Complexities Behind Choosing and Using Health Insurance

According to Alan Balch, PhD, CEO of the Patient Advocate Foundation and the National Patient Advocate Foundation, rising employer-sponsored insurance premiums—outpacing both inflation and wage growth—are creating severe financial pressure for low- and middle-income families. He describes a “perfect storm” in which healthcare costs are increasing alongside everyday expenses such as housing, food, and utilities, while household incomes fail to keep pace. For many families already managing serious or chronic illnesses, this imbalance forces painful trade-offs that directly affect access to care.

Balch emphasizes that these decisions are not discretionary or short-term choices, such as whether to seek treatment for a minor illness. Instead, patients are weighing essential household expenses against life-sustaining therapies for conditions like cancer, HIV, or diabetes. From a patient’s perspective, all out-of-pocket costs—insurance premiums, coinsurance, deductibles, medications, or basic living expenses—come from the same limited pool of income. As healthcare spending rises, patients face compounding financial strain.

The burden is often amplified by lost wages when illness requires time away from work, further reducing household income while medical expenses simultaneously increase. This dual pressure leaves families with little flexibility and increases the likelihood that they will delay or forgo necessary care. Balch notes that patients are increasingly forced to decide between paying rent, utilities, or groceries and covering the remaining costs of their healthcare.

These financial trade-offs have serious clinical and economic consequences. When patients postpone or skip treatment due to cost, diseases can progress, complications become more severe, and interventions become more complex, less effective, and more expensive over time. What initially appears as a short-term cost-saving decision ultimately leads to higher overall healthcare spending and worse health outcomes. Hello—

Balch’s perspective underscores the broader affordability crisis facing working families and highlights how rising premiums and out-of-pocket costs are eroding the ability of patients to remain insured, stay adherent to treatment, and maintain financial stability while managing serious illness.

He also discussed the policy solutions that advocates should prioritize and much more.

A transcript of his conversation with PC can be found below.

PC: Why is insurance such a complex financial mechanism for most people, regardless of how it’s provided?

Balch: Insurance is a complicated financial mechanism for most individuals, regardless of how you're provided it, whether it's employer, through exchanges, etc., or whether you have an HSA or a high-deductible plan, or different aspects of it. It’s a complicated financial instrument, and so whatever the solution is, I think part of the problem is that, generally speaking, people don't know how to select the right insurance, and/or how to use their insurance appropriately.

That's the challenge with any solution—it still requires a level of understanding at the consumer level about how to pick appropriately, and then how to use your insurance in a way that makes sense. If you have an HSA plan, you've got to figure out how to maximize the contribution to that and then make sure you spend it appropriately.

Just picking, if you have options within your employer sponsored plans—which many people do—what's the right choice for me? Do I just pick it based on premium, which is what most people end up doing. That actually can be quite problematic if you end up in a situation where you actually need more cost coverage utilization, as opposed to paying more premium, or whatever the construct is.

There’re trade-offs financially in how these products are constructed, both in how you purchase them and then how you use them. I think whatever solution is selected, let's say for the Affordable Care Act, for the exchange plans, you've got to make sure there's commensurate public education for that population about how to select their insurance and then how to use it, particularly if you're going to do something different or create an insurance product that's decidedly different, or markedly different than what most people have access to in general.