Cost Sharing Leads Some Patients to Delay Medically Necessary Care

A new report by the American College of Physicians (ACP) sheds light on the harsh truth that being underinsured is as big a challenge as being uninsured. Cost sharing, in particular deductibles, has caused patients to forgo or delay care, including medically necessary services.

“Evidence shows that when cost sharing is imposed, consumers may respond by reducing their use of both necessary and unnecessary care,” said Nitin S. Damle, MD, MS, FACP, president of ACP. The sad truth is that these effects are even more pronounced among those with low incomes and the very sick.

The position paper titled Addressing the Increasing Burden of Health Insurance Cost Sharing includes detailed evidence supporting the study as well as a 5-point recommendation.

The Rising Cost of Insurance

Health insurance is a necessity. It provides financial security against healthcare costs and reduces the chances of medical debt. However, in the last decade, total healthcare expenditures have grown substantially. The average annual premium for family coverage in 2015 was $17,545, a 27% increase from 2010 and a 61% increase from 2005. In 2015, the average annual deductible for single coverage was $1318. In 2005, the same was only $584.

Even though employees have increasingly shouldered the health insurance cost burden, the median family income has not offered much relief because it hasn't grown at a favorable rate. Cost sharing, in particular deductibles, has caused many low-income patients to choose between their medical necessities and other necessities of life. They usually forego medically necessary services because of this high cost.

“Because cost sharing exposure is in effect the absence of insurance for those expenses, cost sharing can undermine the primary function of insurance,” explained Christopher Robinson from the University of Arizona James E. Rogers College of Law.

Alternative Approach

Considering the rising health coverage costs and stagnant wages, ACP recommends a different cost-sharing approach is needed to ensure that vulnerable people can afford medically necessary care.

1. Accelerating healthcare system efforts to reduce overall spending while not shifting the cost burden onto insured persons who cannot afford to pay more for their medical care.
2. Encouraging use of high-value healthcare by implementing strategies that reduce or eliminate out-of-pocket contributions for certain services, and implementing income-adjusted cost-sharing approaches that reduce or directly subsidize the expected out-of-pocket contribution of lower-income workers. The goal is to ensure exceptional quality and healthcare effectiveness and not just low costs.
3. Improving cost-sharing provisions under the Affordable Care Act.
4. Enhancing health insurance literacy and promoting better, more accessible, and objective information about cost-sharing requirements and health insurance plan design.
5. Implementing a large-scale demonstration to test the short- and long-term effects of cost sharing in different populations.

“An alternative approach is needed to reduce spending through systemic reform of the healthcare sector, protect low-income workers from overly burdensome out-of-pocket costs, enhance subsidies for marketplace Quality Health Programs, increase healthcare literacy, and direct shoppers to the right type of plan so that patients are shielded from financial ruin and insurance can function as intended,” Damle said.