Over the past several years, experts have continually raised alarms about the rising cost of health care and coverage, trying to highlight to consumers and policymakers alike just how expensive comprehensive care has become. To that end, it is also increasingly important for people to do more to educate themselves about their options for finding the right insurance for their needs, and tapping the proper avenues for comprehensive care.
However, one of the biggest problems typically encountered is that even when consumers have insurance coverage, they often do not understand the ins and outs of those policies, and that may lead them to make missteps in seeking treatment. The third annual HSA Bank Health & Wealth Index recently found it was uncommon for people to know what their out-of-pocket maximums were, and that was particularly true of Generation Z, of which only 9% were confident in that figure. Furthermore, 42% of respondents, regardless of age, didn't know if their plans were eligible for a health savings account.
Perhaps as a consequence of this uncertainty, just 21% of those polled said they have made changes to their financial situation based on their health care needs, and only about 1 in 7 say they've made it a habit to put money aside specifically for future health care expenditures. In fact, more than twice as many (37%) say they rarely do so. Meanwhile, 83% of seniors participating in the survey say they're worried about current or future medical expenses.
What's the result?
With so much uncertainty and lack of confidence around being able to deal with the cost of care, especially given the broader understanding about just how expensive treatment has become, people may be putting themselves in worse situations. For instance, more than 2 in every 5 people say they have put off seeking medical attention because they were concerned with the high cost of their deductibles and out-of-pocket expenses, according to health insurance CEO Tony Miller, writing for Benefits Pro. People are also more apt to choose lower-cost pharmacies and pay more than $500 per year for their deductibles (which isn't on the high end of what's become common in recent years).
However, when aware of the exact costs associated with their coverage and care, people tended to choose the best option 40% more often than people who were more worried about their deductibles, Miller noted. Altogether, data suggests that if people are generally more aware of costs associated with care, they make more informed choices that can save them as much as 20% on their health care expenditures in the long run.
Crunching the numbers
The question, then, is how much more gets spent when people don't really understand their full range of care and coverage options, and what that means for their finances. A 2016 study published in the Journal of the American Medical Association showed that average outpatient spending for people using a pricing transparency tool was slightly more than $2,000 the first year it was introduced. That number rose to more than $2,200 the year after. Interestingly, those numbers were both more or less in line (within $100) of the averages seen in control groups.
The reason why seems to be relatively simple: In the first year the tool was available, only 1 in 10 employees even used it once, and fewer used it multiple times. The researchers noted that other studies of medical pricing transparency have shown similar adoption rates among consumers, perhaps indicating an enthusiasm gap. However, it's also worth nothing that data suggested that even if people did use the tool, the actual opportunity to save money on so-called "shoppable" treatments was limited because of the way insurance deductibles affected actual cost to the insured. In fact, it was considered possible that consumers equated higher prices with better care, even if that wasn't necessarily the case.
Getting everyone onboard
The question many care providers and insurers may have is what they can do to make sure people are better engaged with more aspects of their care on an ongoing basis. Some providers, the Healthcare Information and Management Systems Society found, have successfully leveraged technology, such as touchpads and smartphones. Apps for these devices can make people generally more aware of and engaged with their treatment. Especially in a time when telehealth is becoming increasingly important amid the novel coronavirus pandemic, the ability to make better choices with a few clicks is likely to be critical to success in fostering greater engagement.
Now is the time for care providers and insurers alike to look at their options and talk to patients and policyholders to determine the best way forward. The more all involved can do to make sure there's a better understanding around what options might be available and what they cost, the more likely people will be to make the most informed decisions they can.