Point of View

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Editor's Corner

Improving consumers’ medical financial literacy and the ability to make more informed choices

The famous quote from Bill Clinton’s 1992 Presidential campaign comes to mind when we start discussing US healthcare. Instead of saying “It’s the economy, stupid” - in healthcare, the important factor is “It’s what it costs me and my family, stupid”...

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The famous quote from Bill Clinton’s 1992 Presidential campaign comes to mind when we start discussing US healthcare.  Instead of saying “It’s the economy, stupid” - in healthcare, the important factor is “It’s what it costs me and my family, stupid”.

Healthcare spending accounts for about 18% of the US gross domestic product (GDP), and the US spends more on medical services than any other nation.  Unfortunately, the return on investment does not match the massive expenditure.  The US consistently ranks below other first-world nations in most measures of health even though the other countries spend a much lower percentage of their GDP on health care than the US does.

This disconnect is not only a national problem but also increasingly a personal one.  Financial considerations greatly impact many Americans’ decisions on choosing the type of healthcare coverage they can afford, or their ability to pay for expensive drugs or procedures.  Even when an individual and his/her family are covered by an employer, the government, or individual market plans, their ability to manage medical finances and pay for appropriate care is often difficult.  Premiums and deductibles can be high and insurance coverage for expensive drugs or procedures may not be enough to protect one from financial catastrophe.  Many plans, including traditional Medicare, also do not cover dental or vision costs, which can be very expensive.  Major illnesses or injuries can cause severe financial harm, including bankruptcy, to a family or individual in addition to the direct medical impact.  For example, a recent study done by GoFundMe found that by far the greatest number of their fundraising requests were by individuals who could not afford to pay for a large medical expense.

In addition, a recent study by the JP Morgan Chase Institute found that Americans are spending a large amount of their tax refunds on medical expenses.

The recent publicity and new legislation around “surprise” medical bills and bringing more scrutiny to the costs of prescription drugs will certainly help. However, while the changes could end some of the worst abuses of the system, they will do little to change the consumer’s knowledge and understanding of the medical billing process, or to end the high costs.

Despite the importance of financial considerations to a person’s healthcare choices and impact on their current and retirement budgets, little has been done to help the consumer better understand and plan for their medical expenses.  Most healthcare websites or mobile apps are siloed by health plan or medical practice and are focused mainly on providing their specific claims or clinical information to a member or patient.  Any financial information also tends to be very narrowly focused.  Consumers’ understanding of financial considerations related to health plan coverage is often limited and determining out-of-pocket, deductibles, and actual costs of a procedure or medication can very difficult.  CMS and the Administration have been pushing for more transparency around drug costs and hospital charges but providing more transparency without improving medical financial literacy and helping the patient to fully understand their “real” and total costs will not result in the consumer making the best financial decisions.

The industry often gets caught up in promoting wearables and other consumer tools that proport to help the patient, but often are really a stalking horse to get access to new sources of data.  Medical financial literacy gets ignored in the rush to create open APIs to gain greater access to the vast data troves that Government and other entities have.

What is needed is a national movement to create a partnership between the healthcare industry, consumer groups, financial services organizations, and government agencies to develop online tools and educational materials similar to the Choose-to-Save campaign that the Social Security Administration, financial services industry, and consumer organizations partnered on many years ago. The result could be the more highly engaged and educated healthcare “consumer” who can truly be the catalyst for change that we want to see in US healthcare.

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