Why is it so difficult to find affordable health insurance?

As many Americans are already aware, finding affordable health insurance can be a bit of a challenge. But why is that? What makes health insurance so expensive, and why are costs increasing for the average American family?

If it seems like health insurance is becoming increasingly less affordable, you’re not just imagining things. According to CNBC, the cost of health care traditionally rises faster than inflation. And when you consider the fact that inflation is totally out of control in the modern era, this should give you a sense of just how unaffordable health insurance is becoming in the United States.

But even though medical treatment is expensive in the United States, it’s actually lower than it should be when you take inflation into account. In October of 2022, USA Today reported that the trend had been reversed, with inflation rising faster than health care costs for the first time in over 30 years. At the time, experts predicted a massive surge in health care costs by 2023 to account for the inevitable reversal of this rare trend. Some reports state that the cost of private health insurance could rise by about 10% by 2023.

In 2022, about 40% of Americans were struggling to pay their medical bills. But despite this worrying statistic, premium rate hikes were technically modest compared to the rate of inflation. This means that when the cost of medical treatment eventually catches up with the real rate of inflation, many Americans may be completely priced out of health insurance. It’s important to note that while inflation may change the price of gas from one week to the next, the medical industry reacts more slowly to inflation, with prices changing from one year to the next instead. This is because insurers negotiate reimbursement rates with providers to create long-term contacts that are fixed for years. When those contracts expire, costs can suddenly spike as newer, more expensive deals are struck.

What is happening to drug prices?

Over half of all Americans rely on their employers for health insurance coverage, but these rising costs may prevent companies from offering health insurance benefits in the future. One survey found that 43% of employers were expecting the cost of their health plans in 2023 to exceed their previous budgets in 2022. Another survey found that 20% of employers in the United States will pass on these additional costs to their employees in 2023 – resulting in higher premiums for American workers who are already struggling to get by. More companies will likely join this trend in the following years, either cutting group insurance plans or increasing premiums for their workers. Labor costs are also increasing, with workers rightfully asking for higher wages to deal with rising living costs. Almost inevitably, this situation will reach a point where offering health insurance benefits just isn’t viable.

But average workers aren’t the only ones asking for a raise. Nurses and doctors are also demanding greater benefits and wages after a truly draining pandemic that pushed all of these individuals to their limits. Most Americans would agree that these demands are justified – but that doesn’t change the fact that this will push the cost of care even further toward unaffordable levels. If everyone is asking for a raise, both employers and health care providers will deal with these costs by cutting health benefits or increasing the cost of insurance to much higher levels. There’s really no other choice.

The cost of prescription drugs is also rising at a staggering rate. Even before the inflation crisis, Americans paid more for prescription drugs than any other nation on Earth. This was due to several factors, including the lack of single-payer negotiation, the lack of government regulation, and problematic drug patents. That being said, inflation is definitely playing a role in the ever-increasing cost of prescription drugs – and this has been happening for many years. In fact, the cost of prescription drugs is rising even faster than the official inflation rate – in some cases more than double. Even though the current administration has repeatedly promised to fight big pharma and lower the cost of prescription drugs, very little has actually been done to address this issue. On average, Canadians can buy the same drugs that Americans rely on for a discount of over 65%.

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Cure driven treatments are driving up costs.

Some experts believe that treatment in the United States is excessively expensive because it is “cure-driven” and not “prevention-driven.” It is very cheap to provide preventative care – which perhaps involves adjusting a patient’s diet or recommending regular exercise. In contrast, providing cures is much more expensive and profitable for the pharmaceutical industry. After all, no one makes money when a doctor recommends regular exercise or fewer carbs. But if big pharma is incentivized to create expensive drugs to cure problems after they have progressed to a serious level, the entire medical industry in the United States becomes less affordable for the average American.

Some have also argued that the medical industry is incentivized to provide quantity, not quality. The more services you can prescribe for a patient, the more money you make as a treatment provider. This means that many Americans are instructed to undergo pointless, redundant tests and procedures simply because the entire industry is geared towards maximum profit. That being said, some redundancy is caused by miscommunication between providers and a general lack of coordination.

Another factor is the general lack of choice in the health insurance industry. Over half of all Americans get their insurance through their employer. This means they don’t really have the opportunity to shop around, and they simply have to accept whatever they’re given. More choices mean more competition, and more competition means lower prices for the average consumer.

Other factors influence rising costs.

Due to the increasing number of medical malpractice lawsuits in the United States, many treatment providers are now practicing so-called “defensive medicine.” This means that they often order numerous tests and scans in order to protect themselves from liability. The idea is that doctors need to feel completely confident in their diagnoses to avoid being sued for failure to diagnose or misdiagnosing various illnesses. Of course, the patient is tasked with paying these additional costs. The lawsuits themselves also drive up the cost of health care for the entire population, especially when you consider that 6- or 7-figure settlements for medical malpractice claims are relatively common.

In general, the United States is unhealthier than ever before, and this is further increasing the cost of health care for the entire population. According to the CDC, 50% of the entire population either has some form of chronic disease or diabetes. Eighty-five percent of all health care costs in the United States are associated with chronic diseases, and 40% of all adults over the age of 20 are overweight or obese. This means that the average American is paying higher premiums to account for this decline in health – even if they take their personal health very seriously and pursue positive lifestyle choices.

You also have to consider the fact that the health care industry is becoming increasingly advanced. While new technology can help improve outcomes for Americans, it is almost always more expensive. In addition, it’s worth mentioning that newer technology doesn’t always result in better care – and there is little evidence to suggest that these innovations are making a notable difference for average Americans. Even if this technology does result in better outcomes, you have to consider what happens when people live longer lives. Technology might extend our lifespans, but those additional years represent added costs for the health care system – despite the fact that the U.S. has a lower overall life expectancy than other high-income nations.

This leads to another important point: The senior population is massive in the United States, with approximately 10,000 Baby Boomers reaching retirement age every single day. These individuals will enjoy much longer lifespans – putting an increased strain on not only health insurers but also the government and the taxpayer.

The United States finds itself in a strange situation. On one hand, more people have health insurance than ever before. On the other hand, people are also paying more for their medical care than ever before for a number of reasons. While some might assume that traditional health insurance will automatically lower the cost of their treatment, the statistics paint a very different picture.

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Tips for finding the best health insurance plans

Due to legitimate concerns about the rising cost of health insurance in the United States, it makes sense to shop around for the most affordable plans. But the complexity of the system makes this a serious challenge. Searching online for effective coverage can be time-consuming and unreliable, with many Americans basing their decisions on questionable online reviews left by uninformed individuals. In most cases, online reviews cover topics like wait times and the friendliness of customer service agents, and they fail to cover important details. Of course, many people don’t actually get to choose their healthcare plan and are stuck with whatever their employer gives them.

Even if you manage to find a solid plan online, you also need to spend additional time searching for a doctor who is within your insurer’s network. In many cases, this means compromising for a less skilled doctor. In addition, many Americans are forced to choose doctors that are set to retire in a few years, which means they’ll have to go back to square one sooner than they think.

Finding information about health insurance and medical care is much more challenging than you might expect – especially with the wealth of information we have access to in the digital era. Hospitals and other providers often struggle with inadequate transparency, leading to a general sense of confusion about prices.

That being said, there are a number of steps you can take to find a cheap health insurance plan:

Constantly search for new options: Insurers are constantly adding new plans and changing their offerings, so it makes sense to keep an eye on the marketplace. While you might only have the chance to switch insurance during open or special enrollment periods, you can still set your sights on the most low-cost health insurance plans and get everything set in motion before that time arrives. Even if you feel like you have the most affordable insurance possible, you might see something even better.
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Consider estimated yearly costs: Many people consider only the monthly premiums when assessing the affordability of health insurance. However, you also need to keep in mind the estimated yearly costs, as this can prove to be a much more significant statistic in terms of overall affordability.
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Figure out what you actually need: The key to finding low-cost health insurance is to know exactly what you need. This allows you to choose plans that provide you with the necessary coverage without needless bells and whistles for things you will never actually spend money on. Take a moment to assess your past medical costs and determine where you’re actually going for your treatment.
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Be wary of plans that seem too good to be true: If something seems too good to be true, it probably is. Before you pull the trigger on one of these plans, read the fine print or get some advice from an expert. You may be missing a crucial detail that makes this plan less affordable or effective than you realize.
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Understand the difference between the tiers: When people see the tier system for the first time, they assume that the bronze tier encompasses the worst possible plans while the platinum tier represents the best. But this just isn’t the case, and in fact, this tiered system has nothing to do with the quality of care you’ll receive. The metal tiers simply represent how costs are split. For example, the bronze plan means that 60% of the cost is shouldered by the health insurer, while 40% is shouldered by the policyholder. Platinum plans involve policyholders taking 10% of the cost, while the health insurer takes 90% of the cost.
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Consider Medicare and Medicaid: If you’re looking for an affordable option, you might want to check out Medicare or Medicaid, since these programs are specifically geared towards low-income Americans – especially those who are of retirement age.

Why a cheap healthcare plan isn’t always the best

With all that being said, opting for the cheapest possible option might not be the best strategy. After all, it doesn’t make sense to choose a cheap monthly plan if you’re not even covered for the most expensive medical treatments. Choosing truly affordable health insurance is something of a balancing act. You need to assess monthly and yearly costs while keeping in mind the potential for unexpected medical emergencies in the future. No one can predict what will happen with their own health, so it’s generally a good idea to err on the side of caution.

Boost your health with alternative coverage

If you’re searching for more affordable health insurance, you might want to check out various alternatives to “mainstream” plans under the umbrella of the ACA. These include:

Short-term health insurance: There are a number of plans that are offered on a short-term basis, but these options are only really intended to fill gaps in coverage. For example, COBRA represents a short-term solution for employees who lose their health benefits through their employers. However, these options aren’t very affordable and should only be viewed as a temporary solution.
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Health-sharing plans: Health-sharing plans are not the same as insurance, but they can offer some of the same general advantages at a fraction of the cost.
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Private health insurance: Private health insurance is offered outside of the federally regulated ACA marketplace. Most private health insurance plans are held by employees under their employers’ plans. While this represents a viable alternative to Obamacare, it usually isn’t as affordable for non-employees.
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No insurance: Of course, the cheapest possible option is to simply abandon insurance altogether. This might be a viable choice for healthy individuals, but you never really know what will happen in the future. If you’re going to abandon insurance, you first need to check whether you’re actually allowed to do this in your state. Secondly, it might be a good idea to create an emergency fund.

Why CrowdHealth could be the best solution for affordability and health

Out of these alternatives, health-crowdfunding plans like CrowdHealth may end up being the most affordable in the long run. Short-term health insurance only lasts for a few years at most, while CrowdHealth can provide coverage for the foreseeable future. While private health insurance and ACA plans are often ruinously expensive, CrowdHealth offers zero-dollar deductibles and much lower monthly costs. Having no insurance is far too risky for most Americans, and you’ll probably end up putting a significant portion of your paychecks into an emergency fund anyway.

If you take that money and join CrowdHealth instead, you can benefit from an innovative crowdfunding system that is revolutionizing how Americans pay for their healthcare. While it’s important to note that CrowdHealth is not the same as health insurance, this system can help you pay your medical bills. After you pay for a visit to the doctor, for example, you simply post your receipt onto the crowdfunding platform. From there, CrowdHealth can facilitate the crowdfunding process and provide you with compensation taken from other members.

If you’d like to learn more about CrowdHealth, reach out today and speak with one of our team members.

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I've never understood why Realtors have to pay more for quality health care just because we are entrepreneurs. CrowdHealth is providing a true solution to our community combating the high costs of traditional health insurance.

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Former Chief Clinical Transformation Officer, United Health Group

Dr. Maryanna Barrett, MD

Owner of Thrive OBGYN

The vast majority of people in this country are enjoined in an insurance contract they never wanted. CrowdHealth aims to change the terms of this spectacularly bad contract.

Dr. Mark Napoli, MD, FACC

CEO, Cor Medical, Inc.

Dr. Maryanna Barrett, MD

Owner of Thrive OBGYN

Healthcare desperately needs viable alternative payment approaches. I am thrilled to see CrowdHealth leading the way.

Dr. Tanya Stewart, MD, MBA

Former Chief Clinical Transformation Officer, United Health Group

Dr. Maryanna Barrett, MD

Owner of Thrive OBGYN

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