Number of Patient Payments to Healthcare Providers Up 72 Percent in 3 Years

Although Obamacare’s health-insurance policies are shocking people by imposing very high deductibles, high deductibles alone are a feature, not a bug, of high-performing health insurance. In the absence of over-regulation of health insurance, every dollar a beneficiary pays directly to a healthcare provider, instead of to a health insurer as premium, reduces administrative and bureaucratic costs. If very few patients incur health spending above the deductible, administrative costs and hassles should shrink.

Robert Laszewski, a well-known health-insurance executive and consultant, recently stated that only three or four percent of beneficiaries would hit a $5,000 deductible. The real question is whether the high deductible is attached to a policy that is consumer-driven (i.e., covers costs that consumers themselves are willing to pay premiums to health insurers to cover) or government-driven (i.e., forces consumers to pay premiums that finance the government’s priorities instead of their own). This is the real struggle over Obamacare.

InstaMed, a payment-processing company that specializes in healthcare, has published its latest report on Trends in Healthcare Payments, which sheds much light on the growth in deductibles and co-payments. For the three years 2011 through 2013:

  • The total number of patient payments increased 72 percent;
  • The average amount of a patient payment increased from $110.86 to $133.15; and
  • The number of payment plans (which allow patients to pay off balances over time) increased 284 percent.

In 2013:

  • 67 percent of providers reported an increase in patients’ responsibility for payment;
  • 76 percent of providers reported that it took more than one month to collect from patients; and
  • 78 percent of providers reported that they mailed more than one paper statement to collect a patient payment.

However, patients are disappointed in providers’ customer service with respect to payment. According to the report:

This surge in HDHP [High Deductible Health Plan] enrollment is causing patients to become consumers of healthcare who are sensitive to their healthcare costs. Since the industry is not prepared to meet consumer payment expectations, such as convenient payment methods, consumer dissatisfaction is becoming a growing problem — which negatively affects both providers and payers.

Patients are not unwilling to pay providers directly, but they need convenient payment options and clarity about how much they owe. Unfortunately, now that the healthcare sector is more focused on the government’s needs than ever, the likelihood that providers can adopt such changes has diminished.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

John R. Graham is a former Senior Fellow at the Independent Institute.
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