It is no secret that healthcare can come at a frightening cost in America.
According to the Journal of the American Medical Association, medical debt has jumped to $140 billion in the last year. On average, those with medical debt owe more than $2,400. Meanwhile, the Centers for Disease Control and Prevention reported that U.S. life expectancy dropped by 1.5 years in 2020; the U.S. hasn’t witnessed such a substantial one-year decline since World War II.
With the pandemic exacerbating healthcare gaps and confusion in employer-provided insurance plans, it is vital to consider what is amiss in the insurance landscape. Amy O’Meara Chambers, the chief operating officer at Healthbridge, has her eyes on two issues: out-of-pocket costs and lacking employer awareness regarding their employees’ experiences with certain healthcare plans.
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“Two-thirds of all Americans with high deductible plans report skipping or delaying necessary care,” says Chambers. “What I advise most for employers is to truly have a full appreciation of how their health plan design works and what the total out-of-pockets are.”
Healthbridge is a financial security benefits company that helps individuals manage and pay for their health insurance’s out-of-pocket costs. That’s a challenging task considering that in 2019, the Federal Reserve estimated that nearly 40% of Americans could not spend $400 on an emergency — yet the average out-of-pocket maximum for an individual is approximately $4,416, according to the Urban Institute. Just this year, LendingClub Corporation released a study reporting that 54% of Americans live paycheck to paycheck.
“We know that the math doesn't work,” Chambers says. “We've basically turned health benefits from a benefit into a liability.”
Chambers advises employees to know the “out-of-pocket liability” before accepting a job, especially if they or a loved one have chronic conditions. On the employer end, Chambers believes it is essential to analyze how a given plan impacts workers, which means communicating with brokers, conducting surveys and even initiating one-on-one conversations with employees.
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On the other hand, Andrew Frend, senior vice president of Health Solutions Product & Strategy for Voya Financial, traces health insurance trouble to high deductibles and the limited knowledge of how to maximize the benefits already there.
“A $3,000 to $5,000 deductible for many is the difference between bankruptcy and not,” says Frend. “How do we help people secure the right protection products, so they avoid the big things that suck up that deductible all at once?”
Voya, in its mission to help Americans retire, offers a range of voluntary protective benefits, such as accident and hospital indemnity insurance, so the unexpected doesn’t leave an individual in financial disrepair. However, many people may not be aware of these benefits’ purpose or how little it costs. For instance, an employee would pay less than a dollar a day for hospital indemnity insurance, which would cover costs if an individual is admitted to the hospital or ICU.
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“Because employers are maxed out on the number of offerings, we need to help employers help their employees get the most utility out of the things that they provide,” Frend says.
Both Chambers and Frend advocate for employees to have a firmer grasp on their financial tools — namely health reimbursement arrangements (HRAs), flexible spending accounts (FSAs) and health saving accounts (HSAs). These accounts allow users to put money away for healthcare expenses while saving on taxes. An employer can contribute on the employee’s behalf as well.
The root of this issue comes back to education — an issue that motivated Voya to launch myHealthMoney, a digital assistant designed to help employees better understand their workplace benefits and make effective choices during enrollment.
While Chambers agrees employers should put energy into educating their employees about health insurance plans, Healthbridge foresees a systematic solution.
“We need to size these out-of-pocket costs to fit the individual's pocket,” says Chambers. “It's definitely an idea that's floating out there.” Potentially, this means the individual’s out-of-pocket expenses would depend on their annual income, reminiscent of a progressive tax system.
Regardless of the solution, benefits companies know it is crucial to offer American workers a chance at financial wellness. Although, some experts are calling for government involvement if the U.S. hopes to truly change the tides of medical debt, and point to past signs of success as proof: the Affordable Care Act, which offered federal funding so states could expand Medicaid programs to low-income adults in 2014, has since enabled a 44% decline in medical debt across those states.
Still, further long-term solutions, be it from the U.S. government, benefits companies or a revised collaboration between the two, is yet to be seen.
“If we all had a crystal ball, that would be great,” says Frend. “But it’s about incrementally providing better solutions that we hope are in the best interest of people and their families.”
