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Let’s Navigate the American Health Care System

Americans make about 150 million trips to emergency departments each year. Their bank accounts wish they made far fewer.

Photo illustration of the Rod of Asclepius running through a pile of money
Photo illustration by Connor Lin / The Daily Upside, Photos by Paul Campbell and Vovashevchuk via iStock

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In 2023, Americans spent $4.9 trillion on health care, a hefty 7.5% increase from the previous year. That’s not just more than any other developed nation spends. It’s bigger than the nominal annual GDP of both Japan and Germany, amounting to $14,570 per American. 

In short, we spend a lot of money on doctors. And as Americans live longer, medical science progresses, and a select few insurers expand their footprints, those costs are only going up. Whether a patient’s ailment is an isolated emergency or requires long-term care, the financial fallout can be an overwhelming surprise.

“People are incredibly unprepared for something like that,” said Cassandra Kirby, a certified financial planner with Braun-Bostich & Associates.

I’ll Do It Later

Similar to housing and those might-as-well-buy-golden eggs at the grocery store, health care expenses tend to increase faster than the overall rate of inflation. That means as everything in life gets more expensive, medical costs climb even higher. And in many instances, those costs get so high, that people just forgo health care altogether:

  • According to a report the Kaiser Family Foundation published in March of last year, one in four adults said that in the past 12 months they had skipped or postponed getting the health care they needed because of the steep costs.
  • A similar trend was seen with prescription drug prices. Some people cut back on taking their medication, and roughly 20% said they hadn’t filled a prescription in the past year because they couldn’t afford to.

While it may seem like an obvious conclusion, when patients finally have no other option but to go to the hospital or visit a doctor, their condition has often gotten worse, meaning their bills will likely be higher. The report found that 40% of people said they have debt due to medical or dental bills. “Many US adults may be one unexpected medical bill from falling into debt,” the report said.

Got You Covered?

In December, Luigi Mangione — the privileged grandson of a real estate tycoon — was charged with murder in the shooting death of UnitedHealth Group CEO Brian Thompson outside the New York Hilton Midtown. When police finally arrested Mangione, who was not a United customer, he was carrying a letter that said the health insurance industry is full of corruption, greed, and “parasites.” 

Obviously, murder is horrendous, but the case has amplified many Americans’ disdain for health insurance corporations. It’s an aspect of life where plenty feel like they have very few options. More than 90% of Americans have some type of insurance, and more than half of those folks are covered through a workplace benefits program. However, there’s a growing concern that health care costs will increase more rapidly as the private sector continues to consolidate:

  • Over the last decade, the number of private health insurance companies in each state has decreased, according to the Government Accountability Office
  • UnitedHealth Group, Elevance Health, and CVS Health (Aetna) have all been on massive M&A crusades for decades. Today they collectively control about 40% of the market share in the US.
  • US employers expect total health benefit costs per employee to rise 5.8% on average in 2025, even after accounting for planned cost-reduction measures, according to a survey from consulting firm Mercer.

Less competition is never really considered good for consumers, and the GAO said all the consolidation may result in higher premiums and decreased access to affordable health insurance.

The Double-Edged Sword

A century ago, the life expectancy of the average American was 59 years. Think about that number today, and jeez, that person might still have kids in college. But thanks to modern medicine, Americans are living longer, and today the life expectancy is 77 years old. Who doesn’t want more time with their grandkids? However, longer doesn’t necessarily mean better, and in many instances it means more expensive twilight years. 

Kirby pointed to Pennsylvania as an example, where nursing home care costs about $135,000 a year. If a patient needs that for five years — which is not typical, but that’s what her office plans for just to be safe — the total cost is close to $700,000. And even with insurance, it’s still going to be a lot out of people’s pockets.

“The big companies, the really well-known providers of long-term care insurance, are annually hitting clients for increased premiums,” Kirby told The Daily Upside. “I’m talking about 20% increases a year. That’s 100% in five years. They’re backing people into a corner.”

And while it’s a very morbid aspect of an already morbid topic, high end-of-life expenses can mean leaving less behind for your family and friends. Paula Nangle, president and senior wealth advisor at Marshall Financial, said she’s had clients who burn through significant amounts of money in their last years.

“One client lived well into her 90s, she needed 24/7 care, and easily spent $1 million in the last couple of years of her life,” Nangle told The Daily Upside. “It greatly depleted the wealth that she probably would’ve preferred to pass on to her heirs.”

Saving for a Rainy Day

There are ways to alleviate some of the pain that comes along with medical bills. Two products that are growing in popularity among workplace benefits programs are health savings accounts (HSA) and flexible spending accounts (FSA). Both are a means to pay for medical expenses while also lowering your taxable income for the year. 

So let’s say you put $1,500 into either account. You can use that money to pay off deductibles, cover copayments, or even purchase certain products like sunscreen and first aid kits. Plus, your taxable income at the end of the year is $1,500 lower. 

HSAs, which are more longterm focused, also have the benefit of being able to put money into stocks, bonds and mutual funds. “If you start young enough, you can actually build up a substantial amount of money in those accounts,” Nangle said. “There’s an unlimited carry forward, so you could tap into that pool of money in retirement.”

FSAs don’t have those luxuries, and they also come with use-it-or-lose-it rules. At the end of the year, you might find yourself getting an extra tooth cleaning or stocking up on lip balm to avoid letting that cash go to waste.

My Bill or My Phone Number? So what do you do when you get smacked with a surprise bill or claim denial? Unfortunately, most don’t do anything. According to a report by the Commonwealth Fund, less than half of patients who believe they were erroneously billed or denied care actually challenged it. Insurance networks are so complex that many patients are confused about their right to appeal and who to contact. “South Park” even has a song about it.

On the upside, though, Commonwealth found that about a third of the folks who challenged their bill said that it was ultimately reduced or eliminated by their insurer. So you can succeed — it’s just a very annoying process.