Impact of Out-of-Pocket Costs on Health Outcomes and Utilization

Employer-sponsored health insurance plans have shifted more costs over the years to employees and their families. The average annual individual deductible on an employer-sponsored health insurance plan is $1,763… up 61% in 10 years.

Of course, that ‘average’ deductible means that many employees have a deductible that is ever higher. In fact, one third of workers have an annual individual deductible greater than $2,000. A family deductible is typically two times the individual deductible, which implies that approximately one third of family deductibles are greater than $4,000 per year.

Impact on Care

High and rising health insurance deductibles lead to an affordability problem for employees, with many of them rationing their own care. Forty percent of adults delayed or went without care in the previous year due to out-of-pocket costs.
Healthcare is incredibly broad and complicated, so let’s look at the impact of patient out-of-pocket costs on specific medical conditions.

Cancer Care

One quarter of cancer patients go without care, delay care or change treatment because of out-of-pocket costs. Additionally, 40 percent of cancer patients spend their entire life savings within two years of a cancer diagnosis.

Heart Disease Care

Twenty-seven percent of households with insured, working-age adults who have cardiovascular disease report financial hardship from medical bills. Even worse, 16% of similar households are unable to pay their medical bills at all. If you add the 27% and the 16%, that means 43%–almost half—of households of working-age adults who have cardiovascular disease have trouble with or cannot pay their medical bills… and these households have insurance! They have coverage!!

Overall Unaffordability of Healthcare with Health Insurance

U.S. Federal Reserve research has found that 32% of households are unable to pay for a $500 unexpected expense with their savings. Therefore, the out-of-pocket costs associated with most health insurance plans are simply too much for people to afford. Essentially, employer-sponsored health insurance is ineffective in ‘transferring risk’ for many employees.
On a more human level, high out-of-pocket healthcare costs limit access to care that reduces suffering and prolongs life.
We can and must do better.

An alternative is to eliminate the deductible and spread out the copays over 12-month payment periods. Those copays can then be set at different dollar amounts to steer patients to higher-quality, lower-priced doctors and hospitals.
It’s being done today by Coupe Health. In fact, we’ve been doing this for employers and their employees since 2019.

Sources: 

https://www.kff.org/report-section/ehbs-2022-summary-of-findings/ https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/ 

https://www.statnews.com/2023/05/23/financial-toxicity-cancer-costs-cost-sharing/#:~:text=It%20is%20calculated%20that%20all,all%20costs%20for%20cancer%20care 

https://www.jacc.org/doi/10.1016/j.jacc.2018.12.004 https://www.washingtonpost.com/business/2023/08/03/actually-most-americans-can-