The US spends about twice as much on health care than other
large and wealthy countries do. It's just a complicated product and people have a hard time
figuring it out, which is unfortunate because it's such an important
product. People are recognizing the importance of having available
affordable, quality services. They have to make the commitment to provide health care for
everybody. That's the destination. It turns out there are many different routes to that
destination. Health care spending is rising around the world. As far back as we've been measuring this, health care
spending has always risen. Overall spending on health care has doubled over the past
two decades, reaching $8.5 trillion in 2019, which comes out to 9.8% of global GDP. The US spends about twice as much on health care than other
large and wealthy countries do. The U.S. health care system is not as effective when it
comes to controlling costs compared to systems in other countries. The way the system is structured now, it is a cure driven system, not a prevention driven system. There is not one access model here in the United States. And so for preventive services or treatment, it really depends on people's insurance status, where they're
located and the provider network near them. It is extremely frustrating for not just
patients but physicians. Also. The way we do it by definition makes things much more
expensive for us. So why are U.S. health care costs rising more than anywhere else, and can
it be stopped? Health care spending made up 5% of total U.S. GDP in 1960. In 2020, spending hit almost 20% of total GDP. So what that means is that for every dollar that people
spend in the US, about $0.20 is going towards health care. This rise in spending can't be attributed to inflation
alone. Health care almost always outpaces inflation, and so health
care costs grows faster than the economy. That's why it's representing a larger and larger share of
the economy. The United States spends more per person on health care than
other high income countries, but still has a lower life expectancy. We have poor outcomes relative to other countries. We pay twice as much as any other country. We pay more and get less. We see that people in the US use a similar amount of health
care to people in other wealthy and large countries, but we pay more for each
interaction. The money is in hospitals and doctors. That's what makes it the big difference between what we
spend on health care in the US and what other countries spend. Hospitals, physicians and clinical care made up more than
half of total health care spending in 2019. When we talk about ways to reduce spending, you can either
look at ways to reduce the amount of care that people are getting or to reduce the price that people are paying
for their care. And in the US it seems that there needs to be more of
a focus on the prices of care because that's where the real
difference is between what we spend in the US and what other people spend
in other countries. Drivers of the rise in health care spending has focused
mostly on the on the symptoms of the rising health care spending. So when we are talking about hospitals, prices are very
high or drug prices as very high. These are not the causes of the high spending. These are the symptoms of high spending. One of the causes of high spending is the fragmented nature
of the US system. Some Americans have incredibly comprehensive and affordable
health insurance coverage, while others have little to no coverage. For some people, they might spend a very small share of
their income on health care, and that's usually because they're healthier. People who are sicker will spend a very large share of
their income on health care, especially if they're in private insurance coverage
with a high deductible plan. Over 11% of the US population was uninsured in 2020, with a
large disparity when it comes to race. 51% of Americans said they have delayed or skipped medical
care due to cost. That number jumps to 63% among those living in a
household with an income of less than $40,000 per year. Even those covered by insurance say they've experienced
financial trouble. About 46% of insured adults reported difficulty affording
out-of-pocket medical costs. The W.H.O. argues in a 2021 report that universal coverage would limit
catastrophic health spending. This lack of universal coverage can make costs
rise, while also leading to worse health care outcomes, specifically when it comes to preventative
care. When costs become prohibitive for patients to seek care. Is that, number one, preventative care in preventing diseases from getting worse? It's always going to cost less and the cost meaning to the
overall system, it's. Always going to cost less. Let's say somebody has no insurance or very little
insurance, and she feels a vague pain on the right side of her abdomen. You know, it would cost your 120 bucks to go to the doctor. She's not going to do that. She's going to work through it. And three months later, she's in the emergency room. The first appendix costs 60,000 and we'll treat her will
treat her. But if she could have gone to the doctor when she felt that
first pain, the doc could have treated the infection. It would have cost 100 bucks. There is a phenomenon in health care called the cost
shifting. Cost shifting happens when health care organizations shift
the cost of those who cannot pay the bill to others who are covered by insurance providers by increasing the prices somehow. You also have to take into consideration the concept that
maybe 30% of these bills will go unpaid, which can be thousands
of dollars. So at some point, if you want to keep your practice afloat,
those have to be recouped in a different way. This is a factor of the US healthcare system where how much
people end up paying is going to depend on your insurance. A lack of universal coverage and a fragmented health care
system also mean that people don't have the same insurer for their whole lives, which means that
insurers have less of an incentive to provide preventive services or to ensure that you don't get
sick later. The majority of Americans don't have much of a choice when
it comes to their insurance plan. More than 54% get health insurance through their employer. Capitalist view works when the market is free. Health care is never a free market. Instead, we have insurance companies bidding on patients
behalf, which limits patients ability to bargain with their health care providers. We have what the insurance companies call narrow networks
where they dictate which doctors you can go to. Patients also can't bargain because they usually don't know
how much care actually costs. One key requirement in a free market is to be informed about
the price of the product or goods you are purchasing. But in health care, patients are in the dark about what
would the cost be when they seek their care? Insurance makes prices even more opaque, not just for
patients, but also for doctors. Sometimes it is difficult to know upfront what a patient's
costs are going to be for whatever services that they are getting. At the end of the day, we are actually not the ones
controlling the rate for each different company. And even if we have a whole list of every single possible
charge, we don't know if people have met their deductibles yet. We don't know where they are with respect to out-of-pocket
maximums. We don't know what their co-pay might exactly be if it's a
percentage. A lot of care is delivered through what's called fee for
service. That means for every service that your doctor delivers to
you, that doctor is billing for each individual thing, and that
can create an incentive called provider induced demand, which is
basically that your doctor has an incentive to do more things to you. But it's more complicated than just greed. America's litigious culture can play a role in excessive
testing. I do think that in the United States we do order more tests
simply because, one, there's this fear of missing something. Of course, that comes from a human aspect where you don't
ever want to misdiagnose a patient. But then there's also the malpractise side of things where
if you do miss something, what are the consequences? Since there isn't true free market competition, insurance
companies will try to rein in the spending by either denying claims or requiring pre-authorization. Most physicians are doing the right thing and choosing the
right treatments for their patients. But sometimes there are instances where the
procedure that's being requested may not always be the most effective
treatment for that particular patient. And sometimes the prior. Off process. Also serves as kind of a gatekeeper, so to speak, of whether
whether that physician has tried everything that could potentially
help the patient. There are proponents for completely overhauling the heavily
commercialized system. You have to make the commitment to provide health care for
everybody. That's the destination. It turns out there are many different routes to that
destination. One of the more popular policy proposals is Medicare for
All, which would replace for profit insurance companies with government funded health
insurance. I am a strong supporter of Medicare for All because it is our principal goal in this country to give everyone
coverage at the lowest possible cost. And Medicare is the best way to do that. President Joe Biden is instead focusing on expanding the
Affordable Care Act to enable more people to get insurance. There's also been a bipartisan push for increased price
transparency. Congress passed the No Surprises Act, which went into
effect in January 2022. The goal of the legislation is to help Americans avoid
surprise medical bills. Now, people who inadvertently go to an out-of-network
provider, for example, by going to an in-network hospital but being
seen by an out-of-network doctor, that patient is held harmless. And then it's up to the insurance company and the doctor to
kind of work out how much gets paid to them. Researchers and economists are still debating what exactly
is driving these costs in the US. It's very hard for people to know how much health care is
going to cost them before they get it. Some of that can be addressed through price transparency
efforts by basically posting prices on hospital or doctor's offices websites. Research has to be intensified in this area to clearly
identify the root causes of the high spending and the
interrelationship between the different routes. There's a lot of moving pieces here, and there's probably
not going to be one single solution to health care costs and access and quality of
care and insurance coverage. But there's a lot of different directions that
policy is starting to go in terms of actually addressing health care costs in the
US. It's an open secret among Americans that calling for an
ambulance is a financial gamble. According to one study, 71% of all ambulance providers do
not take the patients insurance. That same study found that 79% of patients who took an
ambulance could get a surprise bill with an average total around $450. And when nearly four in ten Americans would have to borrow
money to cover a surprise $1,000 emergency. These surprise bills can be a huge problem. The COVID 19 pandemic has exposed wide inequities
throughout the American health care system. And like the rest of the health care industry, ambulance
operators are feeling intense financial pressure from the crisis. So why are ambulance services so expensive in the United
States and what's being done to solve the problem? There's a broad price range for emergency medical services
in the United States. The U.S. Government Accountability Office, or the GAO,
found that in 2010, the median cost per ground ambulance transport was $429,
ranging from $224 to $2204 per transport. And that price can vary a lot by state. In 2016, the average price of an emergency ground ambulance
in Georgia was $824. In New York it was $752, $930 in Texas and $557 in Florida. Even within the same state, the charges can vary
widely. Take Florida, for example. In Lake City, Florida, the average charge for an emergency
ground transport with basic life support services was $463. In Tallahassee, 2 hours west of Lake City, the average
charge was more than $200 higher at $680. In Miami, the average charge was $630, and Tampa's average
was $590. A variety of factors contribute to this disparity in
price, including the type of ambulance used, the medical services
rendered, how far the patient was transported, the state and city the ride was
taken, and whether the ambulance service was publicly or privately funded. There are many types of organizational structures when it
comes to running an emergency medical service. They could be privately run or funded by the municipality
and work in conjunction with other entities such as the fire department. They could also be a volunteer organization that's funded
through private donations and grants. Art Cook and David Sloan work at Westfield
Volunteer Rescue Squad in Westfield, New Jersey. The rescue squad is funded completely by grants and
donations from residents and businesses in the town, so there's no out-of-pocket charge at the point of
use. We're lucky that we live in a very generous and affluent
community, so we don't generally have difficulty raising the funds. Because all of the rescue squads, dispatchers and EMTs are
volunteers. The organization can operate without high staffing costs. As with any labor intensive organization. Your highest cost is going to be payroll. Supporting a nonprofit ambulance provider through donations
can be tough for less affluent areas, as well as dense urban areas with high call volumes. If a West African town were not able to meet the fund fund
requirements of that individual rescue squad to be able to supply their
ambulances or if they have a problem getting volunteers to be able to operate that
system. Each town would would look for an alternative to be able to
provide ambulance service. And more often than not, that either becomes
contracting with a private ambulance service or which is a cost or hiring EMS personnel under the auspices of their police or
fire department. Many patients who get surprised ambulance bills can trace
them back to for profit companies. My name is Karen Chhabra. I'm a resident in the Department of Surgery at Brigham and
Women's Hospital. Surprise medical bills happen when you get medical care
from somebody who you are unable to choose and that person or that provider doesn't take your insurance. So in those situations, if they don't participate in your
insurance plan, they can charge you whatever they want to be paid. Dr. Chhabra and his colleagues recently released a study
that evaluated insurance claims from a large national insurance plan focusing on the years
between 2013 and 2017. The data couldn't tell them how many patients
actually received surprise bills, just how many could have if the ambulance provider
decided to bill them for what the insurance company didn't pay. They found the average patient could be charged $450 per
ground ambulance ride after the average insurance payout. Contrast that to the potential surprise bill for an air
ambulance, which came in at a staggering $21,700 per ride. Ground ambulances usually get the focus when it comes to
surprise billing, even though they cost less than air ambulances. That's likely because ground ambulance rides are 55 times
more common than air ambulances. Chopra's analysis found that potential surprise
bills for ground ambulances over the four year period he studied would add
up to more out-of-pocket costs overall than air ambulances, despite being less
common. Air ambulance billings are trending upward. Chhabra Study notes that potential out of pocket air
ambulance fees are catching up with a 15% annual increase in potential surprise billings
for air ambulances between 2013 and 2017. Betsy Imhof is an attorney who used to work on health care
issues at Consumer Reports, a nonprofit consumer advocacy and research
organization. One of the arguments about why there's more air transport
these days for medical reasons is that rural hospitals are closing. But we found, in fact, that there's a lot in metropolitan
areas. Some would say the traffic has gotten bad. And so we need to even transport people locally in highly
concentrated populated areas for whatever reasons there's. Word of going on all over in all kinds of areas now. Imhoff says one reason for this spike could be the air
ambulance industry shifting more toward a for profit model. Between 2012 and 2017, more than 100 new helicopter bases were added, some of those in areas where there
already were services. So there are duplicating services, not responding
to higher demand. When air ambulances first started to be used in New Jersey,
they were run by the state police and didn't charge for their services. Now there are also competing private ambulance, air
ambulance services that are generally affiliated with hospitals. But in a normal functioning market, this would work. If there are more suppliers present in the market, then
prices should go down. But the problem is that people in medical emergencies don't
get to choose their ambulance provider. The ambulance providers dispatch by a911 operator, and
since they don't have to take your insurance by law, they can charge you whatever they want. So there's no price competition, there's no pressure
driving down prices. In some cases. There's been an argument over whether
patients medical issues were urgent enough to warrant the use of air transport. Some of the consumers that we interviewed felt that they had
been unnecessarily transported by helicopter when they really didn't need to
be. It was an urgent situation, but they felt that by the time
the copter landed and picked them up and got them to the hospital, they could
have even more quickly gotten there by ground transport. So it's very hard for consumers to know, was it
really necessary or not? And often that's a fight with insurance companies. Was it medically necessary? A big problem is that emergency medical services are
expensive to operate. The amount of revenue that's generated from even the most
efficient ambulance systems is limited by the fact that if you want the ambulance in your
community to be available for you when you need it, that means they can only really be
doing ambulance calls about half the time at best. But not much data is available about how much ambulance
services cost to operate. Aspell Montes is the senior vice president of Strategic
Initiatives for Acadian Ambulance Service, as well as the Chairman of the Payment Reform
Committee for the American Ambulance Association. We are one of the last industries to do any type of cost
data collection or what in most people refer to it as cost
reporting. And that is something that we have advocated for as an
industry. We do not have a mechanism like hospitals in any others
that are actually having to do cost reports to validate their Medicare the
Medicare payment system. That is not we do not have that data yet. The GAO and the nonpartisan Medicare Payment Advisory
Commission, or MedPAC, do collect some data regarding reimbursement rates for EMS
providers. But those within the industry say the reports do not
accurately estimate cost of service. The lack of comprehensive data also leaves some consumer
advocates, such as Immelt's concerned. The question is what is the real cost of providing this
service? And are people price gouging? Are some of these companies price gouging because of the
private equity control of many of these companies? We really don't have the data on what it really costs. How much is profit, how much is surplus, how much are
unnecessary rides? They're just building up more more supply than they
really need to. So there's a lot of information lacking. Still. Many private insurance companies consider most EMS providers
out of network. This means the two entities do not have a predetermined
agreement about how much the service costs. The way reimbursement set up right now, it's often more
profitable for these ambulance companies to avoid contracting with the insurance companies. It's more profitable to stay out of network. So why would they bother writing a contract? The American Ambulance Association does not believe the
concept of in-network or out of network should apply to emergency medical services. There's really no such thing as an out-of-network 911
provider you might be the city of. And I'm just going to throw out a name here, the city of
Houston, who provides their own EMS services. If you as a citizen do not have a choice in who
your 911 provider is, that is set by the mayor of that city and
the city council saying we, the city of Houston, is the one that provides 911
services. How is that out-of-network? So the issue there that we've got going on is the insurance
company is denying it wrong, saying the city of Houston does not want to be in
our network and so they're out of network. No, the issue is, is you don't like the rate
that the city of Houston is charging. In addition to private insurers not paying the entire cost
of the bill, government funded insurance plans such as Medicare and Medicaid don't
cover the entire cost of the service either. A report conducted by the Moran Company contracted
by the American Ambulance Association, concluded that EMS providers lost money from
Medicare and Medicaid rides. That did conclude that we were being reimbursed below cost
for Medicare and then Medicaid, remember? And actually reimburses less than Medicare does. We often hear that that there's cost shifting, that that
much more has to be charged of private pay or even uninsured people because the
reimbursements either from insurers, Medicare or Medicaid are insufficient. And we haven't really found the evidence for that to be
valid. So how much should ambulances cost patients out of pocket? The main reason we have out-of-pocket costs for any health
care so that we don't use health care willy nilly and without some rationale. So we want to discourage things like calling an ambulance
for a routine stomachache. So the out-of-pocket costs for anything should be just
enough to discourage people from overusing ambulance services, but not so high that they discourage appropriate
use or they make people go broke. And the problem is, is you have to balance this out so that
the patients don't get hit with a $3,000 bill. But at the same time, you want to also have some controls
over utilization. So while you don't want bills that are going to bankrupt
people, you do want bills, preferably some kind of payment at the point of
service, which discourages people from utilizing an ambulance when they
don't really need one. There are some countries that do maintain low out-of-pocket
costs for ambulance services. Take Australia, for example. Ambulance fees do vary in Australia from no out-of-pocket
costs to more than 1,000 AUD in certain regions. In some of the Australian states and territories where
there are no out-of-pocket costs, many residents call for ambulances without actually having an
emergency because this puts a strain on the system. Australia runs a public education campaign urging people
not to call an ambulance if it isn't an emergency. 000 ambulance emergency. Oh, yeah. Hey, look, I've. I think I've sprained my wrist. I'm very cold for three days now. Last year, Ambulance Tasmania received too many trivial 000
calls that could take us away from real emergencies. Save 000 for saving lives. Rational people behave in rational ways if you're poor and
you could either have to call an Uber and pay for the Uber at the point of service,
or you call the ambulance and not have to pay at all. People call the ambulance because that's perfectly
rational. Despite there being agreement on both sides of the aisle
that this is an issue. It's been difficult to make progress on legislation. It's been a completely bipartisan issue. There's been there's been proposals that have been agreed
upon by both Democrats and Republicans in both the Senate and the House. And remarkably, the Congress and the president agreed on
this as well. Congress has taken some steps toward collecting more cost
data for the industry in order to better understand reimbursement rates. The Bipartisan Budget Act of 2018 did actually mandate a
cost data collection provision to start this calendar year for
the ambulance industry. Over a four year period, they will basically mandate every ambulance provider and supplier that bills. The Medicaid program will have to, at a minimum of one
time, report their data and they will do an analysis on the
system from all of the rights that we get paid based upon the different
organizational types to understand where are we being paid in appropriately. The legislation authorizes what is known as extender
payments for ambulance services. These are Medicare add ons that increase the payments
depending on the area that providers are servicing. Basically, Congress this time said we want data from your
industry. You keep telling us, based upon the GAO reports, the MedPAC
reports that we are underfunded. Are your reimbursing us under cost? Well, in order for us to get any more money in here, we'll
extend these for five years. But we're going to mandate cost data collection. Some states have also been working to pass laws to fill the
holes of federal regulations, but they can be met with legal challenges. There are many states that have tried to intervene to
protect consumers on several of them at least. But generally the industry comes right in and takes them to
court and challenges the law. Under the CARES Act, one of the coronavirus relief packages,
any provider that got federal funding through the relief package is actually banned from balance
billing anyone with suspected coronavirus. So it can't help but think about our big health care system
in the middle of this pandemic kind of crisis. And people are recognizing the importance of having
available affordable, quality services for us. And certainly in the emergency context, as we rethink the
health care system, I hope that as a nation we will just really think hard about whether we
want to leave emergency services on a catch as catch can basis with unbridled for
profit companies without any rate regulation. Or whether we really want to think this through carefully
and have a system that ensures that every American can get the care they need
without going bankrupt. Most Americans pick the wrong health insurance plan. Sora Bhargava and his colleagues at Carnegie Mellon
University conducted a study of almost 24,000 employees at a major Fortune 100 company. The study found that 61% of them chose the wrong plan for
their needs. The researchers estimated that the average employee could
have saved $372 per year by choosing a different plan. The average cost of these choices was about 2% of salary. In 2018, over 8% of Americans total household spending went
toward health care costs. This represents about a 37% increase since 2004. It seems like people aren't able to maximize their welfare
because they're having trouble understanding the decision environment. It's just a complicated product and people have a hard time
figuring it out, which is unfortunate because it's such an important
product. So why do Americans struggle to pick the best plan for them? And how can we fix it? One major issue in choosing a health care plan is people
don't understand the lingo insurance companies use to discuss each plan. We usually ask every year, what is a premium, what is a
co-pay, what is it deductible? And the results are usually pretty depressing. Only about a third of people usually correctly identify all
three. These are the most basic terms to understand. This basic lack of literacy, I think, contributes to a
number of problems that people have exhibited when they do choose from a plan. The way plans are presented to people makes it difficult to
figure out exactly how much each plan costs. People have trouble doing the math from going from the
features to the consequences. We see things like What's the deductible of
each plan and what's the co-pay of each plan and what's the maximum
out-of-pocket of each plan? The part that's difficult is to actually then say, okay, so
suppose next year I break my leg and I go to the hospital. How much money do I actually spend under each plan? There are premiums, which is the amount of money people have
to pay each month, regardless of whether they go to the doctor. This is the bare minimum someone would have to pay for
their plan each year if they don't use any health care at all. There are also deductibles, which is a set
amount of money a policyholder has to pay out of pocket in the beginning of each year
before the insurance plan will kick in and start sharing costs. It's common for people experiencing information overload to
hyperfocus on one aspect of a plan, such as how much the deductible is or how
much the premium costs. Rather than looking at the plan as a whole based on how
much health care they'll actually use over the course of the year. When you're in a decision environment that's complicated is
to try to simplify it for yourself in some way that you can. And often that's a rule of thumb or what
we call a heuristic. But but in some cases, they can go awry. And I think in the case of a lot of health insurance
contexts, the heuristics that people use results in them, selecting
overly expensive plans that that end up costing them quite a bit. A lot of people are basing their decisions on the absolute
numbers they're seeing presented to them rather than calculating their financial risk with each
plan. One challenge that I think people have is that, well, plan
choice really should be about your health risks and your willingness to take on
financial risk. I think a lot of people, they look at more expensive plans
and they see more expensive plans as being better. I'm almost like choosing a hotel. Research has shed light on how to best help people determine
the plan that makes the most financial sense for them. Find that showing people the consequences improves the
choices that they make. The best way is to do the math and figure out how much a
plan may actually cost over the course of the year based on how much health care the policyholder might
need. One study gave people several health insurance plans to
choose from. The researchers also gave the study subjects some help,
choosing their plans by laying out exactly how much each plan may cost based on how much
health care they use that year. We designed this tool that allows you to see for every
potential expenditure under each plan how much money you actually are
going to be spending over the course of the year in terms of both the
premium you're going to be spending and then also how much you're going to be on the hook for
relative to how much the plan is going to help you out with. And we could show it in a graph and you
can actually see some plans are above other plans in this graph in terms of how much money you're spending
overall. And the tool helps people to pick a plan that over the
course of the year they end up on average spending less money. Some employers and state run Obamacare marketplaces are
beginning to provide decision aids, such as calculators that help people make the best
decisions for them. If you are going to do the math yourself, take into
consideration your own health risks when doing so. That means considering the best case scenario where you
may not need any care or just preventative care, and the worst case scenario where you
need a lot of care. You should also be careful to check which doctors are
in-network within specific policies because the doctor you go to can change costs dramatically. If you have expensive health conditions or kind of a serious
health history. I'm a cancer survivor, so I have a group of
doctors who I really want to keep seeing because they've saved my life
a couple of times. So. So it matters to me that they're in my plan
network. I can't necessarily guarantee that all of your doctors or
the facilities that you go to, the treatment facilities and so
forth, are going to be covered. So you're really going to have to check. It's not very transparent. So all the plans have a link to a provider directory, but you're going to have to kind of click into
all of them. It's also important to revisit a policy every year to see if
it's still the best option that fits your needs, even if your employer hasn't made any changes to the
plan. So only 2020 5% of employees and employer sponsored contexts will actually change their plan from year to year. So if you choose a poor plan from a financial basis, then
normally you stick with that plan for potentially multiple years. So it can become quite a costly choice. There are places for people to turn to get assistance. If you are looking at marketplace coverage anywhere, there
are navigators. These are trained experts who can help you walk through the application, answer any questions, what am I
supposed to fill in here and help you kind of sift through the plan choices and try
to figure. Out how they're. How they're different and which one works best for you? Picking the wrong plan means people are spending more money
on health care than they have to, and the numbers show it. Health care costs in the U.S. have been rising overall due to a variety of factors,
including out-of-pocket expenses for Americans. Health care spending in the United States has
gone from 6.9% of total GDP in 1970 to more than 17.5% as of 2019. When we are spending that amount of money on health care,
that money is not available for other sectors of the economy. The average American household is also spending more on
health care, according to federal data. Average deductibles in employer plans more than doubled
between 2008 and 2017, from $869 to 1808 dollars. Cost of living as a whole is also getting more
expensive, which puts more pressure on Americans because wages have not been keeping up with
this increase in prices. The average household income in the U.S. increased by 27% between 1984 and 2020. In that same time period, the average American household
spending on food rose 155%. Spending on housing rose more than 160%. And out-of-pocket spending on medical care rose more than
390%. This burden of income is not keeping up with costs has
implications for what kind of plans Americans are drawn to. High deductible plans can be a big problem for a lot of
people because they may not have the cash for it. The recent proliferation of high deductible plans across the employer sponsored landscape is that there's a real
worry about liquidity and being able to pay for out of pocket costs. These liquidity concerns are also driving driving people to
select what ends up being fairly expensive plans. Bhargava said he found that employees earning less than
$40,000 per year were much more likely to select a plan that would end up costing them
more money. Lower income employees were also less likely to switch
their plan each year, and even when they did switch, they were less likely than higher income employees
to switch into the highest deductible plan. The high deductible plan tends to be the better value over
the long term because that plan you're paying a lower premium. And then under many states of the world, especially the
ones where you're relatively healthy, you end up paying less over time. Ultimately, economists say that the whole system needs to be
simplified in order to provide plans that are higher quality while also being more affordable. Whereby we we get rid of a lot of the complexity of cost
sharing and replace it with just a much more simple, much more
transparent menu of options. But attempts to make the actual costs of plans clear can
backfire. For example, on the Affordable Care Act marketplace, which
is frequently called Obamacare, people are presented plans using a metal tier system. A plan could be labeled as platinum, gold, silver or
bronze. These are meant to help people understand the cost sharing
features of each plan. So the platinum plans have the most financial coverage. The insurance company would pay 90% of costs at time of
service, and the policyholder would pay the remaining 10%. The trade off is that those plans have a higher monthly
premium. At the other end of the spectrum, a bronze plan has the
least amount of cost sharing support. The insurance company pays 60% of the cost of
service, and the policyholder pays 40%. Research shows that people are misunderstanding the medals,
thinking they're actually a reflection of the quality of the plan rather than the amount of money
they'll end up paying in monthly premiums or out of pocket costs at time of service. President Biden signed an executive order in July 2021 that
aims to improve cost transparency and standardize plans on HealthCare.gov
starting in 2023. The goal of the order is to make it easier for people
to compare across plans. Several states such as Maine, Massachusetts, Oregon,
Rhode Island and Vermont have rolled out budget comparison tools to help
people navigate the state's local health insurance exchanges. I think giving people access to this type of data in a in a
way that is simple to understand would definitely be helpful. Having more information that is easy to understand is very
important.
