“America’s health care system is neither healthy, caring, nor a system.” – Walter Cronkite
The United States of America is the only high-income country in the world with no universal healthcare. The American healthcare system is paid for by a patchwork of private and public health insurance that leaves millions of Americans without any health insurance.
Health insurance in America is incredibly challenging to navigate. Understanding the basics of health insurance gives you, as a patient advocate, the tools to get the care your loved one needs while and get the most out of insurance benefits. We show you how to:
- Understand U.S. Health Insurance
- Learn important health insurance terms
- Figure out who is spending your money
- Understand why healthcare insurance costs so much
- Maximize insurance benefits for your loved one
Educating yourself about the United States Health Insurance system puts you in the advocacy driver’s seat to get the most out of insurance to benefit your loved one the most. Let’s dig in.
Private Health Insurance
55% of Americans have private health insurance. Private health insurance is essentially insurance that is not paid for by the United States government.
Private insurance falls into two groups:
Group Market and non-group market insurance
Group Market Insurance
Almost 55% of Americans use group market insurance. The vast majority of those using group market insurance have employer-sponsored insurance.
Non-Group Market Insurance
Plans directly purchased from either on or off health insurance exchanges are considered non-group market insurance plans. These plans a used far less frequently in the United States.
Public Health Insurance
Public health insurance is insurance provided by federal, state, or local governments.
About 58 million people in the United States use federal Medicare health insurance. Medicare is available to people 65 years or older and to some persons with approved disabilities.
Slightly more Americans use Medicaid/CHIP insurance. Medicaid is administered by both state and federal governments. People wanting to use Medicaid/CHIP must meet eligibility requirements including showing evidence of need through income level.
A Brief Glossary of Terms
Before we go any further, let’s list a few basic terms that will be helpful going forward:
Beneficiary – individual enrolled in a health insurance plan.
Co-Insurance – a set percentage the beneficiary must pay for specified services.
Co-Payment – a set dollar amount the beneficiary must pay for specified services.
Deductible – A set dollar amount of healthcare costs a beneficiary pays out-of-pocket before insurance payments begin.
Diagnosis – Identification of a disease, condition, or injury from its signs and symptoms.
Policy – Documentation of what is and what is not included in a health insurance plan.
Premium – The fee the insurance company charges for a health insurance plan. This is usually charged monthly.
Who are the Big Spenders in U.S. Health Insurance?
Now that we have some basic information down, let’s talk about who spends the most on healthcare in the United States:
- In 2016, 1% of persons accounted for 22% of total healthcare spending in the United States.
- Inpatient hospital care accounted for 40% spending of the top 5% of the spending distribution.
- About ¾ of the top 5% of healthcare spenders were equally divided between private insurance and Medicare.
(Source: Agency for Healthcare Research and Quality )
What do those numbers mean? The statistics above tell us that a very small portion of the population is using most of the healthcare in the United States. And that’s the way the system works. Insurance is able to pay for that small population because the risk of large healthcare bills is spread across many people.
Essentially, the insurance premiums of a 26-year-old who maintains a healthy weight and exercises regularly (who uses few insurance benefits) helps cover insurance benefits for the 62-year-old diabetic with liver disease (who uses many insurance benefits).
Why is Healthcare So Expensive in the United States?
Diseases and their treatments truly can be expensive. But lack of strong behavioral support from society as well as an increasingly complex and inefficient healthcare system bump costs higher every year. Let’s look a little deeper.
The Healthcare System
The United States healthcare system isn’t really much of a system at all. It’s a decentralized competition between healthcare providers, healthcare facilities., and insurance companies. The ‘system’ is loosely held together through a market system where providers and insurers vie for dollars from private and public patients.
Lack of treatment coordination, price transparency, standardization, and government regulation combined with expensive drugs, technology, and high physician pay all contribute to rising healthcare costs.
Chronic Disease and the Role of Society
As a society, the United States suffers greatly from chronic diseases such as heart disease, lung diseases, and diabetes. Many chronic diseases may be improved through behavioral changes. For example, lowering sodium intake may improve blood pressure and losing weight may lower dangerously high blood sugar levels. As a society, the United States fails to make the changes it needs to improve diseases using behavioral methods and often prescribes medications for chronic problems instead.
Additionally, costs of end-of-life care exceed that of any other time of life. Few family members are willing to skimp on any measures that will extend the life of a loved one and those measures tend to be expensive.
You can see that Americans often make decisions that are not only unhealthy but financially draining to an insurance system. Whether due to poor health education or a personal choice to continue negative behaviors (e.g. not exercising or smoking tobacco), all drive the cost of United States Healthcare insurance into the stratosphere. And everyone pays for those choices.
Effects of the High Cost of Healthcare
Affordability
Some people get ‘priced out’ of private healthcare insurance. They simply cannot afford the premiums and are, perhaps, ineligible for public insurance programs. The Affordable Care Act, commonly known as Obamacare, put healthcare insurance premiums in the reach of millions of previously uninsured Americans. However, healthcare insurance premiums continue to rise, both for private insurance through employers and on the Healthcare Marketplace. Some Americans, like Robert Laurence, are forced to make a tough decisions:
“You kind of have a choice. You know, do I pay my car payment or do I get my inhaler?” – Robert Laurence
A growing number of Americans, especially young, healthy adults, are declining employer-sponsored health insurance due to the cost. This puts fewer payers in the insurance ‘pot’ and leaves a larger number of frequent benefit users withdrawing insurance funds. This results in higher payouts from health insurance companies. The increased costs get passed down to healthcare insurance consumers causing a rise in the cost of health insurance.
Healthcare Rationing
Persons living in less affluent areas already have fewer healthcare choices including less available facilities and care providers. If supplies or treatments are not available or are too expensive, the poor suffer the consequences.
How Patient Advocates Make Healthcare Insurance Work
So how do you make sure your loved one receives the care they need while working with insurance?
- Find out if your loved one has insurance.
- if they have insurance, what kind do they have? Private (e.g. employer-sponsored insurance); group market health insurance (e.g. Health Marketplace); or Public health insurance (e.g. Medicare, Medicaid/CHIP).
- Look at your loved one’s health insurance policy. The actual policy is a gold mine of information for you, the patient advocate. Read about co-pays, covered services, and premiums. Really study the policy. This is how you know where you have leverage for care.
For example, let’s say your loved one is scheduled for a surgical procedure at a hospital where they will be put under anesthesia. The doctor states that your loved one will go home the same day as the procedure and not spend a night at the hospital. YOU know your loved one typically reacts poorly to anesthesia. The health insurance policy clearly states that for this procedure, an overnight stay is covered. Once you bring that information to the attention of the doctor, you can strongly advocate for your loved one to stay overnight at the hospital if necessary.
- If there are options for care, compare costs. A stay in a rehabilitation center that provides more frequent hands-on care may cost the same as home health care with less frequent care for the same condition.
- Track expenses. This can be difficult, but read health insurance billing statements carefully. If you have questions, CALL THE HELP DESK. It is their job to help you. Record every conversation/email and keep a brief synopsis of the content. Take names. When you call back and can say, “I spoke to Ashley on October 10th at 2pm and she said…” this gives you authority and puts accountability onto the insurance carrier.
- Follow up. It is the beneficiary’s responsibility to follow up. That means that YOU, as the patient advocate, will be contacting the insurance company if a payment is denied finding out why and what you need to do to get the payment to go through.
Conclusion
United States healthcare insurance is mind boggling in size and complexity. But you can maneuver smoothly through health insurance obstacles. Health insurance education coupled with determination, persistence, and advocating on your loved one’s behalf will get the best care possible for your loved one at the lowest cost.
Read more information from Patient Advocate Info:
Medicine 101: An Overview of U.S. Healthcare for Patient Advocates
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