The authors find that the total cost sharing per inpatient hospitalization increased 37% between 2009 ($738) and 2013 (1,013). Much of the increase in the average cost of hospitalizations was due to higher amounts applied to deductibles (86% increase during these years) and by increases in coinsurance (33% increase during these years). The growth in cost sharing was lower in individual-market and consumer-directed health plans, though the absolute out-of-pocket costs were markedly higher in individual plans ($1,875 in 2013) than for group plans ($997 in 2013). Moreover, the regional variation in cost sharing per hospitalization is striking, with New York and Massachusetts being among the low end of the spectrum, North Carolina, Texas, and Alaska being among the highest end ($>1200), much of the West and the South being the next highest ($1000-1199), and much of the Midwest and Northeast falling next lowest ($800-999). This regional variation is consistent when evaluating the price of doctor’s visits and various different medical procedures.
There are a number of challenges here. First, the authors cite a finding that only a small minority of individuals (11%) are able to correctly estimate their financial responsibility in the event of a hospitalization (and only 14% correctly answered multiple-choice questions about their deductibles, copayments, coinsurance, and out-of-pocket maximums) even when given information about admission and plan benefits. That is, most Americans, when given information about health plans, are unable to make sense of the benefits that they obtain and the responsibility with which they are still left when utilizing their benefits. In a sense, given the complexity of plans, it is not terribly surprising (after all, one might reasonably think that after an out-of-pocket maximum is met, one needn't still face ER copayments, though I recently learned the hard way that this is not the case).
Despite not being surprising, it is a big problem, because there is clearly a normative desirability that one be able to make informed decisions about their healthcare, both with respect to selecting insurance plans from a (potentially limited) menu of options -- that is, one may choose to have a higher premium but lower deductible and out-of-pocket maximum versus lower up-front costs but higher cost-sharing in the event that care is utilized -- and with respect to determining the value of seeking emergency room treatment versus postponing treatment. When I was healthier, I made calculated judgments that keeping money in my pocket on a monthly basis was preferable. I now happily (okay, maybe not happily) pay a higher premium so as not to wince over coinsurance when my doctor adds extra labs and so as not to think twice about going to the doctor or for other treatments. It is an informed decision that I now make. Some conditions simply must be treated in an emergent manner. One does not simply postpone medical treatment of appendicitis, let alone myocardial infarction. However, some conditions might be less severe and might resolve on their own or be able to be treated through urgent care. Being able to understand clearly the (literal) costs and benefits associated with using one’s health insurance is essential to making informed decisions about one’s medical care given the stresses that medical debt can pose.
The additional challenge is that of selection into a hospitalization, the financial effects of which are being estimated. That is, the study does not include those gauge correctly that they cannot afford the costs associated with obtaining medical care and thus do not seek hospitalization for their illnesses. Those most burdened by out-of-pocket medical costs are also those for whom the associated additional costs are most likely to pose the greatest challenges – for example, the loss of income associated with taking off several hours (let alone days) from work, particularly if working on an hourly basis. If people were to use their medical benefits purely with regard to medical necessity as opposed to delaying needed care in order to curb out-of-pocket costs, we would almost assuredly see that the out-of-pocket costs are higher than those estimated based on these hospitalizations, and that this increase over time would be more marked than that estimated given peoples’ rising deductibles and hesitation about obtaining needed care.
Indeed, according to the Commonwealth Fund, compared with those who are insured all year and not underinsured, those who are insured all year but underinsured are more than twice as likely to not go to a doctor regarding a medical problem, more than twice as likely not to fill a prescription, twice as likely to skip a recommended test or treatment or other follow-up care, and more than twice as likely to skip making an appointment with a specialist when it was recommended that one be consulted with. The extensive selection out of outpatient medical treatment even among those carrying insurance suggests at least as great a selection problem with respect to inpatient care, and thus potentially an even greater problem on our hands.
Like many policy problems, there is an important racial component to these challenges, with minorities more likely to have chronic medical problems and for those conditions not to be managed well. For example, non-Hispanic blacks are 40% more likely than non-Hispanic whites to have high blood pressure and are less likely to manage the condition; the rate of diagnosed diabetes is 77% higher among blacks, 66% higher among Hispanics, and 18% higher among Asians than among whites; and blacks and Hispanics are more likely than whites to be obese. Such prevalence of chronic medical conditions raises the probability of requiring hospitalization (if the individual is able to access care), with healthcare utilization disproportionately used by those with multiple chronic conditions (a study of hospitalizations in 2009 revealed that 39% of inpatient discharges were of patients with 2-3 chronic conditions and 33% had 4 or more chronic conditions). Such hospitalizations can then produce these financial strains to which the authors point in evaluating hospitalizations (some of which were tied to chronic conditions (e.g., heart attack, which can be impacted by weight, diet, and smoking status) and others not (e.g., knee replacement).
That Americans are facing rising out-of-pocket costs associated with hospitalization is a problem in its own right, but particularly so given a) the racial disparity in the conditions likely leading to hospitalization, and b) the information problems to which the authors point with respect to patients understanding their health plans and financial responsibility associated with obtaining care. This suggests a few opportunities for those working in public health as well as in public policy and politics. There is clearly a long way to go in reducing inequality in the extent to which minorities and inner-city communities are faced with more adverse health outcomes with respect to the chronic diseases whose treatment adds to patients’ financial burden. Improving interventions that enhance the affordability of healthy food and that reduce rates of smoking and sedentary lifestyles are obviously in need. As a shorter-term solution, improving tools with which to help people shopping for health coverage – ideally in-person so as to tailor based on individual needs and health history, though perhaps an online tool could be better developed and made accessible across socioeconomic groups – will importantly reduce the information asymmetry that is leading individuals to face higher healthcare costs than they realize prior to making medical decisions.