Health Care’s 2012 MVP: Self-Pay

As reported in the Wall Street Journal and NY Times, the Kaiser Family Foundation Health Research Survey reported that healthcare insurance premiums paid by employers rose by 8% in 2011.  The “WOW” factor is increasingly more powerful when paralleled by the fact that premiums should have slowed as more employers elected to offer high deductible plans.  The rapid growth of both employer premiums and high deductible plans foreshadows the upcoming trend for healthcare providers, that patient responsibility will become a major player, even MVP, in healthcare discourse.

I have the unfortunate dilemma of balancing health care dollars.  On one hand, my facilities and the healthcare clients we serve face continuous reimbursement cuts.  On the other hand, our company and employees are paying more each year for our own healthcare.  And yes, our premiums rose by 8% last year as well. Over the past five years, we have seen close to 25% decreases in payments.  Imagine the impact a quarter of your paycheck disappearing would have on you.  Now imagine your expenses increasing the same amount too.  It’s a truly unfortunate dilemma, so what is the key to combating this situation?

With the unique vantage point I hold for both sides of the provider-patient relationship, I understand the challenges the nation faces in dealing with limited healthcare dollars.  You have heard it before, “the US system is broken”.   Indeed it would seem so, as one side of the political spectrum screams for our government to pay for healthcare it obviously cannot afford while the other side of the spectrum demands that patients pay for their own care.  So what happens when these patients must resort to this?

In a more perfect world, void of the challenges that our current system faces, companies and the government would be able to afford catastrophic healthcare policies.  By catastrophic, I mean big-ticket healthcare events such as hospitalization, debilitating diseases treatment like cancer care, or end-life events.   Large healthcare insurance companies could use the actuarial tools their cousins in the life insurance industry use.  In other words, if it is true as the pundits say that “most of the healthcare costs occur the last year of one’s life” then the health insurance companies could surely hedge for a catastrophic event in a patients life, however doing so would still require the patient to take on some responsibility.

Patients would be required to pay for normal doctors visits, medication, diagnostic testing, however these patients, or their companies, could be awarded reduced premiums by maintaining healthier lifestyles and receiving wellness check-ups, in much the same way that good drivers are awarded lower costs in the auto industry.   Patients paying for this level of healthcare would create a market where they are more cognizant of their health dollar.   In the near future, tools are being developed to help patients understand the true costs of their healthcare, thus enabling them to negotiate what they pay out of pocket.

Hogwash, one might say to the notion of patients actually paying for their own healthcare.   In reality self-payers are growing increasingly more popular as healthcare players.  With 17% of employees in high deductible plans, these plans have grown 25% in the last year.  The average family of four already pays close to $3500 out of their pocket for their care and you can ask any physician group, they will tell you that the self-pay component is growing.   Allow me to suggest that providers, insurance companies, and patients accept this new reality, because in the same way that paper phone books, Blockbuster, and disposable cameras have become obsolete, so will the notion that patients will be protected by their insurance, so as not to have to pay for a large portion of their health bill.  Yes, patient responsibility for payment can seem daunting, like picking up the tab for an expensive dinner you know you cannot afford, but forward thinking is the key.  Self-pay is the new player, and price shopping is the winning game plan.