The U.S. health care system is expensive, extremely complicated to navigate, and has worse health outcomes in multiple areas compared to other high-income countries. Most health insurance plans require you to pay for care in multiple ways:
Premium: The amount you pay each month for your insurance policy
Co-payment (or co-pays): A set amount you pay for medical visits, tests, procedures, medications, and other services
Deductible: The amount you have to pay before your insurance pays for covered health care costs
Co-insurance: A percentage amount of the allowable cost of your medical care that you are required to pay. (For example, your insurance may pay 80% and you pay 20%)
Maximum out-of-pocket costs: The most you can pay for covered plan services in a plan year. This typically includes such things as your deductible, co-insurance, and copays.
Out-of-network costs: The charges for services received from providers who do not participate in your insurance company’s network..
Visit our Educational Materials to learn more about getting and using health care coverage, understanding the terminology, and ways to save money on health care costs.
Pre-Authorizations, or Prior Authorizations
When health issues arise, your insurance may require you to get a pre-authorization (also known as prior authorization or pre-certification). Pre-authorization is a process whereby you or your provider is required to obtain permission from your insurance company before you receive certain health care services, treatments, medications, surgeries, or durable medical equipment. Pre-authorization policies are commonly used by private carriers, but in certain cases may also be imposed by Medicare, Medicaid, or other coverage programs. Failure to obtain the required pre-authorization can result in a lack of coverage for these services. Even with pre-authorization, payment by the coverage entity is not guaranteed.
The New York Times spoke to more than 50 doctors and patients who shared horror stories about the pre-authorization. The video, produced in March 2024, also explains how a process intended to save money actually inflates U.S. health care costs while enriching insurance companies.
93% of physicians surveyed reported that pre-authorization delayed patients’ access to necessary care.
How Does the U.S. Health Care System Compare to Other Wealthy Nations?
The Commonwealth Fund’s 2024 Mirror, Mirror report compares the performance of health care systems in ten countries: Australia, Canada, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, the United Kingdom, and the United States. When looking at access to care, care process, administrative efficiency, equity, and health outcomes, the U.S. ranked last overall. The U.S. performed well only on care process, ranking second. The care process metric focuses on whether most experts consider the care provided to be essential to high-quality health care.
The Commonwealth Fund report also found that the quality of coverage is worse in the U.S. than in other countries. One reason for this is the lack of investment in primary care, which makes it difficult for patients to access convenient and effective care. Another is administrative inefficiency, which makes the system a nightmare for patients and providers to navigate.
America’s poor performance comes despite spending far more on health care annually than any other wealthy nation. In 2024, the U.S. spent $14,885 per capita on health. Other large, wealthy countries spent about half as much per person on average.
“Despite spending a lot on health care, the United States is not meeting one of the principal obligations of a nation: to protect the health and welfare of its residents,” the Commonwealth Fund report stated. “Most of the countries we compared are providing this protection, even though each can learn a good deal from its peers. The U.S., in failing this ultimate test of a successful nation, remains an outlier.”
Privatization of Medicare Benefits: Buyer Beware
Currently, Medicare benefits can be administered by for-profit firms that promise expanded health care and wellness services. These plans offer lower out-of-pocket costs to patients compared to keeping Traditional Medicare and buying supplemental insurance to bridge coverage gaps. There are two general models:
- Medicare Advantage Plans take over your Medicare benefits and administer them, along with other health care and wellness services not typically covered by Medicare. In return, these plans can limit access to covered care by approving only a restricted panel of providers within limited geographical areas and tightening control over medication coverage, thus limiting treatment options. Medicare Advantage Plans | Medicare
- Under the Accountable Care Organization model or ACO, patients covered by Medicare can have their health care benefits managed by a for-profit company. An expanded set of benefits beyond those found in traditional Medicare may be offered. As in the Medicare Advantage Model, the ACO can limit services by using only approved healthcare providers and exercising tighter control over medications.
Major differences between the ACO REACH model and the Medicare Advantage model are:
- ACO REACH companies enter into shared financial risk agreements with Medicare in terms of the total dollars that they spend on the patients that they cover.
- Medicare states that “beneficiaries may be aligned to an entity participating in the model if they choose (or already have) a primary care doctor who is part of an ACO participating in the model.” This means you can automatically be enrolled in an ACO REACH plan without your consent.
Visit our Educational Materials to learn more about comparing Traditional Medicare to Medicare Advantage
The No Surprises Act Protects Against Surprise Medical Bills
In 2022, patients gained new protections under a law designed to prevent excessive health care billing. Typically, out-of-network providers would bill consumers for the difference between the charges the provider billed and the amount paid (if any) by the consumer’s health plan. This is known as balance billing. An unexpected balance bill is called a Surprise Bill. These surprise bills can be so high as to result in personal bankruptcies.
The U.S. Centers for Medicare and Medicaid Services (CMS) describes this law as follows:
“As of January 1, 2022, consumers have new billing protections when getting emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers. Through new rules aimed to protect consumers, excessive out-of-pocket costs are restricted, and emergency services must continue to be covered without any prior authorization, regardless of whether or not a provider or facility is in-network.”
- Some health insurance coverage programs already have protections against high medical bills. You’re already protected against surprise medical billing if you have coverage through Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, or TRICARE.
- The balance billing protections generally don’t apply to ground ambulance services.