The High Cost of U.S. Health Insurance: A Deep Dive
recent reports indicate important premium increases for individuals purchasing health insurance through the Affordable Care Act (ACA) marketplaces, largely due to a planned reduction in federal financial assistance. But the question remains: why are U.S. health insurance premiums so high to begin with? NPR’s Selena Simmons-Duffin reports the issue isn’t unique to the ACA, but rather a reflection of the broader american healthcare system.
According to Cynthia Cox of the nonpartisan health research organization KFF, “Obamacare insurance premiums are high because American health insurance premiums are high.” She points out that ACA premiums are comparable to those offered by employers, but unlike employer-sponsored plans, individuals in the ACA marketplaces bear the full cost without employer contributions.
While premiums were lower before the ACA’s passage, Cox explains that access was severely limited. Individuals with pre-existing conditions often found themselves unable to purchase coverage, and even those who could often faced plans with significant gaps in coverage.”For example, health plans often might not cover pregnancy or even prescription drugs,” Cox stated.
Despite broader coverage now, the cost remains substantial, exceeding that of healthcare in many other countries. However, cox clarifies that insurance company profits aren’t the primary driver of these high costs. “I think its a common misunderstanding that health insurance profits are what drives health care costs.”
The core issue, Simmons-Duffin reports, lies in the higher prices charged by U.S. hospitals and doctors. “A hospital visit in the United States costs more. A doctor’s visit costs more. The same prescription drug costs more,” Cox explained.
interestingly, Americans don’t necessarily use more healthcare than their counterparts in similarly wealthy nations. In fact, “We have slightly fewer doctors’ visits and slightly shorter hospital stays than people in similarly large and wealthy countries do. But we are just paying higher prices for that care that we get.”
For the past few years, approximately 24 million individuals purchasing their own insurance – including small business owners, farmers, and ranchers – have benefited from federal subsidies that reduced their premium costs. These subsidies functioned similarly to employer contributions. Though, these subsidies are set to decrease unless Congress reaches a bipartisan agreement in the coming weeks. Individuals have until December 15th to enroll in a plan for the new year.
(This report is based on NPR news coverage as of November 26, 2023.)
