Executive summary

Insurance coverage for middle to low-income American citizens has substantially impacted hospital patients’ ability to gain just and easy treatment care. This disparity disproportionately affects lower-income citizens, undermining the core values of equality in the U.S. This brief will cover how wealth and influence play a role in the fairness of treatment care—both ethically and financially—and how this prevalent issue can be combated with policy implementations.

Overview

Economic inequality in the pricing and availability of healthcare treatments has prompted disadvantaged Americans with lower or average incomes to skip needed medical care in fear of the final medical bill (The Commonwealth Fund). This common practice in the U.S. is almost foreign in other countries, such as the Netherlands and Germany, which have the lowest rate of affordability issues and the fewest income-related disparities.

To combat this pressing issue, many corporations provide their workers with insurance that covers medical expenses below a set amount. In recent times, however, the annual deductible of covered workers has increased from 30% to 60% over the last ten years. An analysis by Congressional Budget Office health economist Dr. Sen found that an estimated 40% of families could not pay the mid-range deductibles for employer-sponsored health plans in liquid assets.

Relevance

Cost influx impacts every American citizen within a certain social class, especially targeting working-class citizens. The increasing cost of healthcare treatment in the U.S. also exceeds the amount insurance can cover, making insurance an ineffective tool for reducing the financial burden of treatment.

A survey by the American Cancer Society Cancer Action Network concluded that 61% of cancer patients struggled to cover the cost of treatment, while over 80% stated they had to make financial sacrifices to cover expenses. Of those, 44% tapped into savings and 36% went into credit card debt. In one case, a Texas woman could not continue chemotherapy because her insurance wouldn’t cover enough of the $80,000+ cost.

History

Modern healthcare insurance was officially established in the 1920s and 1930s. The urbanization and industrial boom led to more workplace injuries, prompting the need for formalized care. In 1929, Baylor University Hospital in Texas introduced Blue Cross, offering prepaid healthcare plans for teachers—marking the start of modern health insurance. However, these plans were initially accessible mostly to wealthier individuals, setting a precedent for wealth-based disparities.

Following World War II, employer-sponsored insurance became more widespread due to wage freezes. In 1954, the IRS ruled that employer-provided health insurance was tax-free, encouraging its growth. Later, Lyndon B. Johnson’s Great Society programs introduced Medicare and Medicaid to help seniors, the disabled, and low-income individuals.

In the later 20th century, organizations like HMOs and PPOs began controlling treatment costs but limited access.

Current stances

Healthcare inequality due to wealth and influence is a long-standing global issue, though 2024 brought renewed attention. The Affordable Care Act (ACA), passed in 2010, expanded Medicaid and helped low-income citizens. However, the Trump administration’s reduction of ACA subsidies in 2017 made insurance more expensive for middle-class families. Today, healthcare costs outpace wage growth, widening the wealth gap. Without intervention, this divide may deepen.

Policy problem

Stakeholders

Primary stakeholders include employees with employer-sponsored insurance, particularly those from low-income households. These individuals, along with children, chronically ill patients, and minority groups, are most affected. Cleveland State University researchers cite socioeconomic disparities, access challenges, and cultural/language barriers as key drivers of health inequity.

Businesses are also stakeholders—rising costs can influence employee retention and morale. Equitable insurance matters to both workforce stability and long-term public health.

Risks of indifference

Failing to address healthcare costs will lead to worsening disparities, declining living standards, and increased medical debt. Poorer outcomes and financial strain will escalate, particularly among vulnerable populations.

Nonpartisan reasoning

RAND Corporation’s 2023 study found that U.S. hospitals charge private insurers 224% more than Medicare for the same services. An MRI that costs $1,200+ in the U.S. might be $100–$300 elsewhere. These figures support policy reform from both fiscal and ethical standpoints, regardless of political affiliation.

Tried policy

The Affordable Care Act (2010) introduced risk corridors, reinsurance, and CSR subsidies to stabilize the insurance market. But Congressional defunding led to the collapse of small insurers and most ACA co-ops.

Cascade Care, Washington State’s public insurance option, was launched in 2021. However, insurer refusal to participate and low provider reimbursement rates hindered success. Despite early setbacks, enrollment is gradually increasing.

Policy options

Universal healthcare coverage

Universal coverage would make publicly funded healthcare available to all. Countries like Costa Rica and Iceland boast excellent outcomes under such systems. Iceland, for example, ranks second globally in Healthcare Access and Quality.

While promising, this model would require higher taxes and could increase wait times, posing challenges especially to the very population it intends to serve.

Expanding Medicaid to all states

Only 40 of 50 states have expanded Medicaid under the ACA. Extending it nationwide could reduce medical debt, improve outcomes, and help millions of Americans.

Challenges include the long-term cost to federal and state budgets, as well as concerns over fraud and misuse. Nonetheless, with 90% of expansion costs covered federally, the program presents a viable, cost-effective option.

Conclusions

Healthcare disparities continue to spark debate, touching on issues of life and death. This brief examined how employer-sponsored insurance impacts low-income Americans, offering multiple solutions to the challenges posed.

Of all the proposed options, universal healthcare insurance presents the most comprehensive and long-term solution. By addressing wealth and access disparities head-on, this policy could reshape public health in the U.S.

The path toward equitable care is long, but thoughtful policy backed by socioeconomic understanding offers a path forward.

References

1. “2023 RAND Annual Report.” RAND Corporation, 10 Apr. 2024, www.rand.org/pubs/corporate_pubs/CPA1065-4.html.
2. Cancer. “Survey: Majority of Cancer Patients Struggle to Afford Cancer Care.” American Cancer Society Cancer Action Network, 15 Dec. 2021, www.fightcancer.org/releases/survey-majority-cancer-patients-struggle-afford-cancer-care?utm_source=chatgpt.com. Accessed 3 Feb. 2025.
3. “Cascade Care Savings | Washington Healthplanfinder.” Washington Healthplanfinder, 2025, www.wahealthplanfinder.org/us/en/my-account/savings-options/cascade-care-savings.html. Accessed 19 Feb. 2025.
4. Chen, Lanhee J. “Early Lessons from State-Based Public Option Plans.” JAMA Health Forum, vol. 5, no. 3, 28 Mar. 2024, pp. e240973–e240973, https://doi.org/10.1001/jamahealthforum.2024.0973.
5. Cleveland State University. “Identifying Vulnerable Populations in Healthcare and How Nurses Can Make an Impact.” Cleveland State University, 17 Apr. 2024, onlinelearning.csuohio.edu/blog/identifying-vulnerable-populations-healthcare-and-how-nurses-can-make-impact.
6. Harker, Laura, and Breanna Sharer. “Medicaid Expansion: Frequently Asked Questions.” Center on Budget and Policy Priorities, 18 Mar. 2024, www.cbpp.org/research/health/medicaid-expansion-frequently-asked-questions-0.
7. “Iceland’s National Health Service Provides for All.” Yale Medicine, medicine.yale.edu/news/yale-medicine-magazine/article/icelands-national-health-service-provides-for-all.
8. Kaiser Family Foundation. “Status of State Medicaid Expansion Decisions.” Kaiser Family Foundation, 12 Nov. 2024, www.kff.org/status-of-state-medicaid-expansion-decisions/.
9. Sen, Aditi P. “Research and Policy to Strengthen the Employer-Sponsored Health Insurance Market.” Health Services Research, vol. 57, no. 3, 25 Apr. 2022, pp. 439–442, https://doi.org/10.1111/1475-6773.13982.
10. “State Public Option Plans Are Making Progress on Reducing Consumer Costs.” The Commonwealth Fund, 7 Nov. 2023, www.commonwealthfund.org/blog/2023/state-public-option-plans-are-making-progress-reducing-consumer-costs.
11. The Commonwealth Fund. “The Cost of Not Getting Care: Income Disparities in the Affordability of Health Services across High-Income Countries.” The Commonwealth Fund, 16 Nov. 2023, www.commonwealthfund.org/publications/surveys/2023/nov/cost-not-getting-care-income-disparities-affordability-health.
12. Weiner, Janet, et al. “Effects of the ACA on Health Care Cost Containment.” Penn LDI, 2 Mar. 2017, ldi.upenn.edu/our-work/research-updates/effects-of-the-aca-on-health-care-cost-containment/.