Why your health insurance is so expensive

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0:47I have definitely already been here. Now, was it left, right, or right, left? Well, maybe I'll cut a path out and find my way back later. But it wasn't like that. I filed a claim in under two minutes on the GEICO app, and they handled it from there. It was taken care of almost as quickly as it happened. It feels good to get help quick. It feels good to GEICO. I'm wondering if having healthcare coverage is worth it from a financial perspective. It feels pretty bad to be in healthcare in America. It makes me want to move. I just stick with the millennial health care plan, which is don't get hurt, don't get sick.

1:25Jonquilyn Hill:You guys, it's time. We got to choose our health insurance again.

1:33Jonquilyn Hill:Going to be honest, I've been off my parents' insurance for almost a decade now, and I still call my mom to try to figure out which plan is best for me. Because somehow it keeps getting more complicated. Hey, JQ, this is Natalie. when I signed up for my benefits, I was given a big book and I was told, read the book and pick your benefits. And I kept asking, what do these policies mean? Can someone help me understand all this information in this book? And I was told no. The benefit specialist kept telling me, I cannot pick your benefits for you. So if the HR specialist isn't helpful, who else are we supposed to ask on what these policies mean for us?

2:17Jonquilyn Hill:Well, Natalie, we got you. I'm John Gwinn-Hill, and today on Explain It to Me from Vox, we're going to make sense of open enrollment together. What all those acronyms mean, why we're paying so much more this year, and whether there's an alternative that actually works. First up, I talked to Lisa Jarvis. She writes about health care for Bloomberg, and she says that like with any major decision, the key to choosing insurance is to start by looking within. I would say the first thing to think about is how you use your health care. Are you going to the doctor regularly? Do you have a standing appointment with a health care provider that you want to make sure you can keep seeing that same provider?

3:01You know, do you have prescriptions that you take regularly? And then you want to look at what your options are. There's a few different kinds of plans that might be offered to you. There's an HMO, there's a PPO, and then there's some other things that are kind of in between. So an HMO, you're going to have to pick a primary care provider. That person is sort of determining how many other specialists you can see. You have to ask for permission. A PPO, you have a lot more flexibility. That one, you can go see a specialist usually without a referral. You can also see out-of-network people with a PPO plan.

3:36So I would be looking at how you're using your health insurance, what you think your health care needs might be going forward. for example, are you turning to an age where you suddenly need a little more visits to the doctor? Are you thinking that you might be growing your family in the next year? And just sort of weighing what you think you're going to need in the next year, and then looking closely at the fine print of your plans. Okay, when it comes to price, how do these plans shake out? So you'll notice that the HMO is probably going to be cheaper than the PPO. And that's because you've got this limited network of providers.

4:16You're not allowed to go out of network, right? And you have to kind of ask for permission to see specialists. The PPO is going to give you a lot more flexibility. And so it probably is going to be more expensive and you'll feel that.

4:28Jonquilyn Hill:Okay. So we got HMOs, we got PPOs. There's more jargon that shows up in open enrollment, and I'm hoping you can remind us what it means. The words I'm thinking of are premium, copay, and deductible. So there's a premium. That's what comes out of your paycheck. There's the deductible. That's how much money you need to pay before your health insurance kicks in for certain services. And then there's the copay. So every time you visit your doctor, it might be$25, it might be$40. That's how much money you pay and your insurance pays the rest of it. So there's another plan that I've heard about, and that's the high deductible plan.

5:09Jonquilyn Hill:What is that and how does that fit into these options? Yeah, so I think you want to think about how you're using health care. If you're someone who is not using a lot of health care, a high deductible plan might be good for you. What that means is you're paying very little in premiums. So the premium is the part that comes out of your paycheck, right? You see that number and it can feel really good to have it be a low number. But the trade-off could be a high deductible, meaning that you first are going to be paying a lot of money up front before your health insurance starts to kick in and pay for your coverage.

5:43You can also pair that with some other things like a health savings account, which can allow you to put some pre-tax dollars aside to help pay for that deductible. So it's complicated, but you want to think about how much you think you're going to be using your health care. And, you know, sometimes a high deductible plan might be an affordable choice for you and make a lot of sense.

6:04Jonquilyn Hill:Yeah, you talked about that health spending account. There's also a flexible spending account. What's the difference between those two? There are other ways that you can try to save some money on your health care expenditures for the year. There's an HSA, which basically is a way of taking pre-tax money out. You have to have a high deductible plan. That's the key to know in order to have an HSA. and then you can decide how much money you want to put aside. That money can roll over for year to year and it can also grow. So it can be invested. If you don't spend it, you can use it the next year.

6:38An FSA is a little different. That's through your employer and there's a limit similarly to an HSA and you're putting money aside and you have to spend it all in that calendar year. So you got to be careful about thinking about what you want to put aside. Usually there's either a little bit of wiggle room around tipping over that spending into the next year, or it could be that some employers could choose to let you carry a little of the money over a certain percentage of it for the full year. But you can use that for lots of things, the copay, the deductible. You can use it for what you buy at CVS.

7:13You'll look at the very end of your receipt at CVS and there'll be a line that says FSA eligible or HSA. That can be deducted. You can get that money back.

7:22Jonquilyn Hill:Yeah, I did discover that I could buy my fancy sunscreen with an FSA. That was exciting. I mean, I nerdily save all my CVS receipts. And at the end of the year, when I realize I am running out of time to spend my FSA money, I go through them all and I find all sorts of things I never would have expected are covered by an FSA. This whole process seems like it can be so confusing. Do you find it confusing? I mean, you cover this? I find it very confusing. My mother-in-law was trying to pick a plan through the ACA. I found it very hard to help her. Luckily, the ACA has navigators, so you can go to one of those people and they'll help you find your plan.

8:05When it comes to employer-sponsored insurance, you just really have to think about all the different ways that you might be paying or not paid, right? So you just have to think about how you're using your health care and how your insurance is covering what you might use. It's complicated. It can be a really, it's like trigonometry and algebra and geometry combined. I don't know, trying to calculate all the right factors and come up with the right choice. But I think ultimately trying to understand what your family can afford and what they use, you know, is also going to help you as you try to do the calculation of what makes the most sense for you.

8:47This year, when you open that email and from your HR and look at what the premiums are, you open up the, you know, Obamacare to find out what your plan will cost next year, you might experience a little sticker shock. Healthcare costs are going up and employers are trying to balance absorbing some of those costs or managing some of them with passing them on because they can't afford it all either. And so, you know, look at the fine print. It might be that your premium doesn't change, but it might be that there's more costs on the back end that you should be aware of. So I just think really paying extra close attention, this is the year to not just accept the plan that you've had every year and just weigh your options carefully.

9:33Jonquilyn Hill:You heard right. Premiums are about to go up. A lot. Coming up, we'll explain why.

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12:00Jonquilyn Hill:This is Explain It To Me. I'm J.Q. And today we're explaining all things health insurance, including why it's so expensive this year. No matter where you get your insurance, whether it's through your job, the Affordable Care Act marketplace, or Medicare, the price is going up. To find out why, I went to D.C.'s number one go-to for health care reporting. I am Julie Rovner. I'm Chief Washington Correspondent for KFF Health News, and I'm host of What the Health, brought to you by KFF Health News and WAMU 88.5 FM. Julie has covered the health care system for nearly 40 years. And she says that while the costs always go up, this time is different.

12:42Well, we are talking premiums going up pretty much across the board for every kind of health insurance right now. You know, we've had bigger inflationary spikes, particularly in the early 2000s. But for the last 15 years or so, health care costs have been rising, but not terribly fast. They seem to be accelerating again now. Why now? Well, there's a bunch of reasons, but they come down to sort of two things, price and utilization. Utilization is how many health care services people use. And obviously, the more services people use, the more the nation's health care bill goes up. So there's a lot of things that are driving expanded use right now.

13:24One of them is the aging of the baby boomers. I am one of them. As we get older, we suddenly get and need more health care. And to some extent, we're still catching up from health care that people didn't get during the pandemic, when nobody was leaving their houses and when you basically didn't go to the doctor unless you absolutely had to. So we're still seeing people not only getting care that they didn't get then, but people who didn't get care then and should have who are sicker than they might have been if they'd gotten preventive care or care early in the pandemic. So that's sort of driving up use.

13:59And then, of course, there's just new things that we can do. Everybody knows about the GLP-1 weight loss drugs that are so popular and so highly used right now. We have lots more new drugs. I mean, some of these are sort of amazing advances. It used to be you didn't want to do things and, you know, it was always cost-benefit, whether the benefit was worth the cost. And the cost was not just monetary. the cost was in how long you would be laid up if you had a joint replaced or had some kind of surgery. Now we have much easier surgeries. So it makes it much easier to do these things. So we're doing more of them.

14:36So that's just the usage side. Then there's the price side. And the price side, basically, you know, I can sum up in one sentence. We have the highest prices in the world because people who provide health care here can. The government doesn't regulate it nearly as much as they do in other countries. Most other countries do have hybrid systems. They do use some private insurance and some government subsidies. But they also, most of them that don't have spending out of control, have much more serious regulation of prices than the United States has.

15:10Jonquilyn Hill:It's really wild because we should be going to the doctor. We should be taking care of ourselves. But it feels like when it comes to the price of things and the price of insurance, we kind of get punished for it. Yeah, we do. And, you know, one thing that I didn't mention is that because we now spend so much on health care that it's like 18 percent of our GDP, lots of people who would like to earn money are going into health care. So we have people sort of encouraging possibly unneeded health care to make a profit. So there's that piece of it also, in addition to the things that we should do and that end up costing us money.

15:48Jonquilyn Hill:Is there a difference in, you know, the rise in costs we're seeing for those of us who get employer-sponsored insurance versus those of us who get our insurance through the ACA marketplace? There is. And, you know, one of the reasons that in 2026 ACA premiums are rising is because of these additional subsidies that made it easier for people to get health insurance under the ACA, the expanded tax credits. It basically doubled enrollment. And insurers, seeing that those extra premiums were scheduled to end, said, well, a lot of people are going to no longer be able to afford their health insurance.

16:26So we're going to have to raise premiums on the theory that the sick people are going to hang on to their health insurance and the healthier people are probably going to drop it if they see the prices go up. Although everyone will be affected if people can no longer afford their coverage and go uninsured because, like with the pandemic, they won't get medical care until they absolutely have to, and then it's more expensive. And then the cost of that care is going to have to get passed along to somebody.

16:53Jonquilyn Hill:Are employers absorbing some of these higher costs for people who get that employer-sponsored insurance? It depends. During times when it's hard to hire people, and we have tight labor markets, employers try to absorb as much of the increases in health care spending as they can because they don't want to load more onto their workers and therefore make it harder to win new workers and retain old workers. Right now, the labor market is not as strong as it has been and health care costs are going up. So it's expected that a lot of employers are going to pass along a lot more costs to their workers.

17:28Jonquilyn Hill:What can consumers do to try to mitigate these costs? Like, you know, it's getting expensive. What can we do? It's really hard. You know, there are a number of people who think that price transparency is a big help. It's probably not the answer to everything. But knowing what things cost in advance certainly doesn't hurt. Being able to shop around for elective things also doesn't hurt. Sometimes, you know, if you go to a hospital, you can find the same care as an outpatient for much less because of the complicated ways that government and private insurers pay for these things. Sometimes you can offer to pay cash instead of use your insurance and you can save money.

18:09That's very true for things like generic drugs. So there are ways to save some money, but we're all sort of captives of the mess of a health care system that we have right now.

18:18Jonquilyn Hill:OK, so everyone is focused on premiums right now because they're going up. But that's just one symptom of what is going on with our health care system, right? Like there's a bigger problem here. There definitely is. And obviously Republicans are saying, you know, we're over subsidizing for the ACA, which is a mess. Obamacare is terrible. It's bad health care at far too high a price. And it's become a boondoggle. It's a subsidy for insurance companies. When you subsidize the health care system and you pay insurance companies more, the prices increase. That's been the problem. Well, we subsidize everybody else who gets health insurance.

18:56You know, the federal government subsidizes Medicare, federal and state governments subsidize Medicaid. There's a gigantic tax break for people who have employer-provided coverage that most people aren't even aware of. So it's really only been people who buy their own coverage in the individual market and small businesses who haven't been getting a subsidy. And that's what this is.

19:18Jonquilyn Hill:If insurance just keeps getting more and more expensive, do you think we'll see more people just kind of opt out of it altogether? Well, that's a concern. Of course, that's where we were before the Affordable Care Act passed when we had, you know, 14 percent of the population that didn't have insurance. Now it's down to an all time low of about 8 percent. But, you know, we're definitely going to see people lose their insurance, even if they're not dropping it voluntarily. The bill that Republicans passed this summer takes away eligibility for a lot of people. And out-of-pocket costs, as you say, are going up dramatically, even if you do have insurance, deductibles and copayments.

19:58And just the cost of medical care in general means that even people with pretty good insurance end up owing lots of money out of pocket. So I think we're sort of coming to another transition point where this is going to be back on the national agenda.

20:18Jonquilyn Hill:Up next, we talk about some creative solutions to our health care problems and why finding a fix won't be easy.

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