With more financial skin in the health care game, and fewer uninsured citizens, too many Americans self-ration health care while trying to “save money” and avoid paying down deductibles that are the centerpiece of their health plans. This is a short-term fiscal choice that can lead to huge future financial and physical costs.
In November 2014, one in three Americans were postponing getting health care due to cost, a Gallup Poll found. Even though the Affordable Care Act (ACA) kicked in earlier in the year, this was the highest level of putting off medical treatment Gallup found since asking the question over the previous 14 years.
While more than half of people without health insurance postponed medical treatment, it may be surprising to find that 34% of people with private health insurance postponed care in 2014 – a 9 percentage-point increase from 25% in 2013 due to cost. But most surprisingly, there was an 11 percentage-point increase in the number of upper-income Americans (with incomes over $75,000) who postponed care due to cost: up to 28% in 2014, from 17% in 2013. And the percentage of all people putting off treatment for a serious condition rose to 22% in 2014 from 19% in 2013.
“Variation in the pricing for medical treatments, not to mention differences in how much insurance plans cover, could be confusing Americans or making them fear a needed treatment is too expensive,” Gallup reasoned.
Bronze plans = higher deductibles. The lack of understanding of health plan terminology – and in particular, what a “deductible” means in terms of personal dollar impact – continues to be a challenge in Year 2 of the ACA roll-out. Only one-half of consumers (including both insured and uninsured people) polled by the Kaiser Family Foundation in October 2014 could correctly calculate their out-of-pocket cost for a hospital stay. For people who participated in the survey that were uninsured, only one-half knew what a deductible was. “We have a ways to go before consumers sufficiently understand how health insurance works…[so they can] choose coverage wisely and use it effectively,” Larry Levitt of the Foundation observed.
Most new health plan purchasers on Health Insurance Exchanges in 2014 enrolled in Bronze and Silver plans, which charged consumers the lowest monthly premiums for buying health insurance. The all-in price for buying Bronze and Silver plans, however, involve higher annual deductibles, the future financial implications of which many newcomers to the health insurance world often don’t understand during the sign-up process. As shown in the chart above, provided by HealthPocket, deductibles in 2015 for Bronze plans will reach as much as $10,545 for a family and $5,181 for an individual. For health consumers who use physicians more frequently, signing up for a more precious metal tier of insurance could be more cost-effective over the course of the year.
Childbirth cost-sharing in the “Bronze Age.” “Death and taxes might be life’s only certainties, but birth and deductibles are poised to become their equivalent in the private U.S. health system,” caution the authors of an article on navigating high-deductible health insurance for costs “borne” in childbirth. The average out-of-pocket cost for vaginal delivery was $2,244 in 2010. While high-deductible health plans have low to no out-of-pocket costs for preventive care and primary care visits, childbirth hospitalizations generally fall into deductibles. The authors note that maternity care lacks price transparency, and recommend that childbirth could be an ideal test case for providing comparison tools on quality and price to enable women to “shop” for childbirth care in their communities.
Prescription: becoming a health care shopper. The General Accounting Office (GAO) found that prices consumers face for a specific health care service not only vary across the country, but even within specific communities. “More than ever before, consumers can benefit financially from shopping for health care services,” according to the Health Care Cost Institute’s (HCCI) data brief, Shopping for Health Care Makes “Cents” for Consumers published February 2015. HCCI found that the price consumers paid for health care services substantially vary across procedures delivered throughout U.S. regions and within geographic areas.
For example, the national price variation for cataract removal was $2,242 based on 2013 claims data, HCCI found. The out-of-pocket price for that cataract removal ranged from a low of $42 in Arizona to a high of $989 in Wisconsin. For an MRI of hip, knee or ankle, the out-of-pocket variations ranged from $64 in Maryland to $416 in Texas. To help consumer become health care shoppers, the HCCI is initiating a transparency initiative to pull together health care price and quality information that people can use to compare health service offerings in their communities.
Consumers can also shop for health care services using online health care marketplaces that first identify health care providers and needed services in the community, and then compare based on price and other characteristics (location, board certification, network affiliation, among other factors). PokitDok, for example, enables a health care shopper to search for a procedure and a provider, and strike a price for the service. ZocDoc provides an on-ramp for people seeking physician visits, and takes the consumer all the way through identifying a provider through making an appointment and pre-paying for the visit.
Make health care financial management consumer-friendly. With the growth of consumers paying first-dollar coverage, health care must now be seen as a retail purchase and part of a household budget alongside housing, food, and energy costs. As such, health consumers can use tools that support them as retail health care shoppers and payors. There are a number of solutions evolving in the market to support people in their ongoing journey to becoming more health literate and mindful health shoppers.
- Online bill-pay. Most people who use the Internet in America bank online. So it stands to reason that many people who like to do the same in health care: one-fourth of consumers would like to be able to pay medical bills online or via mobile platforms, a Technology Advice survey When health providers offer digital services like online bill payment to consumers, people can engage in health care on their own terms that fit their lifestyles. Offering such tools can be a win-win for both the consumer, who can more easily pay medical bills, and health providers, who can receive more timely payment from patients.
- Pay for health care like a car, with 0% interest. Health providers have begun to take a page out of automakers’ playbooks, often encouraging car buyers with 0% financing incentives. Health systems, hospitals, physician practices and other health care organizations can use financial services companies to extend 0% credit to patients for the life of an account that is accruing deductible costs and out-of-pocket spending, with no hidden fees or impact on their credit reports. CarePayment is one such company which calls some of the country’s largest health systems among its health provider clients such as Baptist Health Care (Florida), DeKalb Medical (Georgia), and Emory Healthcare, among others. At the Crozer-Keystone Health System in suburban Philadelphia, a CarePayment site, patients can get a 0% interest line of credit to pay for their health care, a service for which patients are “grateful,” the health system’s head of patient services claims.
- Hospitals can use the IRS Code 501(r) to improve patient financial engagement. In late 2014, the Internal Revenue Service (IRS) and the U.S. Treasury Department created four requirements that non-profit hospitals must meet to hold onto their tax-exempt status, as part of the ACA: to conduct a community health needs assessment; to establish a financial assistance policy for patients to identify criteria for assistance, policies for providing emergency care, and whether to provide free or discounted care; to limit charges for emergency or other medically necessary care to patients eligible for financial assistance; and, to stop “extraordinary” collection actions before determining if patients are eligible for financial assistance. This new regulation provides an incentive for nonprofit hospitals to engage with patients to drive greater health financial literacy.
Prospects for health care consumers and shopping. On the supply side of transparency, there’s a growing source of information for health consumers who want to get smart about shopping for health care services, including:
- Federal government-sponsored sites, such as SITE?
- State government-sponsored sources, such as gov, MyHealthCareOptions in Massachusetts and California Healthcare Performance Information System
- Insurance plan tools, like Aetna’s Member Payment Estimator, Humana’s health plan member tools, UnitedHealthCare’s myHealthcare Cost Estimator, among others
- Transparency sites and online health shopping marketplaces directed at consumers, such as ClearHealthCosts, Healthcare Blue Book, HealthinReach, HealthSparq, Medlio, the Wisconsin Hospital Association’s PricePoint, as well as previously-mentioned PokitDok and ZocDoc.
Even with the emergence of these websites and digital shopping tools, on the demand side, consumers themselves, with increasing financial skin in the health care game, must feel compelled and activated to engage with these resources. If people do not take on the new role of health shopper, many may continue to succumb to the short-term desire to self-ration health care to save money, leading to longer-term fiscal and physical woes.
THINK-Health and Health Populi blog