Economic Factors in the Rise of Out-of-Pocket Healthcare Costs

I’ve been following the recent reporting on rising health-care premiums, and one thing is becoming increasingly clear: we are in an affordability crisis touching nearly every corner of the system, especially for the 165 million Americans who get coverage through their employers.   The article highlights something we don’t talk about enough: workers with employer-sponsored insurance are facing premium increases of 6–7% this year, on top of last year’s jump. That means families are paying more for the same coverage while wages rise far more slowly. While at the same time, employers themselves are seeing the biggest cost surge in 15 years — driven by rising hospital prices, prescription drug inflation, consolidation, and new economic pressures across the delivery system.   What concerns me most is the broader ripple effect. When costs spike, workers end up with higher deductibles, higher copays, and less usable coverage. The politics right now are appropriately focused on Affordable Care Act (ACA) subsidies, but the lived experience for most Americans is happening in the employer market. If we’re serious about affordability, Congress and our industry can’t ignore the largest segment of the insured population. Transparency, competition, payment reform, and real accountability for underlying costs must be part of the conversation.   People don’t care about the technical distinctions between markets. They care about whether they can afford to take their kids to the doctor, and right now, too many families are finding that answer slipping out of reach. We can fix this, but only if we start addressing the root causes driving these costs skyward. #accesstocare #costofcare #healthcare #employercoverage https://lnkd.in/gxDrB7cV

There is a robust national conversation taking place regarding the cost of health insurance and the performance of the Affordable Care Act. Interestingly, as KFF data shows, the percentage increase in premiums (family coverage) in the ten year time period (2000-2010) prior to the enactment of the ACA was 114% as compared to 47% increase in the ten years (2011-2021) following the enactment of the ACA. The growth was actually slower. However, the real dollar increases added up to about $7,000 over both time periods. What really changed in the post-ACA insurance market was the increase in out-of-pocket spending through cost-sharing requirements. As numerous studies have shown, deductibles grew much faster than premiums in the 2011-2021 time period, about 68% v 47%. But, more telling, there was an uptick in the number of individuals and families who had a deductible. In 2021, 85% of individuals had a deductible associated with their plan. This is what causes such angst – families are paying more for coverage (premiums) and they are paying much more to actually access that coverage due to cost-sharing requirements. I have worried for many years about the disincentive this design has on primary care. Based on recent data, the behaviors that concerned me in 2011 are actually happening. The deductible has become a financial barrier to primary care and prevention. People are choosing to delay or forgo primary care due to the out-of-pocket costs. We at the AAFP have long pushed a two-pronged approach – direct primary care/or direct contracting arrangements and/or covered primary care visits in front of the deductible. They take different approaches, but both create a more financially frictionless connection with primary care. It will be interesting to see how the market and insurers respond to the HSA policy enacted in HR 1 which creates permissible use of HSA dollars with a DPC practice.

"If your only answer is to raise deductibles, you’re not acting as a fiduciary. You’re reacting to cost—not managing it." -ME The cost of employer-sponsored healthcare has passed the point of sustainability—and yet, here we are, sustaining it. But at what cost to our businesses and our people? The default response is to engage in more cost shifting to members. "Suggested reforms" from big consulting firms for many employers, including the State of NJ - include increased co-pays, co-insurance, and higher out of pocket costs across the board. Oh - and increased premiums. I get it, employers are feeling the pressure. Every major consulting firm has issued a survey showing that health benefit costs rose higher than anticipated from 2024 to 2025, and they will be even higher in 2026. I've seen double digit rate increases hitting employers' desks across the country. So what’s the go-to solution for many employers in 2026? Well, according to PwC, shift more of the cost to employees. More than half of large employers plan to raise deductibles or out-of-pocket maximums next year. In other words: we can’t figure out how to manage costs upstream, so let’s make employees pay more at the point of care. This isn’t strategy. It’s a failure of imagination. The problem is not “care-happy” patients using too much healthcare because they don’t have enough “skin in the game.” No, the problem—at least in part—is that employers are often locked into plan designs that reinforce systemic dysfunction: fee-for-service churn, incentives that reward volume over value, and a structure that thrives in the absence of meaningful fiduciary and regulatory oversight. When employers don’t know what they’re paying for—or who’s profiting from the margins—it’s no wonder the bill keeps going up. We need to stop defaulting to cost-shifting and start building smarter plans. Plans that: ▪️ Eliminate financial barriers to high-quality primary care ▪️ Direct members to curated specialty care based on value—not network ownership or referral capture ▪️ Offer full transparency into price, outcomes, and contracts Smart plan design—and even smarter plan management—can get us what we actually want: ✔️ Lower costs for employers ✔️ Low or no out-of-pocket costs for employees ✔️ High-quality care from providers selected for value, not volume If you're still using the phrase “skin in the game” in 2026, please stop. The rules of that game were rigged from the start by an industry that profits from confusion, complexity, and sickness.... and employers have played the game without challenging the rules. Employees have had skin in the game this whole time. Their health. Their wages. Their choices. Their dignity. Nomi HealthDave Chase invites you to RosettaFest Marilyn BartlettDutch Rojas Lee LewisShawn GremmingerKaren van Caulil, Ph.D.Kevin LyonsPreston AlexanderFree Market Medical Association https://lnkd.in/e3xR6FAJ

I’ve been looking at this chart on inflation pricing. Hospital services are up 281% over the last 25 years. TVs are down 98%. While we’ve all known that healthcare is expensive, seeing it zoomed out like this makes the trend undeniable. With ACA subsidies now expired, we're seeing what happens when that cost curve hits real families. I’ve seen some of the real-life stories in CBS News: Noah Hulsman kept the same premium but his deductible went from $750 to $8,450. Loretta Forbes watched her premium jump from $250 to $2,500/month and started rationing her rheumatoid arthritis meds. Nicole Wipp dropped coverage for her whole family except their son because the plan cost more than their mortgage. Premiums are up an average of 26% this year according to KFF, and some have even doubled. Nearly 40% of people are skipping or delaying care because of costs. Healthcare is now the top financial concern for 80% of Americans (ahead of food and housing). For decades, healthcare inflation quietly outpaced wages but subsidies hid some of the gap. With federal policies now shifting, middle-income families are increasingly feeling the actual price of the system. So how do we deliver care when the traditional model prices people out? Virtual care, remote monitoring, AI triage, high-deductible health plans, and other cost-saving measures are all helping. But most of these things are just workarounds and wrappers around the same underlying cost structure of the high acuity sick care industry rightfully serving an aging population, and often very well by the way. What we need for our changing demographics and to make healthcare financially viable is much more systemic change, such as new care delivery models that provide primary care for 1/10th of what it does today a la Apollo Hospitals or Narayana Health in India, permitting reform to reduce compliance costs, state and federal legislation to expand scope of practice for less credentialed healthcare professionals, etc. Here are some real-world examples of companies from across our portfolios that, while albeit ventures, are already meaningfully moving the needle in reducing costs while improving quality:  🔹 Wellsheet and Prolucent: Clinical workforce optimization  🔹Dopl Technologies: Robotics for just-in-time imaging 🔹Aegle and Helm Health : Insurance disruption 🔹Nest Health and Pinch: Home health using nurses and other contingent labor 🔹OpenLoop, Tenovi, an Inc. 5000 Company, and Vytalize Health: Infrastructure for virtual and value-based care 🔹Paloma Health and Tava Health: Specialized virtual care 🔹Troomi: Wellness and preventive care 🔹IgniteData and Leash Bio: Drug discovery and clinical study efficiency

As CEO and Co-Founder of Rivia Health, I’m often asked why patient responsibility is 15-35% of revenue for healthcare practices, when it was only 2% 10 years ago. The answer is increasing High-Deductible Health Plan Adoption. In today’s evolving healthcare landscape, High-Deductible Health Plans (HDHPs) are becoming more popular among individuals and companies as a cost-effective way to manage healthcare expenses. According to the Kaiser Family Foundation’s 2023 Employer Health Benefits Survey, 29% of covered workers are enrolled in an HDHP with a savings option (HDHP/SO), a figure that has steadily increased (estimated 75% adoption increase) over the past few years. However, it’s essential to understand both the benefits and the pressures these plans can create. Here are a few key points: 1. Cost Savings: HDHPs typically have lower premiums, which can be attractive for both employers and employees. 2. Consumer Empowerment: With higher deductibles, individuals often become more mindful of their healthcare choices, which can lead to more informed decision-making. 3. Financial Pressure: One significant downside is the financial burden placed on patients. High deductibles mean that individuals must pay a significant amount out-of-pocket before their insurance kicks in. This can lead to delays in necessary care or financial strain for many families. 4. Health Savings Accounts (HSAs): While HSAs offer tax advantages and can help manage out-of-pocket costs, they don’t fully offset the pressure of high initial expenses. At Rivia Health, we understand these challenges. That’s why we offer payment plans to patients, helping to alleviate the financial burden and ensure that they can easily pay their providers on time.

Why health care costs are so high--and rising--in the U.S. is not only not a mystery but the issues have been been known for literally decades, but remain unaddressed: 1) Consolidation among healthcare providers, particularly hospitals. Sutter Health paid almost $600 million for antitrust violations, but of course, the network the company put together remains in place. When I talked to Jeff Immelt, former GE CEO about his attempt to reign in costs, this was the first issue he mentioned--failure to stop the mergers that have led to too much concentration. 2) Administrative overhead--in billing, prior authorizations, coding, and so forth, that some estimates argue add 30% to health care spend. 3) The reluctance to exclude high cost providers from coverage networks, thereby driving up costs for everyone in the covered plan. Rosen Hotels, in Florida, figured this out long ago, as did Marilyn Bartlett in Montana. Stanford has yet to do so, so I continue to subsidize my colleagues who use the vastly overpriced Stanford Healthcare. Surveys suggest that employees are eager to have the option of choosing plans that exclude higher cost providers that do not afford a quality advantage--but EMPLOYERS do not often make such a choice available. 4) The intermediaries--pharmacy benefits managers, health benefits administrators, and all the other players that frequently add less than no value even as they drive up costs. These are ALL solvable problems, but I guess we have not yet reached sufficient pain to motivate employers to do much to address them. #healthcarecosts #PBMs #overhead #hospitals #antitrust #SutterHealth

Recent reports indicate that India's health insurance premiums have exceeded the national health budget, highlighting a significant shift in healthcare financing. While this surge reflects increased awareness and demand for health coverage, it also underscores a pressing concern: the growing disparity in healthcare access. Medical inflation in India has consistently outpaced general inflation, with rates hovering around 13-14% annually. This escalation has led to higher premiums, making quality healthcare increasingly unaffordable for many. Consequently, a significant portion of the population remains underinsured or uninsured, exposing them to financial vulnerabilities during medical emergencies. The government's flagship scheme, Ayushman Bharat, aims to bridge this gap by providing coverage to the economically disadvantaged. However, the reliance on insurance-based models, both public and private, raises questions about the long-term sustainability and inclusivity of our healthcare system. To achieve true equity in healthcare, a multifaceted approach is essential: Enhanced Public Investment: Increasing budgetary allocations to strengthen public healthcare infrastructure. Regulatory Oversight: Ensuring transparency and fairness in premium pricing and claim settlements. Awareness Campaigns: Educating citizens about available schemes and the importance of adequate coverage. #HealthcareEquity #Insurance #PublicHealth #AyushmanBharat #MedicalInflation https://lnkd.in/gcmbBT6N