The End of ‘Affordable’ Healthcare?

As Americans were busy preparing for the 2021 holidays and began worrying about the rise of the Omicron variant, a dismaying healthcare survey was released that flew mostly under the radar: affordable healthcare. The new information painted a grim picture of the alarming struggle of U.S. households to pay for medical expenses.

The survey, which came out in early December and was conducted by Aflac, showed that Americans are facing mounting healthcare costs and are being forced to work longer hours and make risky financial choices as a last resort to pay medical bills.

COVID-19 has certainly worsened the situation. With Omicron spreading faster than previous variants, it is impacting an increasing number of households. As of the end of January, the Centers for Disease Control and Prevention announced that more than 72 million of Americans have tested positive for the virus in the last two years. 

As a result, the pandemic is also adding to the increasing cost of healthcare in the country. Consequences of catching COVID vary so much from one person to another, ranging from mild cold-like symptoms to weeks of hospitalization, that it makes it nearly impossible to plan ahead from a financial perspective.

In particular, people with COVID are more likely to have to pay out-of-pocket healthcare expenses, according to the survey, which found that nearly two-thirds of respondents who had COVID had out-of-pocket healthcare expenses in the last 12 months compared with 45% of non-COVID American households. 

Nearly a quarter reported more than $1,500 in out-of-pocket expenses versus 16% of non-COVID households. And these families were three times more likely to have taken money out of their 401(k) plans or other retirement funds, twice as likely to have borrowed money from friends or family, and three times as likely to have filed for bankruptcy compared with families that didn’t experience COVID.

Healthcare doesn’t have to be a budget buster

This goes to the crux of the matter: Americans have no choice but to dip into other regular budget items to afford to pay for healthcare.

And it’s not just those with COVID, U.S. households with children are also being impacted in a big way and making greater sacrifices. Parents are working longer hours or extra jobs, dipping into savings or even using money typically used to pay for basic necessities like food, heat or housing, to be able to pay for healthcare expenses.

Within the past year, households with children are more than twice as likely to have picked up hours or shifts at their jobs. They are nearly twice as likely to have tapped into their 401(k) retirement. They are also much more likely to have filed or declared bankruptcy.

This is a real crisis. Americans shouldn’t have to choose between paying medical bills for essential care and buying food or making rent.

medZERO is helping solve healthcare affordability

There are some tools that Americans can utilize prior to dipping into money reserved for basic expenses and making risky financial decisions.

Those enrolled in high-deductible health plans can open a health savings account, which can help save for long-term healthcare-related expenses. Health flexible savings accounts can also fund unexpected qualifying healthcare expenses. And paying in installments using medZERO’s buy now, pay later solution can also ensure that out-of-pocket medical costs become more manageable payments.

There are also some trends pointing to a possible reduction in the cost of healthcare, including telemedicine, but it’s too soon to say whether they will be sufficient to make a real difference. 

The problem around the affordability of healthcare is unlikely to resolve itself in the next few years. Our society has reached a dire situation when it comes to healthcare costs. The question is becoming less about how to fit healthcare spending into American households’ budget and more about how sustainable this all is in the long term. And the situation may also get worse before it gets better, if it ever does.

As PwC noted in its latest research on medical cost trends, the pandemic’s long tail may increase healthcare spending in the years to come as some care deferred during the pandemic will return once we learn to live with COVID. That will result in an increase in healthcare spending. At the same time, COVID-related costs including testing and vaccines will persist.

For now, what’s clear is that the U.S. healthcare system is broken. At medZERO, we’re working to fix it. 

medZERO is unlocking a smarter way for your employees to pay for care. Contact us to learn more.

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