Last few weeks have been a once in a lifetime experience for us all. Self-isolations, quarantine, over 80% of the population under some form of shelter-in-place orders – the experience is just surreal. COVID-19, apart from being a medical issue, has also surfaced as a social, economic and a personal finance issue. We will explore the personal finance side, more specifically affordability and price transparency of COVID-19 care in the United States.
As of 14th April 2020, There are roughly 600,000 confirmed cases of COVID-19 with close to 25,000 fatalities(1). Current numbers show roughly 15% serious illness rate which requires hospitalization and 5% critical illness rate, that requires ICU care. It has been estimated that the cost for such hospitalization ranges from $20,000 to $40,000. While there has been a lot of focus and attention on broader economic impacts of COVID-19, there has been very little discussion on how the impacted patients will afford COVID-19 care.
There’s a ton of complexity patients currently navigate to decide when, where and how to seek healthcare. One of the key factors in that navigation is the patient’s affordability, or ability to pay for care. Patients, or consumers of care, assess both sides of affordability – On one hand they assess personal situation of “how will I pay?” and on another they need to know “what will I actually owe?”
Lets explore both ends of affordability in context of COVID-19 –
On “how will I pay” front – unemployment has spiked and many are facing personal financial challenges. For a significant portion of the population, putting food on the table has become a real challenge in recent weeks. In addition to losing sources of income, a lot of people lost source of healthcare insurance as well. Insurance continuation under COBRA is available, however at full cost of the premium, that is not practically an option. Fundamentally, the ability to pay for healthcare services has been negatively impacted for a great many, at a time when getting care is not just in one’s own interest, but everyone surrounding as well. In such an environment, it is even more important for consumers of healthcare to understand options and to have clarity on what they will actually owe.
On “what will I actually owe” front, even before the coronavirus pandemic, there had been significant push towards price transparency, but not much had been achieved. As a patient, one can potentially find out what the healthcare provider will charge for a specific service, to their insurance company, or to them directly if uninsured. However, the exact amount they will need to pay after insurance co-pays, deductibles and coinsurance, is a complex math that not many patients understand. The key challenge for the healthcare ecosystem is that they shouldn’t have to, especially in a pandemic or an emergency situation. This issue has largely been ignored in the overall response to this pandemic. As the federal government sent two medical ships to help on each coast, and other make-shift testing and care facilities were set up – access to care only exists if one can afford it. Questions still linger in patient’s minds – is this provider in-network for my plan, will this care be covered, and ultimately, how much will I need to pay?
So what can be done? Let’s look at the emergency response to pandemic separately from the structural changes required for maturity of the healthcare ecosystem. A Pandemic may not be the best time to test and implement new processes, but it can certainly act as a wake up call on issues we have known for a while and ignored – such as patient financial transparency.
For the emergency response – The focus should be on helping those negatively impacted. I estimate that the total cost of care – that will be billed for COVID-19 hospitalizations will be under $10bn(see estimates below) in US. In the context of trillion dollar aid packages, that does not seem an unreasonable amount for direct assistance to those infected and hospitalized in this pandemic. The financial assistance could be provided directly to providers incurring the cost in the form of reimbursements. Both federal and state governments already have mechanisms in place to pay for services billed under Medicare and Medicaid.
For the structural changes, I believe the answer lies in understanding patient touch points. Patients connect with their healthcare providers a lot more frequently, then their payors. Being closest to patients, Healthcare Providers are best positioned to help answer affordability questions. Providers can share real-time estimates of cost with patients – what their plans will cover, how much will it be covered for etc. Payors, on their end, should expand the data they share in real-time with Provider and Patients. This information can be made available at multiple points of care interaction – appointment scheduling, check-in, care delivery and check-out. A bill generated weeks later should only act as confirmation of what the patient already knew, not a sticker shock.
What we learn from this pandemic will strengthen the healthcare system, but only if we implement those learnings. Healthcare ecosystem must do more to bring price transparency. Providers and Payors are pivotal to that effort, leveraging support from government and regulatory agencies. Their continued collaboration will help patients understand their care access options, and allow everyone to make best care and financial decisions. That, at a minimum, is what we can learn and implement coming out of this pandemic.
Currently Infected Patient Count ~ 600,000 (1)
Estimated total Infected Patient Count ~ 2,000,000
Hospitalization rate ~ 12.3 % (2)
Estimated # Hospitalizations ~ 246,000
Max cost per hospitalization ~ $40,000
Total cost for all hospitalization ~ $9.84 bn
The estimate is only for COVID-19 hospitalization costs. Testing costs have been waived with Federal and Payor actions. Other treatment costs are assumed personal costs such as over the counter medications etc.