Avenues to Improve Health Insurance

Insurance is meant to protect individuals, in large part, against unplanned events that could bring about detrimental financial consequences. As it currently operates, health insurance enables people to stockpile their resources to cover the costs of health care—low and high—in cases of injury, illness, routine checkups, and more. Although health insurance can increase health care access, prior analyses have suggested that having coverage does not necessarily contribute to better individual health. Furthermore, although stark differences in health outcomes have been observed between populations with and without health insurance, health disparities are still perpetuated within the health insurance system. To explore these systemic issues, this article will examine obstacles faced by health care consumers, the research on individual health impact, and detail potential solutions to counteract health discrepancies and improve health care at large.

Administrative Expenses

A common issue cited regarding health insurance is its outright costs. In their examination on the realities of broadening health insurance, Hyman et al found that marketplace premiums and median claims for enrollees increased by more than 50% and 95% between 2011 and 2021, respectively. But what contributes to these drastic increases? For starters, there is little benefit or incentive for insurance companies to fight for reduced pricing. More prominently, health insurance rates have been heavily influenced by administrative costs.¹

Financial burden | image credit: 1STunningART - stock.adobe.com

Administrative expenses are estimated to range from 15% to 25% of US health care spending, for an approximate $600 billion to $1 trillion every year. This aspect of costs refers to matters related to billing, marketing, enrollment, scheduling and staffing needs, information technology, human resources or customer relations, and more. But why are these expenses so high in the US?

In a 2021 JAMA article, Chernew and Mintz explored this phenomenon, particularly focusing on the market-based system of health provider competitors that can contribute to driving up these forms of spending. “Because competing insurers have different benefit designs, health care organizations and clinician practices must invest in activities to accommodate the out-of-pocket provisions of the different insurers and to collect patient fees,” they wrote. “Additionally, efforts to control utilization through alternative payment models often require risk-adjustment systems, which create more administrative costs.” Their example merely contextualizes the consideration needed to drive down these expenses because these ventures often require additional administrative spending to achieve long-term reductions.²

Coverage Correlations With Health Outcomes

Hyman et al reflected on an Oregon Medicaid program experiment from the past decade to demonstrate the influence health insurance has on individual health. In this randomized study on Medicaid members, the main findings showed that having this coverage did benefit individuals’ financial security and lessen their rates of depression; however, coverage did not have a significant impact on various health outcomes, such as glycated hemoglobin, blood pressure, and cholesterol levels. They went on to complement these findings with results from an additional, nonrandomized study on Medicaid expansion. This analysis found that those who participated in Medicaid expansion experienced lower out-of-pocket spending and access to regular care, and their coverage did not have a significant impact on incidences of stroke, asthma, cancer, diabetes, and coronary artery disease, among other chronic conditions.¹

In light of these results, it has become apparent that health insurance cannot always curb negative health outcomes. A recent 2024 study provided new insights into what can contribute to these effects, specifically analyzing health outcomes for patients with insurance residing in undeserved neighborhoods. Researchers used electronic health data from the National Surgical Quality Improvement Program alongside area deprivation index (ADI) scores, which act as a measure of socioeconomic disadvantage (1-100, with higher values indicating higher degrees of disadvantage). They used these data to break down postoperative textbook outcomes (defined as having unplanned reoperations)—primarily presentation acuity—and any existing associations with insurance type and neighborhood-level ADI.³

Inpatient procedure data were gathered between 2013 and 2019 and included 29,924 cases. Just over 18% (n = 5536) of cases were from underserved neighborhoods (ADI > 85). Lower rates of textbook outcomes were observed in patients residing in underserved neighborhoods who had private insurance (adjusted OR [aOR], 0.87; 95% CI, 0.76-0.99; P = .04) or Medicare (aOR, 0.90; 95% CI, 0.82-1.00; P = .04). Additionally, those in underserved neighborhoods had an increased chance of mortality and Clavian-Dindo grade 4 complications (1-5, used to grade surgical complications and extent of necessary therapy needed to correct them; higher grades indicate more severe outcomes) in the Medicare group, and a higher risk of solely Clavian-Dindo grade 4 complications was seen in the private insurance group compared with groups residing in areas with an ADI of 85 or less.³

Preoperative acute serious conditions (PASCs; defined as Clavian-Dindo grade 4, mortality, presentation acuity, emergency department visits, and readmissions) were more likely for patients in underserved areas in the private insurance group (aOR, 1.29; 95% CI, 1.06-1.57; P = .01) and Medicare group (aOR, 1.26; 95% CI, 1.09-1.45; P = .001) vs patients in areas with ADIs of 85 or less. Those with private insurance and Medicare in underserved areas were also more vulnerable to experiencing urgent/emergent cases (private insurance: aOR, 1.25; 95% CI, 1.13-1.38; P < .001; Medicare: aOR, 1.26; 95% CI, 1.16-1.37; P < .001) compared with patients in better-served neighborhoods. Furthermore, patients presenting with a PASC had higher odds of undergoing urgent/emergent cases in both insurance types (aOR range, 19.1-21.5).3

In an email interview with AJMC, Sara Schidmt, PhD, lead investigator and researcher at UT Health, San Antonio, commented on the significance of their results: “Our findings demonstrate that patient outcomes are not just tied to insurance but access to care more broadly, care that could prevent conditions from becoming urgent or emergent. Insurance does not automatically mean healthcare access.” Subsequently, Paula Shireman, MD, MS, MBA, professor at UT Health, San Antonio, added, “While continuing to improve care in the hospital is important, decreasing presentation acuity, possibly by decreasing barriers to accessing preventive and primary care, may have the greatest impact on improving outcomes.”

Although the concept of broadening health insurance has been taken into consideration, expansion alone may not be enough to combat negative health outcomes. Making efforts to invest in communities to expand their access to primary or preventive care may be the best approach for reducing incidences of PASC, urgent, or emergent cases to improve patient outcomes, authors concluded.³

As Schmidt et al focus on the accessibility of health care as a route toward health equity,³ it is important to keep in mind the reflections that Hyman et al made regarding the financial consequences of a market-driven health system.¹ As they also highlight how 90% of mortality variance occurs due to factors outside health care, their report largely emphasizes the need to lower costs and put money back in consumers’ hands because they argue that “individuals are better situated than anyone else to make financial decisions about their own health care.”1

As Hyman et al conclude, they leave an important reminder that “broader health insurance coverage is not the same as better health care or improved health. Policy solutions to improve health while containing costs should focus on allowing patients—not insurance—to control health care dollars whenever possible. We can no longer afford to deny patients access to health care that they actually want—and the better health that they need and deserve.”¹

Restructuring health insurance is a multistep, multiyear process that would require systemwide changes. Although the questions that ask how health insurance can improve do not have simple answers, the advocacy of individuals such as Hyman, Chernew, and Schmidt present promising avenues for kickstarting the policy-level change necessary to deliver better opportunities and forms of health care to patients.

References

1. Hyman DA, Letchuman S, Bai G. Health insurance coverage—is broader always better? JAMA Intern Med. Published online January 22, 2024. doi:10.1001/jamainternmed.2023.7112

2. Chernew M, Mintz H. Administrative expenses in the US health care system: why so high? JAMA. 2021;326(17):1679-1680. doi:10.1001/jama.2021.17318

3. Schmidt S, Jacobs MA, Kim J, et al. Presentation acuity and surgical outcomes for patients with health insurance living in highly deprived neighborhoods. JAMA Surg. Published online February 7, 2024. doi:10.1001/jamasurg.2023.7468

3. Schmidt S, Jacobs MA, Kim J, et al. Presentation acuity and surgical outcomes for patients with health insurance living in highly deprived neighborhoods. JAMA Surg. Published online February 7, 2024. doi:10.1001/jamasurg.2023.7468