I’m a confirmed AI optimist and believe the technology will improve healthcare on a broad scale, from diagnosis to drug discovery, precision medicine, robotic surgery, record keeping, analytics, population health, and streamlined claims processing.
But there remains one nut that AI, for all its astonishing promise, hasn’t yet cracked – the growing burden of healthcare costs on the American family. No large language models or artificial neural networks are likely to change that in the near future.
Rather, the nearest-term solution to rising premiums, deductibles, co-pays and out-of-pocket costs is embarrassingly analog. It’s a conceptual change in the payment process. We need to change the business model until technology can do more to lower our collective costs.
The cost of care avoidance
The current model is broken. Most Americans are covered by an employer’s health insurance plan, but it’s not a gift. The employer and employee share the premium.
Unfortunately, family coverage premiums have increased by 22% in the last five years, reaching almost $24,000. When a covered employee seeks treatment, they pay out of pocket up to their deductible and often owe a co-pay. Since 1960, out-of-pocket costs have grown nearly twice as fast as the economy.
If the patient can’t pay at the time of service, which is increasingly common, the household carries a balance and pays interest on that balance indefinitely, absorbing considerable financial stress along the way. Providers become de facto bill collectors, something they did not sign up for when pursuing careers in healthcare. Shamed patients avoid the doctor, risking their health and nudging up longer-term healthcare costs for everyone. More than four in 10 adults (43%) say they or a household member have put off or postponed care due to cost.
Employers who shift more healthcare insurance payments to employees to keep costs down risk increasingly discontented employees who struggle with growing out-of-pocket (OOP) costs compounded by a flood of overly complicated bills.
The widespread shift of workers into high-deductible health plans (HDHP), in particular, have hit employees hard financially, as nearly one-third of American workers were enrolled in such plans in 2021. It is a trend that is expected to grow.
This shift has also exposed employees to more complex medical bills and statements that rarely add up. What is and is not covered by their plan isn’t clear, nor how much they owe and to whom. In fact, recent studies show that 58% of healthcare consumers were surprised about a bill they received due to confusion about what they owed, and 48% of consumers said they were late on payment for the same reason.
Worse yet, higher OOP costs combined with this billing confusion is causing many employees to postpone or forgo the care they need. A recent survey from Gallup found that 38% of Americans reported that they or a family member had delayed medical care in the prior 12 months because of cost. Additionally, 27% of those surveyed said that they or a family member had put off treatment for a very or somewhat serious condition.
A New Consumer-Focused Payment Approach
But there is reason for hope. New kinds of healthcare payment platforms are entering the market specifically designed to address employee healthcare payment challenges. Many are point solutions, addressing a specific financial issue such as self-pay patient management, easier electronic statements, or access to healthcare payment cards.
Some platforms also apply game theory to create optimal dual-party agreements with multiple providers in the complex billing ecosystem to determine how they all can be compensated by the patient.
At the high end are platforms that provide a more holistic approach in addressing both the financing needs of consumers and the revenue needs of healthcare providers. The most advanced platforms combine advanced technologies with a payment model to create a simpler approach to healthcare billing based on proven analysis of consumer behavior. For example, they utilize AI and statistical modeling to analyze billions of dollars of existing medical payment data and other data to create a payment capacity model that’s balanced and affordable for the employees.
By Bob Chin, chief information officer, PayMedix.