Published on Flickr by 401(K) 2012, via Wylio
Published on Flickr by 401(K) 2012, via Wylio

Summary: Well-to-do and wealthy people think differently about health care pricing than people of more modest means. This may seem obvious, but it’s a big problem: if the system is built by the haves and services the have-nots, and also takes advantage of them, then big issues will inevitably arise. For an example of this in recent history, look no further than the financial crisis, where the banking industry treated the entire nation as its personal piggy bank.


So, if you’re looking at the system with the lens of a person who’s wealthy or at least well-to-do, you might not have serious money issues with medical care. Good insurance goes a long way toward keeping you from seeing that health costs are ruining families’ finances, and their lives. (For details about rising deductibles and co-insurance, take a look at this piece by Drew Altman.)

A parallel about people’s lenses: I’ve written recently about how men and women think differently about health care. Women know a lot about what things cost, and spend time trying to save money. It’s a bigger bite out of their already-smaller paychecks. But for many men, health costs are an abstraction, because they don’t actually pay for health care: Women make 80-90 percent of the health care decisions in this country.

The same is true for the privileged: The less privileged know a lot about what things cost, and spend time trying to save money.It’s a bigger bite out of their already-smaller paychecks. The privileged don’t actually pay for health care, or if they do, it doesn’t hurt as much.

Rationing health care by income class

This issue bubbles beneath the surface of the health care debate. Occasionally it draws attention as it did recently in a powerful paper by the Princeton economist Uwe Reinhardt and his colleague Tsung-Mei Cheng, also of Princeton. The entire paper, in the form of a slide deck, is here.

Predicting that the next president must confront  “how far the rationing of health care by income class can be pushed in this country,” the authors paint a grim picture of the overall trends pushing the health system to one in which the few have a lot of care, but many cannot afford care.

After a series of pithy slides on politics, economic sustainability and ethics, the two point to questions of  “views concerning the degree to which the supply side of the health care market should be allowed to extract the maximum revenue from the rest of society through their pricing policies.”

They predict: “We shall abandon erstwhile dreams of an egalitarian healthcare system and instead develop platforms that will allow policy makers to ration health care by income class, without ever openly saying so or debating that policy. By 2030 at the latest these new platforms are likely to be cemented in place.”


Is spending approaching a quarter or more of average income?

So, let’s set the scene. Is the average American family required to spend  a quarter of its income on health care? Or even half? Maybe. Take these two numbers:

1.  “The distribution of family income in the United States, whose median now is around $52,000 (meaning 50 percent of American families have a lower family income),” writes Reinhardt writes in a different context.

2. Total spending on health for the typical family of four covered by an average employer-sponsored preferred provider organization insurance plan reached $25,826 last year, according to the Milliman index. Employees’ portion of that is  $11,033. “Employees are shouldering more of the healthcare cost burden than they were 15 years ago.” (Of course, other plans might be more expensive, and serious health problems might cost more.)

For non-employer plans, on the Affordable Care Act, we see narrower networks and higher spending.

Of course, if you don’t have any health issues, you don’t see a problem except in the abstract. And yet, well-to-do people have questions about this too. A well-off friend who was arguing with an insurer and provider over a $2,000-plus bill she was expected to pay told me not long ago, “If we have to pay it, we can afford it,  but what about someone who can’t?”

A contributor to PriceCheck in Florida wrote, “The bill for this care- over $9000.   … We have good insurance so my part was $500.  But I find this outrageous.   What if I was a single mom without insurance?  Seeking this treatment could have bankrupted me or prevented me from seeking treatment all together for a potentially dangerous condition.

Who’s ‘shopping’ for better health care prices?

A similar issue: A common narrative recently in the healthosphere is that high deductibles and high prices don’t cause “shopping” behavior or price sensitivity. But our observation is that several of the studies purporting to prove this are conducted among the haves — and not the have-nots.

One recent study found that at a tech company, employees with 6-figure salaries didn’t display a lot of shopping behavior in the face of a high deductible. But if they’re tech employees, with 6-figure salaries, don’t they constitute a big group of “haves”?

Another study, of employees at a health tech firm, found little shopping behavior. We don’t know the demographics of the firm, but we surmise that people at a health tech firm might be reasonably well off, and generally also reasonably healthy.

We have been seeking support for a study of people who are more likely to be “have-nots” — people on the “gig economy,” people who are not covered by regular employer-sponsored health insurance, and who have variable incomes. That’s an increasingly large part of our economy — and believe us, we hear from people like this all the time who are looking for better prices on care.

Unconscious bias, and why we should care

Speaking of bias:  The gender lens is just one example of unconscious bias: the “I never thought about it” statements at the heart of many flawed decisions. If you’re wealthy, you may never have thought about the expanding pool of those who are struggling to pay their health care bills.

For a deeper dive, read this piece  about the “white-guy problem” in artificial intelligence by the renowned data scientist Kate Crawford. Or, you could read this piece about Cindy Gallop speaking about the ad industry, which she memorably describes as “white guys talking to white guys about other white guys.”

Women know a lot about health care pricing. So do people of color: the health care system for black and brown people in this country is famously bad. LGBTQ people also know a lot about this: They have less access to care, and less access to the care they need, as described in this Guardian story about a recent study.

Finally, people with chronic conditions know a lot about health care pricing. People with diabetes, asthma, and chronic conditions like ulcerative colitis, inflammatory bowel disease and Crohn’s spend hundreds of dollars  that others don’t. People with chronic conditions also face constant shift and churn: A new insurance plan? This month your medication’s not on the formulary? Your generic went straight up in price? These concerns, in addition to coping with the basic demands of maintaining and improving health, can be consuming.

What’s a social determinant of health?


While we’re on this topic, we often hear the catch phrase “social determinants of health” — shorthand for the collection of conditions and factors under which people are born, live and die. “They include factors like socioeconomic status, education, the physical environment, employment, and social support networks, as well as access to health care. Based on a meta-analysis of nearly 50 studies, researchers found that social factors, including education, racial segregation, social supports, and poverty accounted for over a third of total deaths in the United States in a year,” Harry J. Heiman and Samantha Artiga wrote in “Beyond Health Care: The Role of Social Determinants in Promoting Health and Health Equity,” for the Kaiser Family Foundation.

While this phrase is useful as a catchall, it can also be regarded as pernicious. Poor people don’t eat well, and make other bad choices, the logic goes. So those “social determinants” may mean that these factors are taken as a given. A cynic might say “social determinants of health” translates to “our health care system has failed a whole big swath of the population in policy and efficacy.”

A more polite version, from the World Health Organization: “The poor health of the poor, the social gradient in health within countries, and the marked health inequities between countries are caused by the unequal distribution of power, income, goods, and services, globally and nationally, the consequent unfairness in the immediate, visible circumstances of peoples’ lives – their access to health care, schools, and education, their conditions of work and leisure, their homes, communities, towns, or cities – and their chances of leading a flourishing life. This unequal distribution of health-damaging experiences is not in any sense a ‘natural’ phenomenon but is the result of a toxic combination of poor social policies and programmes, unfair economic arrangements, and bad politics.”

Inequality and its consequences

Here’s some historical context, too. The rise of income inequality and wealth inequality (not just what you earn, but also what you own) over the past 30 or 40 years has challenged the narrative of the United States.

The sociologist Marianne Cooper, in her book “Cut Adrift: Families in Insecure Times,” argues that we were once a nation where a sort of unspoken contract bolstering stability, which grew out of the disasters of the Great Depression and the trauma of World War II, made for a pattern of economic gains for a great middle class — a rising tide that lifted all boats, as it were. But, she writes, that pattern has been shattered by forces including stagnation in earnings, globalization, the rise of the service economy, economic volatility, the housing crisis and its consequences, meaning that economic volatility — not economic stability — is the governing narrative.

Insecurity defines our world now, she writes: “In the throes of the Great Depression, Americans decided that there had to be a better way to organize government and society, one that would allow individuals and families to enjoy greater stability and security. This philosophical shift from ‘rugged individualism’ to ‘united we stand, divided we fall’ paved the way for the New Deal, the Great Society, and the forging of an unwritten but pervasive social contract between employers and employees that rested on mutual loyalties and protections. The government invested in its citizens, employers invested in their employees, and individuals worked hard to make the most of those investments. As a result, in the decades immediately following World War II, prosperity reigned, inequality decreased, and a large and thriving middle class was born.

“Beginning in the 1970s, this system began to unravel. Large-scale changes from globalization and the rise of the service economy to a philosophical shift toward free-market ideology and a celebration of risk changed the landscape of security in America. Against this backdrop, the government curtailed its investments in and protections of its citizens, and employers rewrote the social contract to increase their own flexibility and demand greater risk bearing by workers. Individuals continued to work hard, but instead of getting ahead, more Americans struggled harder and harder just to get by.”

Small towns, or the flyover people

Also, we hear from people who live in smaller cities and small towns who are struggling with their health care bills.

Since I grew up in a small town, I’m sensitive to this. Much of our work here at ClearHealthCosts has been  focused in metro areas, where the provider is often a big hospital or larger practice, and the trail of the money might be less clear. But in a small town, the provider might be one hospital or a limited number of providers.

This makes for an awkward situation: imagine your $1,000 co-insurance bill for routine care, placed next to the new copper gutters on your doctor’s home, or her new Lexus? People in small cities and small towns are in need of affordable care. On a small-town income, there’s no way that $6,000 of deductible or co-insurance annually for an individual is affordable.

So, what is to be done?

Against this backdrop, what is to be done? Here’s one thing: We could have empathy for others.

Why empathy? Well, if you have good health, good insurance and plenty of money, you can educate yourself: Look beyond your own experiences, your own biases. Seek evidence of rising payments, intense frustration at the dysfunction of the system, confusion over what your doctor wants you to do as opposed to what the insurer will pay for. Listen to the voices that we listen to every day — full of passion, outrage, anger, despair. Think of how you can make change.

Imagine what would happen if empathy informed the work of a person whose job in health care is to get more people taking a given drug. Or if empathy informed the work of an insurance company person whose job is to reject a treatment prescribed by a doctor because the insurance company doesn’t want to pay for it. Or if empathy informed the work of a data analyst whose job is to analyze data in order to explain how much more money can be charged for a procedure.

Imagine what would happen if those people could talk to the person who wrote us and called ClearHealthCosts “amazing” and added, “Please don’t stop because you are helping people everyday, many of whom are struggling to make ends meet while others are just looking for a some transparency in a market where there has traditionally been very little.”

And here’s a suggestion from Reinhardt.

“A healthy addition to corporate board meetings … for example, might be a presentation on the distribution of family income in the United States, whose median now is around $52,000,” Reinhardt suggests. “…Similarly, the boards should know more about the health insurance status of the American people, including the ever-increasing deductibles and coinsurance families are made to bear. These data might give boards some feel for how much money can reasonably and humanely be extracted from their fellow Americans, especially those in the bottom half of the income distribution, with whom the boards and business executives have lost touch.”


Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...