Hospitals, and especially nonprofit hospitals, have a duty of care to their communities, but their ability to provide that care hinges on their ability to generate revenue – chiefly in the form of patient and insurer payments.
But that model is growing more difficult as the commercially insured population ages into Medicare and those with employer-sponsored insurance increasingly struggle to afford their out-of-pocket responsibility. In 2022, per Gallup, 38 percent of Americans (a record high) deferred healthcare because of cost; since then, inflation has only continued its upward pressure on prices. Meanwhile, pandemic-era payments to hospitals are ending, and the patients who are coming in are, anecdotally, presenting with higher-acuity conditions and thus have more complex and demanding care needs.
This state of affairs hurts everyone. It also illustrates the complex, interconnected nature of health and healthcare in the US: hospitals exist in an ecosystem with patients, employers, private insurers, and government-sponsored programs. To tackle the issue of patients scaling back care because of cost concerns, we need solutions that address care costs from multiple angles. Here are three trends that should inform the development of such solutions.
1. Benefits unbundling
Employer health insurance costs have been on the rise for years. Ensuring employees choose the right benefits package can save employers (especially large employers) significant money, hence the rise of decision support software like ALEX and Plansource.
But as prices continue to climb, many employers are looking for additional ways to save. Enter benefits unbundling, in which employers work with brokers to, essentially, customize the benefits plans they offer employees rather than offering a payer’s off-the-shelf package.
Unbundling tends to be incredibly time- and labor-intensive for employers and brokers, but can yield substantial cost savings. Naturally, the practice is less popular with insurance providers. But they may be on the losing end of this particular issue, as price transparency regulations (and enforcement of those regulations) impact more and more players in the healthcare industry.
This brings me to the second trend.
2. Cost transparency
In January 2021, the Hospital Price Transparency rule took effect, requiring US hospitals to publish prices for more than 300 services, per provider plan, in both machine-readable and consumer-friendly formats. As of early 2023, compliance was lagging, but that improved somewhat recently. And increased enforcement activity this year could further change that.
What’s more, most group health plans were required to publish prices as of last year, and they have been much quicker to comply (likely because of available resources relative to hospitals).
Price transparency hasn’t quite reached consumers (including employers) yet, but the groundwork is being laid. As more providers and payers come into compliance with transparency rules, patients will find it easier to get cost estimates and make care decisions in part based on anticipated costs and quality outcomes.
Still, that use case, for some, remains in the future. We also need solutions today that make it possible for patients to pay for the care they need when they need it. This brings me to the third trend.
3. Payment flexibility
Last year may have seen more care deferred than ever before, but Americans have long struggled to pay for healthcare. And a recent report from the CFPB warned that credit-based “solutions” with high interest and confusing terms only increase patients’ medical debt load.
Health systems have the added burden of trying to collect revenue and acting as a major employer responsible for the health benefits of their staff. Fortunately, there are several options available to help make care more affordable.
The best-known are HSAs and FSAs, tax-advantaged accounts that let employees set aside money specifically for health-related costs. Both can empower employees to pay for care, especially when coupled with an employer contribution to ensure they have dollars available on day one of their health plan. But these accounts are limited in that they’re only as useful as the amount of money employees have proactively elected to save and already funneled to the account. Once that money is spent, it’s gone until new deposits are made.
For the 58 percent of Americans living paycheck to paycheck, HSAs and FSAs may not provide much relief.
One alternative tool to address that problem is the health reimbursement account (HRA), which lets employers pay employee’s out-of-pocket health costs directly, with some tax advantages. However, HRAs have been critiqued for complex rules that make them difficult to implement and administer.
A more recent (and promising) addition to the mix is the health payment account (HPA), which makes funds available to employees via a small line of credit for care expenses, then enables them to pay the money back in installments. Crucially, HPAs do not charge interest or fees. Instead, they’re sponsored by employers, care providers, and / or payers who benefit when employees have access to care.
There’s no “best” solution here; the key is to make multiple options available to employees so that they can leverage the resources that best enable them to seek care when they need it.
Better access to healthcare must be a collective effort
In the United States, access to healthcare is inextricably tied to access to the funds to pay for healthcare. Today, rising costs across the economy mean that access is diminishing, which can have ripple effects through communities, impacting the individuals, hospital systems, and employers that make up those communities.
The best solutions to the issue of access will be collaborative and multifaceted:
- Employers offering varied coverage packages and decision support tools;
- Brokers empowered by transparent pricing to counsel employers;
- Health systems that can fund services because they can depend on getting paid for services they provide;
…and more.
As we look for ways to meet the latent demand from those who delayed care over the last several years, we must bring as many parties to the table as possible to make care accessible to more people.
Photo: adventtr, Getty Images
