Is healthcare still recession-proof?

https://mailchi.mp/3390763e65bb/the-weekly-gist-june-24-2022?e=d1e747d2d8

A recent conversation with a health system CFO made us realize that a long-standing nugget of received healthcare wisdom might no longer be true. For as long as we can remember, economic observers have said that healthcare is “recession-proof”—one of those sectors of the economy that suffers least during a downturn. The idea was that people still get sick, and still need care, no matter how bad the economy gets. But this CFO shared that her system was beginning to see a slowdown in demand for non-emergent surgeries, and more sluggish outpatient volume generally.

Her hypothesis: rising inflation is putting increased pressure on household budgets, and is beginning to force consumers into tougher tradeoffs between paying for daily necessities and seeking care for health concerns. This is having a more pronounced effect than during past recessions, because we’ve shifted so much financial risk onto individuals via high deductibles and cost-sharing over the past decade.

There’s a double whammy for providers: because the current inflation problems are happening in the first half of year, most consumers are nowhere near hitting their deductibles, leading this CFO to forecast softer volumes for at least the next several months, until the usual “post-deductible spending spree” kicks in.

Combined with the tight labor market, which has increased operating costs between 15 and 20 percent, this inflation-driven drop in demand may have hospitals and health systems experiencing their own dose of recession—contrary to the old chestnut.

Credit monitoring companies are removing most medical debt from consumer credit reports

Spurred by the Consumer Financial Protection Bureau’s investigation into how credit companies report medical debt, TransUnion, Equifax, and Experian—the country’s three largest credit bureaus, who keep records on 200M Americans—are revising how they report medical debt.

As a result, the companies could eliminate up to 70 percent of medical debt from consumers’ credit reports. Starting in July, medical debts paid after going to collections will no longer appear on credit reports, and unpaid debts won’t be added until a year after being sent to collections (instead of six months, per current policy). And beginning in 2023, medical debts of less than $500 will also be excluded from credit reports altogether.

The Gist:The poorest and sickest patients have been disproportionately saddled with the highest levels of medical debt. In 2017, 19 percent of US households carried medical debt, including many with private insurance. 

While these changes will help mitigate the impact of medical debt for some, they aren’t a fix to the larger underlying problem of rising healthcare costs and access to adequate health insurance coverage. 

Out-of-pocket limits aren’t silver bullets

Part of the reason why medical debt is so high is because many Americans don’t have enough savings to pay their deductibles and other out-of-pocket costs, according to a second KFF analysis.

Driving the news: Health insurance plans’ out-of-pocket limits prevent enrollees from paying limitless sums of money for medical care. But that doesn’t mean they protect people from having to pay several thousands of dollars — which not everyone has lying around.

  • Deductibles alone, which people must pay before coverage for most services kicks in, are frequently thousands of dollars and can exceed the amount of liquid assets a household has.

By the numbers: Over 40% of multi-person households can’t cover a mid-range employer family plan deductible of $4,000, and 61% don’t have enough to cover a high-range deductible.

  • The ability to pay out-of-pocket costs varies significantly by income.

America’s giant medical debt

Americans owe at least $195 billion of medical debt, despite 90% of the population having some kind of health coverage, according to new research from the Peterson Center on Healthcare and the Kaiser Family Foundation.

Why it matters: People are spending down their savings and skimping on food, clothing and household items to pay their medical bills, Adriel writes.

About 16 million people, or 6% of U.S. adults, owe more than $1,000 in medical bills, and 3 million people owe more than $10,000.

  • The financial burden falls disproportionately on people with disabilities, those in generally poor health, Black Americans and people living in the South or in non-Medicaid expansion states, per the research.

Go deeper: 16% of privately-insured adults say they would need to take on credit card debt to meet an unexpected $400 medical expense, while 7% would borrow money from friends or family, per the research, which focused on adults who reported having more than $250 in unpaid bills as of December 2019. 

It’s not yet clear how much the pandemic and the recession factor into the picture, in part because many people delayed or went without care. There also was a small shift from employer-based coverage to Medicaid, which has little or no cost-sharing.

  • While the new federal ban on surprise billing limits exposure to some unexpected expenses, it only covers a fraction of the large medical bills many Americans face, the researchers say.

Ambulance rides are getting a lot more expensive

https://www.axios.com/ambulance-rides-are-getting-a-lot-more-expensive-cee897fe-63b7-4412-aa67-718109773e79.html

The cost of an ambulance ride has soared over the past five years, according to a report from FAIR Health, shared first with Axios.

Why it matters: Patients typically have little ability to choose their ambulance provider, and often find themselves on the hook for hundreds, if not thousands of dollars.

The details: Most ambulance trips billed insurers for “advanced life support,” according to FAIR Health’s analysis.

  • Private insurers’ average payment for those rides jumped by 56% between 2017 and 2020 — from $486 to $758.
  • Ambulance operators’ sticker prices, before accounting for discounts negotiated with insurers, have risen 22% over the same period, and are now over $1,200.

Medicare, however, kept its payments in check: Its average reimbursement for advanced life support ambulance rides increased by just 5%, from $441 to $463.

Between the lines: Ambulances aren’t covered by the new law that bans most surprise medical bills, meaning patients are still on the hook in payment disputes between insurers and ambulance operators.

State of play: Ground ambulances are operated by local fire departments, private companies, hospitals and other providers and paid for in a variety of ways, which makes this a tricky issue to address, according to the Commonwealth Fund.

  • Some states — such as Colorado, Delaware, Florida, Illinois, Maine, Maryland, New York, Ohio, Vermont and West Virginia — have protections against surprise ground ambulance billing, a columnist in the Deseret News pointed out earlier this year.
  • But in California, Florida, Colorado, Texas, Illinois, Washington state and Wisconsin, more than two-thirds of emergency ambulance rides included an out-of-network charge for ambulance-related services that posed a surprise bill risk in 2018, according to a Peterson-KFF Health System Tracker brief.
  • The Biden administration has said it’s working on the problem.

The bottom line: Costs for ground ambulance care are on the rise and, with few balance billing protections, that means patients could still be hit with some big surprises if they wind up needing a ride in an ambulance.