Myth-busters: Stop saying someone else is paying for health care
Every dollar that funds the health care system is coming from the public - people like you and me. Let's protect those funds!
One of the most damaging myths in health care is the belief that we don’t need to worry about the price because someone else is footing the bill.
Working Americans might think that their insurance company is covering their costs. Or they might assume the government is paying. Or their employer.
But there is no magic money tree that’s funding our $4.3 trillion health care system. Every dollar comes from people like you and me - taxpayers and working Americans. This is one of the foundational principles I teach in my book, Never Pay the First Bill, and my health literacy videos, The Never Pay Pathway. We need to understand that this is our money, so we’re motivated to protect it.
What is a myth? It’s a widely held false belief. In health care we have many myths that need to be busted because they’re causing harm and impeding our ability to get a fair deal. Busting the myths and operating according to what’s true changes behavior. Welcome to “Myth-busters” - a series of columns I’ll be writing to take down these common misconceptions. First up: the mythical belief that someone else pays for our health care.
Insurance companies don’t pay for your health care
Let’s start with the insurance companies. The health care industry falsely refers to them as the “payers,” and many people think their insurer is covering medical costs.
But that’s dangerously inaccurate. The insurance companies are mere middlemen. They collect premiums from their members and dole them out for medical services - while keeping a healthy portion for themselves. Then they take in more money in premiums the following year. Rinse and repeat.
In the case of self-funded health plans, the big insurance companies serve as administrators. They process claims and dole out the health plan’s money and collect fees for their services. But it’s not their money that pays the bills.
I love the line benefits advisor David Contorno uses to bust this myth: “Calling an insurance company the ‘payer’ is like saying H&R Block pays your taxes.”
The government doesn't pay for your health care
The government doesn’t pay for health care, either, even though the industry also refers to it as a “payer.” This is obvious if you pay for your own benefits or get your coverage through your employer. But the government doesn’t pay the health care costs for people on Medicare and Medicaid, either. The taxpayers - everyday Americans like you and me - cover those costs 100 percent.
Want to see some of what you’re paying? Look at your paycheck. See the withholding for Medicare? The government takes 1.45 percent of your salary to fund Medicare, and your employer matches it. So that’s almost 3 percent that’s coming from you and your employer and going to the Medicare coffers. The median household income in the United States is about $70,000. That means a typical family pays about $1,000 into Medicare each year – with another $1,000 coming from their employer.
Medicaid is also funded by our state and federal taxes. Thus, if the government health plans squander money, they’re wasting your money and mine.
Your employer doesn’t pay for your health care, either
What about employers? Aren’t they providing health care benefits for their employees? Hopefully the answer is “yes,” but there’s important nuance here. Employers fund health benefits for their employees - but those benefits make up each worker’s compensation. Your compensation includes your salary, sick leave, paid time off for vacation, hopefully some type of retirement contribution - and hopefully your health care benefits.
If you’re on an employer-sponsored health plan, your employer funds your compensation - but it’s YOUR compensation. It has been given to you in exchange for your work. You earn your salary, and you also earn your health benefits. The benefits are funded by the employer, but your compensation pays those costs. Thus, if you and your colleagues overpay for health care it will cost you. It will cause the cost of your health benefits to rise – and you will continue paying more year after year.
Wasting the compensation our employers allocate to health benefits leaves less money in each employer’s compensation pool to increase wages. Employers must add more money to the compensation pool, or pass more costs on to their employees. (Or a combination of both.) This explains the steady increase in health care premiums and deductibles and cost-sharing for working Americans, and the reduced coverage. That’s a bad equation for you and everyone else who works for your organization. That’s money out of your pocket.
I recently spoke to an audience of employers and benefits advisors at a conference sponsored by Berkley Accident and Health, a stop loss insurer. Jim Hoitt, a VP from Berkley, asked me how educated employees are about who actually pays for health care. Typically, they’re not educated about this at all! Employers typically present health benefits to their employees as if it’s something the employer is paying. Educating workers about how it really works would better motivate them to become better health care consumers. Employers should reframe how they communicate with their employees, so it’s clear how unreasonable and unjustified health care costs are hurting each employee’s bottom line.
It’s our money - so let’s protect it
It’s important that we obliterate this myth that someone else is paying for our health care. People who think the buck stops with their insurer, the government, or their employer, are less likely to demand a better deal. People who understand that they are being ripped off by unjustified health care costs are more willing to change how they engage with the health care system – and that’s what we really need. Check out my book and health literacy videos to get equipped!
What do you think are the biggest myths that are making it difficult to bring down health care costs? Let me know what you’re seeing, and perhaps it’s one I can help bust! Drop it in the comments or message me!
Workers on employer-sponsored health plans struggle to afford health care
Berkley, the stop loss insurance company I mentioned above, recently published its 2022 survey: Health Care Pressures Facing U.S. Employees. This survey included 1,000 respondents over age 18 who receive care through their employer.
Here are some key findings:
84% of respondents said they worried about the cost of health care.
3 out of 5 respondents indicated that they skipped medical care because of the cost.
38% of respondents indicated that they had some medical debt. More than a third of those indicated that their debt was over $3,000.
The Berkley survey echoes similar surveys and studies that show the widespread harm the unjustified cost of health care is causing to working Americans. But it’s distinct in an important way. In this case, it’s particularly alarming because the respondents were people who had health care coverage through their employers. These are not the uninsured we’re talking about. These are working Americans who pay, along with their employers, for expensive health care coverage.
Except many of them are not covered.
Does your organization sponsor health benefits for your employees?
Want to see them get equipped to be savvy health care consumers?
I’m looking for bold employers to equip their employees with my Never Pay Pathway health literacy videos. They’re based on my book, Never Pay the First Bill, and the knowledge will transform the way your employees engage the health care system.
The videos are an ENGAGING resource that will save money for your employees, their families - and your health plan. Let’s stop overpaying for our health care, shall we? Email me at neverpay@marshallallen.com for more information.
