs that now force them to choose between putting food on the table or taking care of their health.

Even with insurance, medical bills have become backbreaking as health care expenditures devoured more than 17 percent of the U.S. GDP, an increase of 4.1 percent from the year before.

Runaway Growth of Health Costs

Over the past few decades, health care expenditures in the United States have skyrocketed.

Costs rocketed to nearly $4.5 trillion in 2022 despite reduced services during the pandemic, data from the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicare program, show. The agency predicts national health expenditures will soar to nearly $7 trillion by 2030.

Out-of-pocket costs will also increase by an average of 4.6 percent annually through 2030 to reach 9 percent of total spending.

Deductibles also show a worrying trend, with the average deductible doubling from $1,025 in 2010 to $2,004 in 2021, according to the Center for American Progress, a public policy research and advocacy organization. In the same time frame, the percentage of plans mandating a deductible rose from 78 percent to about 89 percent.

As a result, even those with insurance often cannot afford the out-of-pocket expenses associated with needed care. The problem is especially acute because incomes have failed to keep pace with rapidly rising costs.

Who’s to Blame?

Why are people with health insurance increasingly faced with high medical debt? Is it a problem with health insurers or health care providers?

It’s both, according to Pavani Rangachari, a professor of health care administration and public health director of the Master of Healthcare Administration program at the University of New Haven in Connecticut.

The root cause is a broken health care system, “the way it is designed, unfortunately,” she told The Epoch Times. Federal policymakers must fix it to ensure affordability, “They have a big role to play in modifying the system to ensure that it works well for people who are insured.”

Unaffordable Costs Forcing Patients to Skip or Delay Care

A Federal Reserve survey found that, in 2022, about one-third of U.S. adults recently skipped or postponed medical care due to cost. The most frequently delayed care was dental, with 21 percent skipping dentist visits, followed by a visit to a specialist, with 16 percent saying they did not go.

Other care avoided due to costs include the following:

• 10 percent did not fill prescribed medication.
• 10 percent skipped follow-up appointments.
• 10 percent did not pursue needed mental health care.

Lower-income patients suffered most: 38 percent of those earning under $25,000 went without some care due to expense, versus 11 percent of those earning at least $100,000.

Data from The Commonwealth Fund, a health care policy-focused private foundation, reveal nearly half of lower- and middle-income adults reported at least one affordability issue accessing care in the past year.

Why Is It Becoming Unaffordable?

One factor contributing to the increasing unaffordability of care is due to the equation “price times quantity,” Ms. Rangachari said.

Price

Providers can charge substantially higher rates for the same services to private insurers versus public plans like Medicaid, Ms. Rangachari said. This allows them to negotiate selectively. For example, they may deny care for lower-paying Medicaid patients if reimbursements are deemed insufficient. This leaves uninsured and lower-income patients with fewer affordable options.

“You have all of these different market segmentations, so the people who are able to afford it and might not really need that kind of preventive health care are benefiting from it,” Ms. Rangachari said. Additionally, those most in need of care face coverage denials.

Quantity

The quantity side of the affordability equation involves overused services, Ms. Rangachari said. Much unnecessary testing stems from fee-for-service models compensating volume over value. Each test, procedure, or patient visit triggers a separate payment.

This has led payments to be based on volume rather than value, incentivizing unnecessary services over preventative care, she added. This has driven health care spending to nearly 20 percent of GDP according to the CMS, an economically unstable trajectory signaling a need for health system reform, Ms. Rangachari noted.

Value-Based Care as a Solution

Value-based care is one solution for repairing issues in the system, according to Ms. Rangachari. This model emphasizes patient outcomes over fee-for-service.

“One big example is bundled payments for episodes of care, rather than just focusing on encounter-based care and paying for every service delivered,” she said.

Programs like CMS’ bundled payments for joint replacements focus spending on total 90-day care rather than single encounters. This prevents emergency readmissions from fragmented or poor care, Ms. Rangachari added, noting this approach could extend to prescription drugs.

Pharmaceuticals also bear the blame for health care’s cost spikes.

A 2023 AARP analysis found list prices had more than tripled since their introduction to the market. To fight these price hikes, the Inflation Reduction Act enables Medicare to negotiate lower prices and limit out-of-pocket costs for beneficiaries. (The act’s provisions don’t extend to the private health insurance market.)

Applying value-based purchasing here could control pricing and supply issues, Ms. Rangachari said. CMS will increasingly scrutinize what value is delivered to justify cost, comparative efficacy, therapeutic advances, and research and development investments.

“And this is an initiative that’s now underway as a result of the Inflation Reduction Act,” Ms. Rangachari said. “Ultimately, it’s really tackling the p’s and the q’s of the equation through delivery system reform.”