The Healthcare System’s Broken Promise

Americans are paying more for health insurance than ever before. The average family premium has climbed to nearly $27,000 a year — more than double what it was two decades ago. But premiums are only part of the story. The average deductible has also climbed to nearly $1,900, leaving many families paying thousands of dollars in cash before their insurance pays a penny for routine care.

The result is a strange contradiction: Americans have never spent more on health insurance, yet for much of the care they actually need, they effectively pay cash out of pocket. That reality should give policymakers pause when they think about healthcare reform.

For decades, the healthcare system has been built on an assumption that increasingly no longer holds: namely, that health insurance will cover everyday medical care. Most office visits, imaging studies, laboratory tests, and minor procedures won’t lead a family to meet its deductible. Translation? All that care is effectively paid for out of pocket. Most insurance plans still provide protection against catastrophic illness — which, of course, they should — but for routine health care, millions of Americans function as direct purchasers, a fact policymakers don’t seem to acknowledge. This disconnect is nowhere more apparent than in pricing. Simply put, the healthcare system still treats consumers as though they have no business knowing what care costs.

Imagine any other services a family might schedule. Would it be acceptable to find out the plane fare only after you’ve boarded the plane, or know what the nightly hotel rate was only after you’ve checked in? It’s absurd on its face. No other major consumer market operates this way. Healthcare does.

There is no single market price for healthcare, and neither payers nor providers have been forthcoming. The No Surprises Act was signed into law years ago, but the provisions that are supposed to require insurers to provide an advance explanation of benefits so families can understand what they will owe before scheduling care still have not been fully implemented. Hospitals haven’t done much better. Identical services, such as imaging studies and medications, vary wildly in price depending on what insurance a patient carries. And while federal law is supposed to require hospitals to disclose negotiated rates, compliance remains remarkably poor. Price transparency is not a partisan issue. It is basic consumer protection.

But while transparency is essential, information alone isn’t enough; patients need the freedom to act on that information. Families should have the flexibility to purchase routine healthcare in ways that work best for them, instead of forcing every medical expense through a traditional insurance model that adds administrative burden and cost.

Direct primary care, or DPC, is one such example. Rather than billing insurance for every office visit, patients pay an affordable monthly membership fee directly to their physician for routine primary care and preventive services. When paired with lower-premium major medical coverage, it’s an option that provides protection for serious illnesses and hospitalization while saving families money and improving access. Recent changes under the Working Families Tax Cuts that allow Health Savings Accounts to cover DPC memberships are a welcome move toward making this option more available for families.

Debates that claim the solution to healthcare affordability is subsidies miss the point. Those subsidies go directly to insurance companies, which return the favor by raising premiums even higher and refusing to provide basic transparency about the rates they’ve negotiated, what a member should expect to pay, or whether a service they approved will ultimately be covered. Families deserve better.

Healthcare affordability isn’t simply about throwing more money at the problem or creating new subsidies. It’s about putting people back to the center of the system. Families should know what care costs before they schedule it, let alone receive it. They should be free to compare prices, choose lower-cost options that meet their needs, and decide for themselves how they will pay for routine care. Insurance remains important for protecting against catastrophic illness, but too often it stands between patients and the everyday care they need. Putting patients — not insurance companies — back in control is one of the most important steps policymakers can take to make healthcare more affordable.

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This is part of a series of op-eds based on Independent Women’s new report, “Flourishing Families: An Agenda to Help Families Thrive.” The report, found here, details ways to support families without direct government subsidies or radically distorting the tax code to redistribute resources to families.

Dr. Monique Yohanan, MD, MPH, is director of the Center for Better Health at Independent Women.