Waking up to the Financial Realities Affecting Healthcare’s Sickest Patients

How to back financial sanity and good health for all Americans

By Mark Spinner, President and CEO, AccessOne
LinkedIn: Mark Spinner
X: @myaccessone

Every year, Americans are bombarded with financial advice like “sock away 12 months of living expenses.” But guidance like this feels increasingly tone-deaf when someone is hit with a $1,000 emergency room bill — and they don’t have the funds to pay it.

It’s a reality that’s becoming more common, according to AccessOne’s 2023 annual consumer healthcare finance survey: A whopping 44% of Americans say their healthcare costs have increased, making it harder to pay for health screenings, surgeries, and emergency care.

A separate survey on employer health benefits found that average annual single premiums and family premiums each increased by 7% over the past year to $8,435 for single coverage and $23,968 for family coverage. Meanwhile, high-deductible plans rose to at least $1,600 for single coverage and not less than $3,200 for family coverage. Essentially, this means a double financial hit for consumers, with higher costs for coverage as well as out-of-pocket costs care.

Digging deeper, a few trends are clear: The struggle to pay is real, especially among younger, healthier adults. And if healthcare leaders don’t find better ways to meet patients at their level, financially, health systems could see a rise in unpaid balances and medical debt.

Affording Care

Nearly one-third (30%) of U.S. adults can’t handle a surprise medical bill of even $250, let alone $1,000. In fact, just 28% of those polled by AccessOne paid their most recent healthcare bill in full, right away. Unsurprisingly, 13% of individuals polled said they used a credit card, and 10% relied on emergency savings to cover a recent medical bill.

Some will point to the recent passage of the No Surprises Act as proof that change is coming. But while consumers may welcome greater transparency in the next 12 months, emergencies will still happen. The average health plan enrollee spends $646 out of pocket, on average, for an emergency department visit.

Also, even with all credit bureaus agreeing to drop most medical debt from consumers’ credit reports, the use of personal credit cards for healthcare expenditures still doesn’t qualify as “medical debt.” That means any charges incurred by a credit card holder — such as penalties for late payments — can be subject to interest.

Consider that one out of four respondents who used credit cards to pay for healthcare over the past 12 months used ones with a non-promotional interest rate of 24% or more. That’s a lot of extra dollars potentially tacked onto the cost of a needed procedure.

While the option to crowdfund healthcare expenses seems alluring, it’s not a sure bet unless you’re a celebrity like Mary Lou Retton. Of the 250,000 crowdfunding campaigns with GoFundMe that Americans launch each to pay off medical bills, 16% generate no donations.

What We’re Skipping

Relying on credit isn’t the only risky tactic. Many Americans are skipping care altogether, including 31% of young adults ages 18 to 34 as well as many older respondents (19% of 55 to 64-year-olds and 7% of those 65 and up). Perhaps more worrisome, 16% of all adults polled decided not to fill or take a prescription to save money on healthcare costs.

Other surveys reveal similar findings. A January 2023 Gallup poll, for example, noted that between 2021 and 2022, the share of Americans reporting that they or a family member had postponed medical treatment shot up to 38%, the highest level since 2001.

According to a Commonwealth Fund study, 46% of adults with low or average incomes had skipped or delayed needed care because of the cost. Among those who postponed care, 57% reported a health problem got worse.

There are other indirect impacts of skipping care, too. For example, nearly 3 in 5 millennials without children say the reason they don’t have kids is that it’s too expensive to raise them.

Bringing Financial Sanity to the Forefront

In 2024, healthcare organizations should explore ways to do their part to extend a lifeline to patients so they won’t need to open a credit card or pull from their savings account.

One important first step is to proactively help patients set up repayment plans and financing ahead of elective procedures. When asked if they would be more willing to receive care if presented a payment plan option ahead of time, 66% of those surveyed by AccessOne said “Yes.”

Leading healthcare organizations should also pay careful attention to their patients’ communications preferences. This enables them to meet patients where they are when sending financial communications.

For instance, nearly one in three (30%) Gen Z respondents prefer being contacted by secure text message when their medical bill is generated, as do 22% of millennials and 19% of Gen Xers. This compares to just 11% of Baby Boomers. Implementing text-to-pay and/or mobile pay solutions and targeting these communications to the right demographic can improve metrics such as days in accounts receivable. It also helps boost financial engagement among a larger volume of patients.

As we look ahead to the new year and raise our glasses to good health, it’s important for healthcare leaders to understand how rising costs impact patients – and acknowledge that our economy and their organization’s viability is connected to the ability to manage those costs. Now is the time to make every effort to mitigate healthcare financial uncertainty so consumers can afford to stash away a few months’ worth of living expenses into their savings accounts, today and 10 years from now.