- A major problem still impacting consumers within the health insurance market is the potential for seeing high out-of-pocket costs. Many individuals are still underinsured despite the significant decrease in the uninsured rate around the country due to recent healthcare reforms. Many consumers have high-deductible health plans today, which may leave them with extensive medical bills.
Health plans vary in the amount of coverage for medical services they provide, but the results are clear that many consumers are still facing high out-of-pocket spending, according to The New York Times. For those who purchase health plans on the public health insurance exchange, bronze plans cover 60 percent of healthcare costs, silver plans handle 70 percent, and gold plans cover 80 percent.
Nearly all health plans have deductibles and consumers face more than merely paying their monthly premium. In 2016, about 30 percent of employees had purchased high-deductible health plans, according to a study from the Henry J. Kaiser Family Foundation. Additionally, more than 50 percent of employees had deductibles of at least $1,000 per year.
About one out of five employees in 2016 had an out-of-pocket maximum of $6,000 or more. Those who have plans from the exchanges also face an out-of-pocket maximum. This maximum is $6,850 for an individual and $13,700 for a family plan.
One study published in JAMA Oncology found that cancer patients who have Medicare coverage may also see high out-of-pocket costs. Medicare beneficiaries who were enrolled in the traditional fee-for-service coverage and lacked supplementary insurance faced an average annual out-of-pocket cost of $8,115.
“Having a cap on OOP costs could be very helpful for seniors and has been part of multiple reform proposals, including policy organizations such as the Kaiser Family Foundation as well as institutions such as our own school of public health,” study coauthor Amol K. Narang, MD, an Instructor of Radiation Oncology and Molecular Radiation Sciences at Johns Hopkins School of Medicine, said in a public statement.
Other types of public coverage programs seemed to reduce out-of-pocket costs more, the study finds. Medicaid beneficiaries receiving cancer treatment saw an average of $2,116 in out-of-pocket costs per year while those insured by the Veterans Health Administration saw average out-of-pocket costs hit $2,367.
Medicare beneficiaries covered under a health maintenance organization faced out-of-pocket costs of $5976 on average for cancer treatment and those with Medigap insurance had average copayments of $5670. Cancer patients without supplemental insurance faced out-of-pocket spending that equaled nearly one-quarter of household income.
“The oncology community needs to better understand those health services that drive out-of-pocket costs for cancer patients, which likely vary significantly by cancer type and likely by region as well,” Dr Narang continued. “We need to understand which of these services provide value to patients, and for those services that don’t, how to redesign care delivery to minimize such services while still ensuring high-quality care.”
What can public and private health payers do to help underinsured consumers who are facing high out-of-pocket costs? One solution is to provide tax credits of up to $5,000 for families facing high out-of-pocket costs or $2,500 for individuals, The New York Times reported. The tax credits could be applied to consumers whose medical out-of-pocket costs are more than 5 percent of their income.
RAND Corporation economists found that a cost-sharing tax credit would increase the number of insured Americans by an additional 9.6 million while reducing out-of-pocket spending for those already covered by private insurance.
Commercial payers can also assist consumers facing high out-of-pocket spending by improving price transparency and enabling their members to shop for healthcare services. Price transparency and consumer shopping platforms are expected to drive down healthcare costs.
With one survey showing that consumers on the exchanges have decreased the amount of medical care they sought, it is more imperative than ever before for payers to boost price transparency for those with high-deductible health plans or high out-of-pocket costs. Postponing primary care visits would only lead medical conditions to worsen with patients potentially ending up in more costly emergency rooms or hospital beds.
“Health plans are at a critical juncture, where they must improve upon their ability to communicate with members to increase satisfaction and remain viable in this era where their members have the ability to ‘shop’ for coverage,” HealthEdge CEO Steve Krupa told HealthPayerIntelligence.com previously.
Payers will need to share pricing information from their provider networks as well as ensure their members understand their premium costs, deductibles, and out-of-pocket maximums when purchasing a health plan. This will enable consumers to shop for medical services and potentially drive down their out-of-pocket costs.