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Fixing health care costs in Indiana should be top of mind for all Hoosiers. The Wall Street Journal spotlighted this critical issue, citing a Rand Corp. study that ranked Indiana as the fifth highest in hospital costs in the United States, while Hoosier physician reimbursement tanked at fourth lowest.
Indiana lawmakers addressed concerns in a letter to hospitals, physicians and insurance carriers, encouraging collaboration to reduce the skyrocketing cost of health care—which didn’t happen. Without a viable plan, the Legislature pledged to take steps this year to reduce health care costs—but at whose expense?
The rise of high-deductible plans created an environment in which patients are the majority payer for many health care organizations. An analysis from the Kaiser Family Foundation reports that deductibles increased more than 150% in just 10 years. It’s also taking patients longer to meet their deductibles, from February in 2006 to May in 2019, meaning more out-of-pocket expenses for patients before they benefit from the financial protections of their health plan.
Furthermore, the average patient deductible now exceeds the average spent on health care. According to Crowe, the bulk of bad debt was once attributed to uninsured patients; now it’s tied to insured patients with balances, rising from 11.1% in 2018 to 57.6% in 2021. Insurance carriers are responsible for negotiating high-deductible health plans with employers, causing a fragmented patient financial experience while reducing physician reimbursement.
According to Becker’s Payer Issues, insurance carriers are seeing record profits, including UnitedHealth, which reported a fourth consecutive quarter of double-digit growth, totaling $82.8 billion. Alternatively, physicians are met with deep cuts in Medicare reimbursements, rising inflation and increasing bad debt from unpaid medical bills.
Health systems in Indiana are experiencing huge deficits and additional costs and chaos associated with implementing stringent regulations and changes in the payer-physician relationship. Additionally, beginning this July, the credit bureaus will no longer include medical debt in collections for amounts of $500 or less. This move offers relief for patients; however, it puts further risk on providers forced to collect payment for services directly from patients.
Why is the risk of collecting on high-deductible plans sitting squarely on the shoulders of hospitals and physicians? All states lacking in health care reimbursement will continue to see problems around access to care, marketplace competition, and recruitment and retention efforts. It’s time to consider a new approach to improve the way health care works for everyone.
There is a solution that keeps patients at the forefront of their health care journey while removing hospitals and physicians from the collection equation and allowing them to focus on providing quality, accessible and equitable health care.
Insurance carriers should be the initial payer of health care, reimbursing physicians for their services, then collecting the remainder of deductible or co-insurance directly from their customer (the patient). This remedy significantly reduces overhead costs for physicians without increasing costs for patients or the state, while also laying out a more equitable framework for hospitals, physician practices and patients.
Ultimately, cost is only one factor to consider when addressing the problem of poor health. Indiana must also recruit and retain quality clinicians to care for all Hoosiers. States that do not view physicians as economic development drivers are shortsighted, as employers need quality health care to attract talent.
Eliminating the risk and cost of collecting patient deductibles for our physicians is a solution that enables our health care systems to heal and gives insurance carriers a chance to put their record-breaking profits to good use.•
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Isenberg is executive vice president of health care advocacy at Zotec Partners.
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