“Dad, I got a bill for $1,113.” One of our daughters wasincensed. “I went to my doctor with a simple question. She sent medownstairs where they drew a few tubes of blood for tests. It took two minutes. How do Iowe over $1,000?”

She's not the only one outraged by out-of-pocket health costs in the U.S. Manyof us feel we are paying more for less and less insurance coverage.We blame high-deductible plans, rising co-pays and otherpolicies that seem to shift more costs onto patients. Headlinessuch as “Out-of-pocket healthspending in 2016 increased at the fastest rate in a decade”amplify the unhappiness.

But the perception of ever higher out-of-pocket health-carecosts obscures important facts.

It's true that, in 2016, those costs rose 3.9 percent. Buthealth-care costs overall increased 4.3 percent, so as a percentageof total health-care spending, out-of-pocket costs actually fell.And this has been the case for several years. In 2010, totalout-of-pocket costs amounted to almost $300 billion, 11.5 percentof national health expenditures. By 2016, they rose to slightlymore than $350 billion, but fell to 10.6 percent of totalspending.

What's going on? Well, a lot of people point to businessesshifting more workers into high-deductible health plans. Such planssave an employer, on average, more than $1,500 per insured family.In 2017, more than half of all insured American workers had healthinsurance with a deductible exceeding $1,000 – that’s almost twice as many ashad such policies when Obamacare passed. But that’s not all that’schanged.

The Affordable Care Act has also limited many Americans'exposure to extremely high out-of-pocket spending. By expandinginsurance coverage, it has lowered the number of Americans who paythe full bill for all their health care. And it placed a legallimit on out-of-pocket costs for people who have insurance.(Disclosure: We both helped design the Affordable Care Act.)

Before Obamacare, Americans who contracted cancer or had aserious accident or gave birth to a premature baby could be forcedinto bankruptcy. Today, even high-deductible plans must limitout-of-pocket expenses to $14,300 for a family or $7,150 for anindividual. This seems like a lot of money – and it is – but theselimits have significantly reduced bankruptcies caused bycatastrophic health-care costs. And they're a big reason that,despite higher deductibles, out-of-pocket spending has fallen as ashare of overall health spending.

To some extent, people's outrage can be explained by thepsychology of high deductibles. Most people are not very sick, andfind it daunting to have to pay $3,000 before their insurancebenefits kick in.

What's more, people tend to deal with deductibles irrationally.Even patients with chronic illnesses who go to the doctor a lot,get a lot of tests and are maybe even hospitalized – andtherefore are sure to reach their deductible limit in theyear – hold off getting medical tests and treatments atthe start of the year, research has shown. Yet delaying medicalcare because of the deductible can undermine a person’s health.This is why the Affordable Care Act requires insurers to cover,without deductibles, preventive services and three primary carevisits. This, too, has enabled Americans to save on health-carecosts.

Of course, it's very unpleasant to receive a bill for$1,113 – but it is dramatically more so to face billsamounting to $20,000 or $30,000 when you get seriously ill. Webelieve health insurance should involve more protection againstvery high costs, even as it provides more exposure to small ones.That’s effectively what is happening.