Health Insurance Pricing Experiment: 15 Years Later
Back in 2009, I took a deep dive into what I called the "Health Care Pricing Experiment." My curiosity about health insurance pricing led me down a path that was as enlightening as it was frustrating. Fast forward to 2013, and I revisited the topic to see what had changed - see Health Insurance Pricing Experiment – 4 Years Later. Spoiler alert: not much. Health care pricing was still a maze of opaque costs, and consumers were left to fend for themselves in a system that seemed more focused on profit than on patient care.
Here we are in 2024. Has the world of health care pricing finally evolved, or are we still playing the same old game, but with new rules? Let’s dig in.
Using the same 5-person family as in 2013 (42, 39, 10, 8, and 2), in 2024:
In addition to the premium impact over time, there has been a large impact to out-of-pocket costs for individuals and families as well - with most more than doubling over the same time period.
The Rise (and Rise) of Health Care Costs
So, if you were hoping for good news, I don't have much to share. Health care costs have only continued their relentless upward climb. Premiums, deductibles, and out-of-pocket expenses are all on the rise. While the Affordable Care Act (ACA) promised to curb some of these trends, the reality is that most people are paying more now than they were in 2013. Sure, more Americans are insured and those with health conditions have access to coverage they did not before, but is the coverage any more affordable or transparent? In many cases, the answer is no.
One of the key drivers behind this increase has been the cost of prescription drugs, which feels like it's been on a rocket ship headed straight for the moon. Specialty drugs, in particular, are eating up a larger portion of health care spending. And while there have been some attempts at legislation to address this, it often feels like the pharmaceutical industry has a stranglehold on the system.
Recommended by LinkedIn
Transparency: Still Missing in Action?
When I first wrote about health care pricing in 2009, I had high hopes that consumer demand would lead to greater transparency. In 2013, I noted some minor improvements—websites popping up here and there to offer cost comparisons for basic procedures. Fast forward to 2024, and transparency is still more of a buzzword than a reality. Yes, you can get cost estimates for some services, but most of us still feel like we're walking into a restaurant where the menu has no prices. You just hope the bill at the end won't give you heart palpitations.
Telemedicine and digital health platforms have changed the way we access care, but they haven't done much to clarify pricing. In fact, sometimes it's even murkier. Sure, you can chat with a doctor from your couch, but figuring out what that virtual visit is going to cost you? Good luck.
Employers: Innovators or Bystanders?
As someone who’s worked with employers on health insurance for years, I’ve seen firsthand the growing frustration on the business side of things. Employers want to offer competitive benefits, but they’re often trapped in the same pricing quagmire as everyone else. Over the past decade, some companies have moved toward self-insurance or high-deductible health plans, hoping that these models would control costs. In some cases, they’ve had success, but many are realizing that simply shifting costs to employees isn't a sustainable solution.
One interesting trend that has emerged is direct contracting, where employers cut out the insurance middleman and negotiate directly with health care providers. The idea is that by doing so, they can lower costs and gain more control over pricing. Early results are promising, but it’s still a niche approach that hasn’t scaled across the broader market yet.
The Future: A Glimpse of Hope?
So, where does that leave us in 2024? Is there hope that health care pricing will become less of a nightmare? I'm cautiously optimistic. Advances in technology are helping to streamline care delivery, and there are promising signs that value-based care—where providers are paid based on patient outcomes rather than the volume of services—could take hold.
That said, the system is still largely reactive, driven by profit, and resistant to change. Until consumers, employers, and policymakers come together to demand a pricing revolution, we’ll likely continue to see incremental improvements rather than the sweeping changes that are so desperately needed.
In the meantime, my advice to everyone is the same as it was 15 years ago: Stay informed, ask questions, and don’t be afraid to push for clarity. Because in this health care pricing experiment, it’s still up to us to figure out the rules.