Accessing and paying for health care was a complicated enough process before the COVID-19 coronavirus outbreak. In response to the pandemic, waves of legislation and policy updates by insurers and health care systems have changed what is covered and how from one day to the next, further adding to the confusion for patients.
In the aftermath of the pandemic, consumers who had thought they would be shielded from the costs for testing and treatment might find themselves with unexpected bills for related services. Others will know the bills are coming but simply have no way to pay for them, as furloughs and job cuts take their toll on household budgets.
Add to that the financial impact of treating the virus on health care systems, which have had to forgo budgeted revenues from elective procedures, and what will we be left with? A surge in medical bill collections, according to a recent report from Aite Group.
“The COVID-19 pandemic has dealt a financial blow to for-profit health systems that are diverting resources away from elective surgeries that bring in revenue and toward treating patients who have tested positive for COVID-19 and need hospitalization,” says Inci Kaya, senior analyst at Aite Group. “Layoffs and health system closures are imminent, at the worst possible time, so collecting on medical bills can help health systems shore up their finances.”
Paying for health care expenses has long been a top concern for many Americans. And as more employers have shifted costs onto employees through increased deductibles and higher out-of-pocket limits, the result is greater medical debt. According to Aite, the number of consumers with medical debt grew from 44% in 2009 to 61% in 2020, and that rate is expected to increase in the aftermath of COVID. By the end of 2020, consumers will have racked up an estimated $115 billion in outstanding medical debt.
“High-deductible health plans’ popularity, while undeniable, has an impact on medical debt Collections,” the report’s authors note. “This factor may well be compounded if the Affordable Care Act coverages offered to the public are rolled back, or if Medicaid expansions are not adopted across more states, giving patients some form of a financial cushion against medical bills that may cause hardship.”
How do consumers plan to pay off their bills? According to Aite, half of Americans likely to take a 401(k) withdrawal, with millennials slightly more likely to take that step–52 percent would consider the option compared to 49 percent of Gen Xers and 48 percent of boomers.
Aite notes that GoFundMe and medical crowdsourcing campaigns will also continue to see an uptick, especially as more consumers deal with the loss of a job and related health care benefits.
Let’s make a deal
In addressing the increased financial stress on both health care providers and their patents, the report’s authors offer up a list of solutions that could help both parties, including improved payment portals and greater use of transparency services and cost estimation tools, and improved explanation of benefit statements.
“Health plans are slow to communicate with patients at or even before the time of care delivery and provide them an estimate on the cost of services. Having this knowledge upfront eliminates the element of surprise and the frustration for patients in the weeks following care when they receive bills—opening the doors instead for a constructive conversation about arranging for payment plans as needed.”
Speaking of health plans, the report also addresses the role of health insurers in the medical billing equation, offering up some recommendations for mitigating the risk of expensive medical bills on consumers. These include:
- Ensuring more accurate and up-to-date information on in-network providers
- Providing price transparency tools and cost calculators
- Offering recommendations for alternative lower cost/higher value services
- Encouraging preventive wellness measures
Overall, we can expect the change in health care utilization dynamics created by the coronavirus pandemic to hasten adoption of many of the consumer-driven health care reforms already at play. In addition to adapting to these pressures, the health insurance industry must also plan for further fallout from the pandemic.
“At a macro level, health plans must consider and plan for some form of a public health plan or Medicare for All option to combat medical-bill-related problems,” the report suggests. “While this is not a certainty, COVID-19, an ensuing recession, and presidential elections on the horizon are a call to action for health plans to review their business models, go to market, and make any major pivot decisions at a 30,000-foot view.”