Insured Critical Illness Beneficiaries Face High Treatment Costs

October 22, 2018 - Health plan members with critical illnesses face high treatment costs and other financial issues even with comprehensive health insurance, said a new survey conducted by the Harvard T. Chan School of Public Health, New York Times, and Commonwealth Fund.

Nine out of ten commercially insured beneficiaries with illnesses like cancer or immune deficiency diseases have health insurance, the survey found, but a large fraction of beneficiaries struggle to pay for medical services and medications.

Thirty-four percent of critically ill health plan members said they struggle to pay their medical bills and 29 percent have serious financial issues when purchasing prescription drugs. Additionally, 27 percent of critical illness beneficiaries said they have affordability issues when paying for emergency room services.

The researchers suggested that even critical illness beneficiaries with insurance may need more financial protections in place to avoid defaulting on substantial medical bills. The high costs of cancer care may create other destabilizing effects on an individual’s life.

“These unpaid bills have a significant impact,” the team said.

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“Thirty-seven percent [of respondents] report that they used up all or most of their savings as a result of the cost of their medical condition, and 23 percent report being unable to pay for basic necessities like food, heat, or housing. For many of these individuals the problem is not that they have no health insurance coverage, but that their coverage is inadequate to deal with a serious illness.”

Current insurance policies for members with cancer and other serious illnesses may not effectively address the high costs these patients usually incur during treatment.

Cost of prescription drugs is an immense expense for patients because they are used by a majority of critical illness patients and are usually not effectively covered by insurance, the survey found.

Fifty-seven percent of critical illness beneficiaries take five or more prescription medications, and 11 percent have one medication that costs more than $50,000 a year. Forty-four percent of members with a medication over $50,000 per year said they struggled to afford the medication even with a health plan.

Beneficiaries with critical illnesses also noted that their health plan either didn’t communicate their benefits properly or only partially covered hospitalization services.

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Forty-seven percent of critical illness patients with insurance said they received a bill for an overnight hospitalization that was not fully covered by their health plan. Many patients also receive hospital services from out-of-network providers. The team said that out-of-network hospital billings are applicable to 61 percent of critical illness beneficiaries.

Members with serious illnesses may struggle to fully comprehend their benefits package. Thirty-one percent of survey respondents said they were unsure what services their critical illness insurance covered or did not cover.

Access to health insurance is not a major challenge for critical illness patients, but rather the lack of benefits they may receive from less comprehensive health plans, the team found.

Twenty-six percent of individuals surveyed with critical illnesses were denied access to medical treatments because they didn’t have health insurance or because their benefits did not cover the treatment.

Beneficiaries with lower incomes experienced this challenge at higher rates than high-income members. Thirty-five percent of members that earned a household income of $25,000 or less each year were denied treatment because of their benefit package, compared to only 18 percent who made more than $25,000 a year.

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The team concluded that critical illness beneficiaries are likely to face several affordability challenges that private or public insurance may not address. Most individuals don’t expect to contract a severe medical condition like cancer, which is likely to contribute to critical illness cost concerns.   

“It is very unlikely that these seriously ill people imagined this high amount of healthcare expenditures in the years ahead at the time they bought their health insurance coverage or were aware of the level of coverage that Medicare would or would not give them if they were seriously ill,” the team stated.

The commercial payer sector and employer-sponsored plans already have tactics in place to improve cancer care benefits such as enhancing member engagement and benefit education, creating clinical coordination teams, and specializing benefits to specific care needs.

However, payers in both the public and private sector may be subject to significant reforms or may need to re-prioritize critical illness benefit design to reduce care complications and financial stressors for beneficiaries.

“Taken together, the survey shows that if we are to improve the healthcare and health insurance systems in the future for those who are seriously ill, we have to look more carefully at a set of less visible issues that really impact the outcome of their life experiences when seriously ill,” the researchers said.

“Often the broad discussions about health reform miss these critical issues that importantly impact those with a serious illness,” they concluded.