So in 2019, the Federal Reserve did a study that showed that consumers, a full 40% of consumers would have trouble handling an unexpected $400 expense. They’d have to borrow from neighbors or friends. They’d have to go into debt for it. So think of that in the context of higher deductibles, which I think the average is now $2500, but it’s going up. When I had an ACA plan, my deductible was $14,500 for two of us. Think about that. That’s untenable for a wide variety of consumers and difficult to fit into your budget no matter who you are.
Now, when we think about it, I’m going to pick a little bit on high deductible plans because I think that they’re one of the markers of some of the things that consumers are struggling with. And their goals were really there were lofty. They really wanted to improve the situation by giving consumers skin in the game and encourage them because they were bearing a bigger share of the cost to behave like the kind of consumers they would behave in any other aspect of their lives, whether it was buying a car, buying a sofa, purchasing a house. They were hoping people would start to do things like ask for cost estimates before they get them. Seventy-five percent of people say having a cost estimate would change their perception of the provider and would make them more likely to pay it. But in fact, it’s still only about 12% of consumers that actually get cost estimates.
They’re hoping people will shop for lower-cost services. Look at what a mammogram costs at the local hospital versus a stand-alone center and pick the one that has a lower cost overall. They’re hoping people will validate the quality and competence before they hire somebody to do their health care job. You know, it’s getting surgery. What are your outcomes? How many of these surgeries do you do annually and asking the provider for that kind of data if they don’t already publish it?
They’re also hoping people will ask for discounts or pay cash in order to get those discounts and also make choices about care that involve paying attention to is this really necessary or is it something that either can wait or I can go to my PCP tomorrow rather than to the E.R. tonight and then at the end of the process, challenge those bills that seem unreasonable, ask questions and challenge them. So that’s the goal. And know I don’t think any of us will disagree that those goals make a lot of sense when you think about how people approach buying health care services.
Delayed Health and Wellbeing Care
But it hasn’t actually worked out that way. This graph actually shows the kinds of things that people in high deductible plans differ.
And this was confirmed by a study in 2019 or 2020 that basically said, I think it was the same Federal Reserve study that I mentioned earlier, a full 25% of consumers put off care because of the cost. And what happens when you introduce a high deductible plan is that your costs actually do go down for health care, at least in the short term. But sometimes it’s a penny-wise and pound-foolish strategy because what consumers actually seem to do is forgo care across the board. They don’t look at their care.
You know, I’m going to say this word of what we’d consider a really rational manner and reduce the less necessary care. And instead, they seem to just kind of reduce it overall. And I’ll provide some more information about that. So that may have the consequence of actually reducing your short-term costs, but driving up your longer term costs. And if you’ve got a workforce that stays with you over any time, that’s obviously not an ideal situation either.
And despite publicity, really, few consumers seem to actually use cost transparency tools. And I think there are some reasons for that, which we’ll talk about in a later slide, but this is another slide showing that in 2019, a full half of all adults put off or delayed some sort of health care based on the cost. Now, you look at those initial goals and you’d say, “Oh, that’s a good thing.” But again, the question is, are they putting off the right kinds of care or are they just blankly reducing the care that they receive? And there is evidence, unfortunately, that some of it actually results in them reducing the care that they need.
And in 2020, of course, we’ve got only more reasons to delay or defer care because of worries about the coronavirus and the impact of showing up in a place where there are sick people and trying to get care. So we’ve seen some increases in delayed care air and I think it’s resulted in, again, in 2020, short-term lowering of health care costs across the board, but with potentially some long-term consequences that we may be concerned about.
Digital Health and Wellbeing Tools
I will mention here, just by the way, that for somebody like me who has focused on digital health for a very long time and who has a, I’d say, some impatience about the pace of change, it’s great to see that we’ve actually gotten some adaption of digital innovations that have been out there for a while. So far, more providers are offering telehealth services. Far more insurers are covering them during this time period. And along with that, there’s much more attention to, you know, getting access to your portal because that may be your doorway into digital and telehealth tools, making sure that you can get explanations of things through some of those digital tools, because it’s harder to make arrangements to see your provider in person.
So there is actually some good news that came along with that pandemic.
But in terms of cost, we also have reasons to delay care. In the appendix, there’s a slide that says that a full 34% of people surveyed said either they or their partner were making less money in 2020 than they had previously. And as a consequence, they were having problems covering their bills of all sorts. And in that circumstance, health care is certainly one of those bills that they’re concerned about and concerned about covering.
And we are learning that, as I mentioned, consumers don’t always respond in what seems like a rational manner to those reductions or changes in their burden of care. I saw a study that just got published this year that looked at the impact of rising drug prices. So I only looked at one small segment of health care costs and it didn’t cover a very long period of time, but they looked at raising drug prices by 33%. And in that, when they did that, total drug consumption across the board fell by 22%, as monthly mortality actually rose because people were as likely to drop the drugs that were life-saving for their conditions as they were to drop less necessary drugs.