The healthcare system should be a destination to enhanced health and well-being – not increased stress and strain. But for too many Americans, the system inflicts financial hardship.
In June 2021, RIP Medical Debt, a national charity that eliminates medical debt through donations, bought $278 million in medical debt from U.S. hospitals. While purchases like this are critical to helping individuals remove the burden of medical debt, they unfortunately represent a fraction of the debt assigned from healthcare to individuals each year. Therefore, the bigger question is this: “How can our healthcare systems avoid assigning debt at this level in the first place?”
Despite growing attention on access and eligibility for public coverage or charity care, too many individuals continue to struggle to manage healthcare expenses without difficult trade-offs in life expenses. We need realignment to break the cycle of financial health disruption caused by healthcare delivery.
Healthcare Costs Are Breaking Financial Lives
During COVID-19, we saw the most vulnerable Americans – those least able to handle expensive healthcare costs – hit hardest by the pandemic’s economic effects. We know that health systems and policies need to change, and it’s time to start putting meaningful data and work into applied solutions. We know, too, that prior to the pandemic, healthcare costs had been breaking the financial lives of far too many Americans. Consider these facts:
- Medical debt is the most common kind of debt in collections and the most common cause of bankruptcy in the United States.
- An estimated 8 million people were pushed into poverty in 2018 due to out-of-pocket medical expenses.
- Although more than half of Americans’ past-due medical debts are less than $600, this small amount of debt can crowd out spending on basic needs and prevent investments in long-term wealth.
One factor continually increasing the burden is insufficient and inadequate coverage for the insured. Findings from the Financial Health Network’s annual Financial Health Pulse® in 2019 show that 12% of respondents with health insurance reported not getting healthcare they needed because they could not afford it. Further, 9% of respondents with health insurance stopped taking medication or took less medication than directed due to the cost.
This means that patients face significant and growing out-of-pocket costs, accruing bills, and a cycle of difficult trade-offs, including avoiding or delaying medical care; taking on ruinous debt; and depleting savings often necessary for housing, utilities, and food. The burden of medical costs forces patients to make difficult decisions that can ultimately affect their health outcomes as well.
Our Cross-Sector Approach
At the Financial Health Network, we believe that by embedding financial health measurement tools and innovation into the culture of healthcare and wellness in the United States, we will have a positive impact on both costs and outcomes – and ultimately start to break this cycle of medical debt. By creating a more sophisticated view of patients’ financial health, we can help to proactively prevent assigning unreimbursable debt to financially vulnerable patients.
But we can’t do this alone. Through the Financial Health Network’s new Healthcare market focus, we are working to design and implement solutions to help realign healthcare delivery, acknowledging the interdependence and impact on financial health and recognizing financial health as one of the key social determinants of health outcomes. By welcoming diverse perspectives to the conversation, and partnering with organizations from across the healthcare spectrum, we can create solutions to more efficiently address the challenge.
This is where our DNA of collaboration and innovation is essential. The Financial Health Network is built on a network of organizations that are innovating around financial health and has pioneered best-in-class tools and frameworks to assess the financial health of diverse populations. Now the goal is to bring this expertise into the healthcare arena.
We Are Developing Best Practices
For one of our first projects, we have joined forces with the Robert Wood Johnson Foundation to launch a Patient Wellness & Financial Health Initiative that seeks to build on existing research. As part of that Initiative, we are holding regular events and forums to develop a best practices guide for healthcare organizations to mitigate the burden of medical costs on patients.
As part of the Initiative, we have also convened the best and brightest in financial health and in healthcare and patient wellness as an advisory forum, which will develop and issue a report later in 2021. This past spring, 16 senior executive leaders from a wide cross-section of healthcare industries, including delivery systems, payers, technology, and physician and patient advocacy groups, met to assess and evaluate the current situations of medical debt, post-COVID. As a team, we are focused on improving and enhancing three areas in the near term:
- The process of assessment of patients’ financial health.
- Access to price transparency strategies and resources.
- The point-of-care decision process for patients, providers, and management.
Although our healthcare system needs many changes to better support patients’ financial health, we are confident that we can begin making measurable improvements with initiatives designed from this work.
Learn more about the Financial Health Network’s Healthcare market focus.