Lessons in Health Insurance and Healthcare Consumerism
When the Affordable Care Act passed in 2010, it acted as a catalyst that initiated a radical transformation of the healthcare landscape. From encouraging healthcare-related organizations to embrace big data to triggering the rise of healthcare consumerism, the ACA’s influence is undeniable. Yet, as of 2014 data, according to the Commonwealth Fund, the United States still lags behind 10 other nations — Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom — when it comes to healthcare efficiency, equity and outcomes.
We’re making progress, certainly, but as the saying goes, there is no rose without thorns — and one of the thorniest issues faced by all healthcare consumers, providers and insurers is high-deductible health insurance policies. While the ACA’s mandates require full coverage of preventive services like checkups, health screenings and immunizations, regardless of deductibles, many are finding that low-premium, high-deductible policies fail to live up to expectations for affordability.
Let’s take a look at where we’ve been, where we’re at and what can be done to ensure that health insurance coverage becomes more than a box to be checked off and positively impacts patient outcomes.
Health Insurance Coverage Before the ACA
Prior to the ACA’s passage, healthcare consumers had few options when it came to health insurance. If it was offered, they could rely on employer-sponsored healthcare coverage — some good, some less so. Depending on age or income, they could qualify for Medicare or Medicaid. If those options weren’t on the table, they could opt for expensive individual, commercial plans — and hope that a pre-existing condition wouldn’t exclude them from coverage.
The number of uninsured Americans rose steadily between 2000 and 2010, due to a combination of factors. As health insurance costs rose, the number of employer-sponsored plans declined. The recession, and its corresponding job losses, aggravated the situation. And what about the consumers whose income was too high to qualify for Medicaid, but not high enough to swing enormous monthly premiums? Or those that were denied coverage due to pre-existing conditions? They fell through the cracks. In addition, there were millions of younger Americans and small business owners who chose not to pay for health insurance, prioritizing their finite dollars for other things, reasoning that their chances of getting sick were slim. As a result, the Census Bureau reported that 16.3 percent of the U.S. population — or 49.9 million people — were uninsured in 2010.
Health Insurance Coverage After the ACA
Though the ACA passed in 2010, it was not until 2014 that the law’s major insurance reforms took effect, including the Individual Mandate, where consumers had to carry health insurance coverage. Premium costs could no longer be calculated based on pre-existing conditions or health status. And since 50 percent of U.S. healthcare consumers have a condition that qualifies as pre-existing, this was a big deal.
The uninsured rate had seen a modest three percent decline over three years, thanks, in part, to a recovering economy. In 2014, however, the number of uninsured U.S. consumers went down by another 3.3 percent in just one year, according to Current Population Survey data released by the Census Bureau. Part of the drop can be attributed to the expansion of Medicaid eligibility, which varies from state to state. In addition, insurers now must allow young adults up to age 26 to remain on, or be added to, their parents’ health insurance plans, reducing the number of uninsured young adults. And with better coverage, comes improved outcomes — when that health insurance is used. Having access to health insurance coverage is not the same as having access to health care. An increasing pool of insured healthcare consumers, with a static or shrinking population of primary care physicians, makes it challenging to meet the health care needs of all with excellence.
There’s another problem: Despite having made some strides in reducing the number of uninsured Americans, we still have a way to go. Forty-eight percent of currently uninsured consumers report that affordability continues to be a problem. Moreover, whether due to cost, lack of experience in selecting health insurance coverage or a combination of the two, the number of underinsured Americans— those consumers who have been insured all year, but have out-of-pocket expenses equal to 10 percent or more of income (5 percent or more for low-income policy-holders) or deductibles equal to 5 percent or more of their income — has risen.
The latest information about health insurance coverage for 2016 finds that both employer policies and those found on the health insurance marketplaces have higher deductibles than in previous years. CBS News reports that deductibles for employer-sponsored health insurance plans have risen 67 percent since 2010, and deductibles for policies available on the marketplace have climbed as well. According to research conducted by HealthPocket, the average individual deductible for a bronze plan exceeds $5,700 for 2016. The idea, it seems, is that consumers will respond to having greater financial liability by shopping around for the best price and engaging in healthier behaviors to reduce the costs they incur.
Good in theory, perhaps, but we’re still a long way from achieving that goal.
Benjamin Handel, assistant professor of economics at the University of California, Berkeley, told CBS, “When consumers have more cost sharing, do they spend less? We're finding yes.” He cautions, “Then you have to ask how is spending going down: Is it because consumers are acting in a sophisticated manner and shopping for providers and prices and reducing quantities of wasteful care, or are they viewing this as a fairly blunt instrument?”
Findings by Handel and other researchers, suggest consumers see high deductibles as an axe, and they chop away at healthcare usage indiscriminately, foregoing covered preventive care or opting not to fill prescriptions, which often leads to worsening health conditions.
Lessons in Healthcare Consumerism
We have to remember that healthcare consumerism is as new to consumers as it is to healthcare providers and insurers. Even the savviest shopper in the retail world would have trouble navigating the complexities of healthcare and health insurance. So while many consumers would like to shop for the best quality at the best price for their healthcare needs, they aren’t equipped to do so for several reasons:
- Lack of information. As CBS News points out, “The health-care marketplace is notoriously opaque.” Because of this lack of transparency, it’s difficult for consumers to find relevant, accurate information on which to make informed decisions. Last year, the HFMA called for greater transparency, rightly noting that the lack of transparency hinders healthcare consumerism. Even when pricing estimates are available, they can vary so much that consumers would be hard-pressed to choose a provider to fit their unique needs. To highlight the problem, the article noted that a request by the U.S. Government Accountability Office for 39 providers to provide a price estimate for full knee replacement surgery resulted in estimates ranging from $33,000 to $101,000.
- Lack of time. Given plenty of time, consumers could, of course, shop around for the best possible care and the best possible price. What about when they experience a healthcare emergency? Healthcare consumers that are newly diagnosed with cancer, in need of an emergency appendectomy or experiencing some other sudden health issue must make decisions quickly, usually under great stress. Those aren’t situations that lend themselves to extensive research or bargain hunting.
- Fixation on immediate costs. Unfortunately, consumers who are ill-prepared to ‘shop’ effectively for insurance often gravitate towards low monthly premiums, since they are more familiar and comfortable at gauging how another payment fits into their budget than estimating what their annual out-of-pocket expenses for healthcare might be. The development of tools, like healthcare usage calculators, can help consumers make more informed decisions that are based on age, health conditions and other factors over the long term, so that they can choose the coverage that best suits their annual needs.
- Lack of motivation. Healthcare consumers have unique attitudes and expectations that also play a role in motivating them to identify the right health insurance policy for their needs. To encourage all healthcare consumers to make better decisions — in choosing a policy or in managing their own health proactively to reduce policy usage — insurers and providers need to adapt their messaging to suit these different psychographic segments and motivate positive behaviors.
The good news is that we’re on the right track. New tools are being developed to help healthcare consumers make smarter decisions when it comes to choosing the right care. And while the cost issue still needs to be addressed, the improved accessibility to wellness care, health screenings and immunizations can help to drive improved outcomes.
How are you working to meet the demands of healthcare consumerism?