November 29, 2006
What will the effects of consumerism be like for tomorrow's healthcare provider? Much will depend on the level of insurance carried by these consumers, as noted in a recent educational report sponsored by Cerner. Consider just a few of the trends particularly pertinent in relation to each key group: the employed and insured, uninsured, and underinsured.
Employed and Insured
Payment processes may undergo significant change. Will health savings accounts take off as the current administration hopes? While many healthcare providers are not seeing a proliferation of HSAs in their local markets yet, it's still too early to tell whether they will become more widely adopted. There is concern, though, that HSAs may be viable for only higher income employees who can afford them.
Also, because American consumers tend to view health care as an entitlement rather than a privilege, they don't necessarily expect to pay for it in the same way that they would for other commodities they purchase. An individual who regularly pays several hundred dollars per month for cell phones or cable television may balk at the idea of promptly paying a healthcare bill of similar amount.
Since it is more difficult to collect from individuals than traditional payers, many healthcare financial executives feel that hospitals will end up having to absorb an increasing burden of the costs of care should insurers and employers shift greater responsibility for payment to employees through HSAs and high-deductible plans.
Uninsured
Service challenges are increasing. The gap is widening between the haves and have-nots in society today just as hospital bad debt outpaces tax support in many communities. U.S. Census data show continued increases in the number of uninsured. To give some perspective, the number of uninsured Americans in 2005--46.6 million people, or 15.9 percent of the U.S. population--exceeded the cumulative population of 24 states plus the District of Columbia, according to Families USA, a consumer organization.
Going without insurance isn't a temporary situation for many. During the entire four-year period from 2001 through 2004, 6.6 percent of the American population under age 65 (16.9 million people) were uninsured, according to a statistical brief from the Agency for Healthcare Research and Quality. For the last two years of that period, 31.2 percent of the population was uninsured for at least one month, and 10.3 percent was uninsured the entire two years.
Added to this challenge is that financial pressures on hospitals that care for the uninsured are mounting. Almost every state faces pressure for Medicaid funding cuts even as these costs climb. Meanwhile, many hospitals have liberalized their charity care practices in the wake of recent lawsuits alleging overly aggressive billing practices even as bad debt for uninsured consumers is rising.
Underinsured
As employee copays and deductibles increase to fend off rising healthcare costs, the line blurs between uninsured and underinsured. Although it is generally known that high medical costs can have serious financial consequences for uninsured people, awareness isn't as strong that high out-of-pocket medical costs can have serious financial consequences for insured families as well.
About 20 million American families reported problems paying medical bills in 2003, according to the Center for Studying Health System Change. Of these, two-thirds were families that had health insurance coverage. When faced with the prospect of high premiums and deductibles, some employees are actually choosing to forgo insurance. They would rather assume the risk of hospitalization knowing that they will qualify for charity care.
SOURCE: "Examining the Implications of Consumer-Directed Health Care," an HFMA White Paper sponsored by Cerner
Additional Resources
- Healthcare Financial Management (hfm) magazine articles (On-line access available to HFMA members only. Not a member? Join now!)
- Education
If you have questions or comments about HFMA Wants You to Know, contact editor Maxine Harrison.
HFMA Wants You to Know ISSN: 1540-0697. Volume V, Issue 25. Copyright 2006, Healthcare Financial Management Association. All rights reserved