Providers Lose When Healthcare Consumers Can’t Find the Right Coverage
Since 2011, the number of Americans enrolled in high deductible health plans (HDHP) has grown at a rate of 15 percent a year. What is behind the seeming popularity of HDHPs? Two major factors are in play: consumer expectations and employer frustrations. Today’s ‘patients’ are not like those of the past. Under pressure to accept more responsibility for the costs of their own health insurance and healthcare, patients are increasingly price sensitive, shopping around for care and coverage that fit their budget. The pressure isn’t just on consumers purchasing plans through Federal or State health insurance marketplaces, either.
An annual survey of employer health benefits by the Kaiser Family Foundation reveals that the average annual out-of-pocket costs per employee catapulted 230 percent in the last decade. So, fueled by burgeoning healthcare consumerism, the HDHP trend has also received a boost from employers who are selecting HDHP plans in reaction to rising health insurance costs or to meet ACA minimum requirements and avoid the ‘Cadillac’ tax. As a result, the National Center for Health Statistics reports that 36 percent of Americans under the age of 65 depend on a HDHP.
Big Challenges of High Deductible Health Plans
Not surprisingly, many hospitals and other healthcare providers express concern that the high deductibles and limited coverage of low-cost insurance will lead to both declining health outcomes among consumers and subsequent rise in the amount of bad debt that providers must absorb. A Health Affairs blog post late last year expanded on these concerns, noting that “…plans with significant cost-sharing can curb utilization of medical services, since patients may think twice about spending money on care deemed avoidable, deferrable, or unnecessary.”
In fact, one study found that one in five surveyed healthcare consumers admitted to avoiding preventive care due to cost. The Health Affairs post notes, “This behavior may well hinder early diagnosis and result in increased cost of chronic care management, according to a recent PwC report.”
Supporting these findings, the 2015 c2b Consumer Diagnostic, a national study on healthcare consumer attitudes and behaviors, also found that many healthcare consumers were struggling with costs, and certain psychographic segments were having a more challenging time than others:
Note: each Psychographic Segment is assigned a letter a-e. If a percentage in the table has a letter(s) under it, that percentage is statistically greater (at 95% confidence) than the percentage listed under the corresponding letter. For example, there is a ‘b’ under the 27% listed for Balance Seekers in the first statement; this means that the 27% of Balance Seekers who Strongly Agreed/Agreed with that statement is statistically greater than the 15% for Willful Endurers.
Willful Endurers appear to be the least concerned with the costs of healthcare. This segment is the least engaged with health & wellness, and tends to address a medical issue when absolutely necessary. They live in the moment and do not generally concern themselves with long term planning. That said, if they do face healthcare bills, they’re also the most likely to skip payment to providers.
When asked to consider a situation where the respondent is facing financial issues or having a hard time paying bills (e.g., rent, car payment, etc.), Willful Endurers represent the highest risk:
Each Psychographic Segment has its own motivations and priorities. How one communicates with each segment should vary based on these personality traits. While Willful Endurers are a challenging segment to break of their habits, c2b solutions has demonstrated that they can be influenced toward healthy behaviors.
Importantly, healthcare consumers may be avoiding preventive care unnecessarily because they do not understand how health insurance works. We noted in a past blog post that a KHN survey of outreach programs for the uninsured, under-insured and newly insured found that 75 percent of consumers lack a solid grasp on basic insurance concepts like how deductibles work or what a provider network is. For example, many high deductible plans cover preventive screenings and routine wellness visits, but a survey of patients in California found that most did not realize that under their plans, they were entitled to preventive care for little or no out-of-pocket spending.
What about healthcare consumers who already have a chronic health condition to manage? For them, high deductible health plans are especially problematic. A comparative study of patients with of HDHPs tied to health savings accounts versus patients in PPOs found that medication adherence among HDHP patients with hypertension, high cholesterol, diabetes and depression was significantly lower after just one year. As we’ve seen time and again, patients who fail to adhere to care plans see a decline in health that leads to increased hospitalizations and higher out-of-pocket expenses. It’s a lose-lose situation for both patients and healthcare providers.
Confusion Over Moving from Marketplace to Medicaid Coverage
High deductible health plans are not the only challenge for healthcare consumers. The passage of the ACA allowed states to expand Medicaid coverage to adults with incomes up to 138 percent of the federal poverty level, but not all states have done so. KHN reports that thirty states have expanded Medicaid coverage already and five other states are likely to do so in the coming year. For people who are teetering on the federal poverty threshold, understanding how Medicaid works with marketplace health insurance plans is a necessity.
- Income changes can require that consumers move from marketplace plans to Medicaid or vice versa. What happens to deductibles and out-of-pocket maximums that have already been paid? According to Sarah Lueck, senior policy analyst at the Center on Budget and Policy Priorities, as long as a consumer returns to the same marketplace plan, any payments that have been made will still count towards the annual limits. There is no requirement for insurers to make such an accommodation for consumers who switch to a different plan, but they have that option.
- In states that expand Medicaid coverage mid-year, will consumers already insured through the marketplace be penalized for not switching to Medicaid if they are eligible? The switch won’t happen automatically, but consumers won’t be hit by a tax bill for subsidies they receive towards marketplace coverage. Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, says that a consumer’s prior eligibility for subsidies will satisfy IRS requirements for the current year. Similarly, if end-of-the-year reconciliation shows that some consumers should have been enrolled in Medicaid rather than a marketplace plan, they won’t be required to repay subsidies.
All of the potential confusion over health insurance — whether through employer-offered plans, HDHPs from the health insurance marketplace or Medicare/Medicaid plans — signals the need for healthcare providers to engage with consumers to improve health insurance literacy.
How Healthcare Providers Can Overcome HDHP Obstacles
We often talk about patient education and patient engagement when it comes to helping patients manage their own healthcare. With dual threats of growing bad debt and penalties for preventable readmissions, hospitals should consider expanding education efforts to help patients understand health insurance. As Medicaid Advisory Group CEO Ginalisa Monterroso says, “Hospitals are losing money. Everybody's walking in with the wrong insurance. Everybody's walking in with the wrong drug coverage. What the executives are missing internally is that education component.”
Monterroso recommends that hospitals initiate a screening system to identify patients with problematic insurance. Such information could then be used to target patients with educational materials to help them understand what is offered by different types of insurance coverage. Monterroso suggests this approach can generate several advantages:
- By providing helpful information, hospitals increase patient loyalty, especially in an era where healthcare providers are under pressure to compete for consumers.
- By helping patients select more appropriate insurance, hospitals reduce the risk of having open receivables.
- By educating patients on finding the right health coverage for their individual needs, patients are more likely to keep up with routine health visits and comply with medication treatment plans.
- By taking the pressure of physicians and nurses to consider costs before care, hospitals empower them to deliver the best care possible.
It must be noted that education does not just entail the provision of information. The information must be offered in a way that resonates with the healthcare consumer and motivates her toward positive behaviors. “One-size-fits-all” messaging will be of limited effectiveness, because all healthcare consumers do not think and act alike. Psychographic insights can help craft messaging that is more readily understood and activates desired behaviors. Better informed patients make better choices, leading to better health outcomes and less financial risk for hospitals.
Given all of these advantages, it is in the best interest of hospitals and other healthcare providers — along with insurers — to embrace healthcare consumerism and give consumers the tools needed to make informed decisions when choosing health insurance. But it’s not as simple as creating a brochure about what to look for in an insurance plan. Hospitals need to understand the unique behavioral and motivational aspects of consumers that influence their responses, or lack of responses, to outreach efforts. By leveraging psychographic segmentation, hospitals gain insights into the attitudes that influence consumer behavior, allowing them to fine-tune their communications and develop decision-making tools that are more effective in reaching and activating consumers who are considering their health insurance options.
High deductible health plans have a place in our healthcare system, but it’s important that consumers have sufficient knowledge to determine whether HDHP is right for them — and it shouldn’t be a decision based on price alone. Don’t miss out on opportunities to provide the guidance they need.