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High-deductible plans increase bad debt, hospitals say


The growing popularity of high-deductible insurance plans is leaving more hospitals stuck with unpaid bills, Kaiser Health News reported.

"We have definitely been hearing from members that they are seeing an increase in bad debt and even in charity care for people with high-deductible health plans," Caroline Steinberg, vice president for trends analysis at the American Hospital Association, told KHN. "A lot of these folks tend to not understand the structure of their benefits until they get to the hospital, and they're not covered as thoroughly as they thought."

The rate of workers in high-deductible plans has more than doubled since 2009 to 19 percent, KHN says, citing figures from the Kaiser Family Foundation. The deductibles can be as high as $5,000 annually, although they're meant to be offset at least in part by a tax-free health savings account.

"The number of accounts that we're seeing that relate to these high-deductible plans has been building, and it has been putting pressure on our bad debt levels," Daniel Cancelmi, financial chief at Tenet Healthcare, a leading healthcare services organization that operates 49 hospitals and 129 outpatient centers across the country, told stock analysts last week, KHN reported. "We've seen it building over the past several years, and it's continued into 2013 as well."

Meanwhile, a study published in the journal Health Affairs suggested that lower-income employees with high-deductible health plans were getting sicker than ever because of putting off needed treatment to avoid out-of-pocket costs.

The study cited figures different than the Kaiser Family Foundation, saying one-third of U.S. workers now have high-deductible health plans, with the number expected to grow next year as more features of the Affordable Care Act are implemented.

While the study found that high-severity emergency department visits of low-income enrollees in high-deductible plans fell to 30 percent in the first year and hospitalizations fell by 23 percent, both rose in the second year. The researchers saw no such trend among high-income enrollees.

"Our findings suggest that plan members of low socioeconomic status at small firms responded inappropriately to high-deductible plans and that initial reductions in high-severity ED visits might have increased the need for subsequent hospitalizations," the researchers concluded. "Policy makers and employers should consider proactive strategies to educate high-deductible plan members about their benefit structures or identify members at higher risk of avoiding needed care. They should also consider implementing means-based deductibles."

High-deductible healthcare plans also are contributing to job cuts in the healthcare sector, according to the latest job cut report from Challenger, Gray & Christmas Inc., FierceHealthcare previously reported. The plans are discouraging consumers from seeking healthcare services, leading to less demand for healthcare workers, the report said.

For more information:
- read the KHN article
- here's the study abstract
- check out the jobs report announcement

Related Articles:
Employees prefer low-cost plans to traditional employer-based plans
Health savings account enrollment on the rise
High deductibles cause confusion, hardship for docs and patients
More employers offering high-deductible plans
58% of employers offer consumer-directed plans
Healthcare hit hard by July job cuts