The United States devotes 16.9% of its economy to health care, more than any other nation in the Organization for Economic Cooperation and Development (OECD), yet has the lowest life expectancy among OECD nations, according to The Commonwealth Fund. What accounts for the high cost of health care here?
Health care costs defy the normal laws of supply and demand, for several reasons. Fundamentally, health care is not like other goods and services, in that you can’t easily consume less of it as the cost increases (you can buy a smaller house if housing costs increase, but good luck settling for half of an open heart surgery). This would be as true in Geneva, Switzerland as in Geneva, Illinois. But there are several features of American health care that make U.S. health care a uniquely bad bargain.
After working for 30+ years in the health care industry, I retired last October. I’ve had employer-provided health insurance through my entire working life. Well, no problem, I figured. I was over 65, I knew a lot about how Medicare works, so there shouldn’t be any surprises, right? Well, not quite. While I knew the basics about how Medicare is structured, I wasn’t prepared for the sticker shock I experienced signing up for coverage.
As Americans quarantined themselves during the COVID pandemic, telehealth has come into its own. The public health emergency caused Congress and Medicare to implement several waivers to the rigid rules that Medicare applies, resulting in an expansion from 13,000 telehealth visits per week for traditional Medicare beneficiaries prior to the pandemic, to 1.7 million per week in April 2020. Medicaid programs in 48 states and the District of Columbia issued guidance related to expanding telehealth coverage during the pandemic. Many private insurers also took action (voluntarily or not) to expand coverage of telehealth services. A report prepared for the National Association of Insurance Commissioners found that more than two-thirds of states took action to expand access to telehealth during the public health emergency, such as requiring coverage of telehealth; establishing temporary parity between payment for telehealth and in-person services; covering audio-only services in addition to audiovisual; and expanding eligible providers. Telehealth utilization rose from a negligible portion of total outpatient visits to approximately 12% in mid-2020.