America’s Healthcare Checkup
The American healthcare system is a chimera, a collection of different beastly plans glued together, resulting in a mix of public and private institutions. Payments are made to healthcare providers from multiple sources at different points in time. It’s a mess. But that confusion and complication is just the tip of the iceberg.
Our healthcare system is one of unrivaled depth and complexity, unique among modern democracies, and not exactly our best claim to greatness. There is a lot to learn about how our own system fails Americans every day, and how it might change in the years to come.
The pandemic forced our healthcare system to buckle. We saw emergency rooms overflow and suffer shortages of vital medical equipment followed by chronic wait times and cripplingly-high costs. But we moved from crisis to crisis, and in that moment of complete focus on healthcare, we paid no mind to the broken system itself.
We moved on when we should have dug our heels in. We plugged leaks and pretended there was nothing wrong with our healthcare Titanic anymore. But we are still floating in these waters.
In this series, we will investigate American healthcare, learn how it works, how it doesn’t, and how we can do better moving forward. There are always going to be new and pressing issues throwing voters for a loop, but as our healthcare system proves, failure over time is costing us much more than a sudden crisis. We have to do something about it. But first, let's describe how healthcare works right today.
Healthcare Today:
Americans know our healthcare system is far from perfect. Polls show that we view our private insurance system unfavorably, with a majority consistently advocating for either significant changes or doing away with this system altogether in favor of public healthcare.
The most recent Gallup poll on our healthcare system showed a negative perception rate of 49% and a positive perception rate of 35%, with 16% neutral and no opinion. This is by no means the largest percent we’ve hit for negative healthcare sentiment, which has reached close to 60% multiple times in the past few years and remains significantly higher than positive perception in the majority of polls. When it comes to affordable healthcare access, the polls are even more stark, with a consistent dissatisfaction rate of 60% and above.
But before we get into how our system got such a bad reputation, we need to understand it.
Most Americans receive their healthcare insurance through their employer (around 55%), who coordinate directly with insurance providers and offer a plan to their employees. That almost always includes sharing costs with the employee, which varies depending on the plan, employer, and insurance provider.
11% of Americans purchase their health insurance themselves, with private insurers on the open market. Taken together, the overall total of privately insured Americans is at 67%, while 34% have public insurance plans, (Medicare, Medicaid/CHIP, and the VA). About 15% of Americans have a mix of coverage, some public, some private. Despite significant change brought about by the Affordable Care Act, (Obamacare), we continue to have an uninsured rate of 8.5%.
Private Healthcare:
Not all private insurance is made equal. Each plan is quite different, from HMO, PPO, EPO, to POS, all of which involve various payments shared between insurance companies and patients, which are broken down below in the order they are usually paid:
Premium: This is the monthly fee you pay to have health insurance. The plan is often provided and partially covered by your employer, while the rest is covered by you. This is the majority of most people’s healthcare costs.
Co-pay: This is a small amount of money charged at the point of service, kind of like a fee, which varies depending on the service you are trying to get done. Specialists are usually more expensive than general practitioners, which are more expensive than prescription drugs, etc. But this isn’t where the big money and the leading cause of bankruptcy in America comes in — those large costs are detailed below.
Deductible: This is the amount of money that patients will have to pay out-of-pocket before insurance starts picking up the tab. Deductibles can differ, but once you hit your deductible, the insurance company starts covering some of the remaining costs. The lower the deductible, the sooner you reach it, and the higher amount of each particular service is being paid by the insurance company, rather than the patient. But just because you reached your deductible, that doesn't mean you are off the hook financially. Many plans instead start sharing costs between insurers and patients, as described below.
Coinsurance: Coinsurance is level two. This kicks in when you have reached your deductible, and now your insurance starts picking up part of the tab. This is percentage-based and dependent on what kind of plan you have. Often, the insurance company picks up more than half of the remaining charges, leaving the rest to you. So if your coinsurance rate is 60%, you pay the remaining 40% out-of-pocket… until you hit yet another number, dependent on your plan.
Out-of-Pocket Maximum: Plans also have an out-of-pocket maximum. Once you have reached your yearly deductible and have been paying coinsurance until you hit this maximum, you are fully covered for the rest of the year, and the insurance company picks up the remainder of your coverage… As long as it is in-network.
A Note on Network: Anyone who has moved and had to go to an out-of-network provider will have heart palpitations as soon as they hear the phrase. It means all the above stipulations are out the window, and you, the patient, will be on the hook for all the expenses, even if you’ve hit your deductible and out-of-pocket maximum.
Because workers seemingly no longer need teeth or eyes, many states don’t require dental and vision coverage, so it is less common in normal insurance plans, leading to a higher percentage of out-of-network costs and supplemental plans in those two areas. But the most out-of-network cost comes from emergency services, like ambulances and emergency rooms, where patients have no choice.
What is a Health Insurance Network? Insurance companies network with healthcare providers in exchange for agreed-on standards of care, (and more importantly), for the discounted rate they provide patients who are a part of that insurance company’s coverage.
Why Are There Health Insurance Networks? Hospitals need patients, insurance companies say they are sending a steady flow of patients to them with consistent billing, giving them the stability they need. Patients need insurance, it’s cheaper than paying out-of-pocket for everything. What we don’t need, however, is the costs that come along with private insurance. The federal government has picked up some of that cost.
Public Healthcare:
The federal government’s relationship to healthcare is largely non-administrative and leans more towards regulation. But there are some massive exceptions: Medicare, Medicaid, CHIPs, and the VA.
Medicare is public insurance, which kicks in at 65 years old. While it is customizable, it is mostly geared towards primary care for elderly Americans, who have been paying into the system their entire lives. Most people are quite familiar with Medicare, and it remains a popular program with wide-ranging support, (at least by US healthcare standards).
Medicaid is similar to Medicare, but instead of being geared towards seniors, it is geared towards at-risk populations, especially those experiencing poverty. In combination with CHIP, (the Children’s Health Insurance Program), the federal government requires and provides funding for states to administer healthcare to those that are eligible. That usually means low-income families with children and pregnant mothers. The Affordable Care Act allowed states to expand those protections to other groups, but many have declined the “handout.”
The last major source of government healthcare is what we provide our active service members and veterans, via the US Dept. of Veterans Affairs, or VA. While often beset with scandal, budget problems, and long wait times, the VA is an example of fully government-ran healthcare in the United States, which we have decided to extend to Veterans for life. It doesn’t cover everything and can change based on disability status as a result of your service. The PACT-Act is a major recent example of expanded benefits for Veterans who were exposed to toxic burn pits and developed cancer as a result. This wasn’t covered until quite recently.
Coming Up:
We’ve laid the groundwork and explained how health insurance works in America. Our next article will discuss cost and where our money is actually going. Americans pay much more than every other wealthy nation, by a lot. Next month we will diagnose the cost problem, and spell out the ways in which Americans are being fleeced for subpar coverage.
Sources:
https://news.gallup.com/poll/4708/healthcare-system.aspx
https://www.commonwealthfund.org/international-health-policy-center/countries/united-states
https://www.verywellhealth.com/hmo-ppo-epo-pos-whats-the-difference-1738615
https://www.investopedia.com/ask/answers/051415/what-difference-between-copay-and-deductible.asp
https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html
https://www.forbes.com/advisor/health-insurance/deductible-vs-out-of-pocket-maximum/
https://www.fiercehealthcare.com/hospitals-health-systems/out-network-billing-costs-at-network-hospital-eds-have-nearly-tripled
https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2740802
https://www.medicare.gov/providers-services/original-medicare
https://www.medicaid.gov/medicaid/eligibility/downloads/list-of-eligibility-groups.pdf
https://news.gallup.com/poll/470894/americans-fairly-satisfied-social-security-system.aspx
https://www.americanprogress.org/article/challenges-facing-department-veterans-affairs-2021/
https://www.va.gov/resources/the-pact-act-and-your-va-benefits/