How health insurance may have made health care more expensive


Widespread medical debt is a uniquely American problem. About 40% 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 essentially the story of the changing answer to the 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 receiving care.

There are many complicated reasons for the rising cost of care, such as the lack of prioritization of preventive care or the lack of price transparency, but one of the main catalysts for inflation has been the rise of health insurance.

“It’s when you get this third-party payment system where the patient doesn’t have to pay the whole cost directly, the insurer pays some of it,” he said. Dr. Peter Kongstvedt, senior health policy faculty member at George Mason University. “It gives you relentless upward pressure on prices, because if you want to get paid, why not get paid a little 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 an insurance plan boom high deductible disease.

A deductible is the amount a policyholder must pay upfront before their health insurance plan takes effect. The average deductible for an individual in 2022 is around $1,760, double what it was in 2006 after adjusting for inflation.

About 70% of low-income adults said they wouldn’t be able to afford an unexpected $500 medical bill. Almost a quarter of people living in households with an income of at least $90,000 also said they could not afford it immediately.

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

Watch the video above to learn more about how medical debt has become so common in the US healthcare system and what we can do about it.


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