Access to high quality health care is critical to helping people stay healthy, manage chronic conditions, and recover from illness or injury. Yet for many individuals and families, paying for that care has become increasingly difficult. 

Costs for care continue to rise faster than the economy, inflation, and wages — creating an affordability crisis and putting care out of reach for too many people. As a result, affordability increasingly shapes everyday decisions, from filling a prescription to scheduling a test or delaying care altogether. In the past year, about one-third of adults reported skipping or postponing needed care due to cost, according to polling from KFF.

Health care affordability reflects decisions made across the entire system, from how care is delivered and priced to how benefits are designed and used. Staffing shortages, prescription drug costs, new medical technologies, and a growing number of people living with chronic conditions all contribute to what patients ultimately pay. Understanding these forces — and how insurance coverage works within them — can help people make more informed decisions about their care. 

Why health care is becoming more expensive

There isn’t one single factor behind rising health care costs — it’s many factors. Much of what people pay reflects the resources required to provide care today. The cost of delivering medical care continues to rise each year, as does the utilization of care. That demand is driven in part by an aging population and more people living with chronic conditions that require regular visits, tests, and medications. Prescription drugs, especially newer specialty medications used to treat complex or long-term illnesses, also account for a growing share of health care spending. While these treatments can be life-changing, their costs can be astronomical. 

Medical advances have also changed what’s possible in care, as well as what it costs. New technologies, imaging tools, and treatments have improved outcomes, though they come with higher price tags. Over time, these innovations may help prevent more serious health problems, but patients still feel their impact today whether at the pharmacy counter, hospital, or doctor’s office, contributing to greater health care costs for families.

Understanding your health care costs

As health care costs rise across the system, people most often experience those increases through what they pay for that coverage: monthly premiums, deductibles, copays, and coinsurance.  

The premium that you pay each month to maintain coverage is used to cover the cost of care. Not-for-profit health plans like Harvard Pilgrim Health Care and Tufts Health Plan, for example, spend 90 cents of every premium dollar on their members’ health care and pharmaceutical costs. The remaining is spent on administrative costs, and, in more profitable years, there is a razor-thin margin to reinvest back into the business and communities.

A deductible is the amount you pay out of pocket before your plan begins covering a larger share of costs. After that, copays or coinsurance typically apply when you receive care.

Where care is received can impact costs as well, including whether a provider is in-network or out-of-network. In-network providers have agreed to negotiated rates under a health plan, which typically means lower out-of-pocket costs compared to out-of-network care — though costs can still vary based on the service and care setting. While emergencies are treated differently, seeking non-urgent care outside of a plan’s network can lead to higher bills.  

Having health insurance provides important financial protection, but it doesn’t eliminate health care costs entirely. High-cost services, specialty medications, or care received before a deductible is met can lead to higher out-of-pocket spending. Knowing how a plan works — what’s covered, what requires prior approval, and which services count toward a deductible — can help people better anticipate costs and navigate care decisions.

Ways to manage health care costs

Many health insurers offer resources such as provider directories and member support teams to help people understand coverage and anticipated costs before care is delivered. Using these resources are strong starting points to reduce uncertainty and support more informed choices. From there, these additional steps can help manage health care costs:

• Stay on top of preventive care
  Keeping up with recommended check-ups, screenings, and vaccinations can support long-term health and help catch issues early — when they’re often less costly to treat.
• Compare your options
  Costs for services like imaging or lab work can vary. When there’s flexibility, comparing locations or reviewing estimates may reveal more affordable options. Some health plans offer cost-estimate tools that can help.
• Consider lower-cost care settings
  Emergency departments remain essential for serious or life-threatening health situations, while virtual or urgent care may offer a more affordable option for non-urgent health needs. For scheduled care, community hospitals, outpatient clinics, or ambulatory surgical centers can also be lower-cost options compared to higher-priced hospital settings — even when all providers are in-network. 
• Review prescription choices
  Depending on individual needs and coverage, generic medications, therapeutic alternatives, or different pharmacy options may offer similar benefits at a lower cost.

“Rising health care costs are affecting everyday decisions for many people,” says Patrick Gilligan, president and CEO of Point32Health, the parent company of Harvard Pilgrim Health Care and Tufts Health Plan. “But when people are able to access the right care, at the right place, and at the right time, it can help manage medical costs and ensure convenient, appropriate options for non-urgent needs.”

How can health care become more affordable? 

Across the health care system, providers, employers, health plans, and policymakers continue to examine ways to address affordability, from improving transparency to strengthening access to preventive and coordinated care. However, one health care entity can’t solve the affordability crisis alone. The health care sector must work together to address these rising medical and pharmaceutical costs. As these costs continue to soar, affordability challenges will persist for consumers and employers. Broader discussions should focus on how care is paid for and delivered, how prescription drug costs and senior health care are managed, and how chronic conditions can be better supported to avoid unnecessary complications and hospitalizations.

“Addressing affordability means looking across the system and recognizing that progress depends on many health care stakeholders working together,” says Gilligan.

While these efforts take time to translate into tangible change, the impact of high health care costs remains a reality for many today — underscoring why affordability continues to be a focus across the health care system, including for health care organizations like Point32Health. 

Point32Health, the parent company of Harvard Pilgrim Health Care and Tufts Health Plan, is a leading not-for-profit health and well-being organization dedicated to delivering high-quality, affordable healthcare. Serving nearly 2 million members, our purpose is to guide and empower healthier lives.