Our healthcare system is broken in many ways, but there’s an ugly truth that is less talked about. Private health insurance is failing American workers. The prevalence of high-deductible health plans and ever-increasing out-of-pocket costs means that three-quarters of workers are worried about being able to afford the care they need. It’s making the “valued employees” of thousands of American businesses sicker. And when their health issues can’t be put off any longer, it costs the employee and employer more in the long run.
If that doesn’t scream for disruption and a new approach, what does? Solving what’s wrong with private health insurance may seem impossible, but that’s precisely why it’s ripe for bold innovation, for those of us willing to push the boundaries for something better.
Disruptors and entrepreneurs in multiple industries have shared that true innovation comes from challenging conventional wisdom and pursuing ideas that others deem impossible or too risky. You can’t simply copy or modify existing models to make meaningful changes. A groundbreaking idea must challenge the status quo to create something better. As a result, innovation often arises when daring to tackle what is considered unachievable.
Need for cost incentive alignment
Private health insurance is not meeting employee or employer needs due to rising costs and misaligned incentives. It’s become a vicious cycle. Employees cannot fully access these healthcare benefits if they can’t afford them, and that means employers are not getting the intended value of this insurance. Employees get sicker when they can’t get needed healthcare, which ultimately is more expensive for the employer with higher absences and costs, while employees are incurring medical debt in greater rates.
Tackling this challenge is not for the faint at heart. Those trying to improve private health insurance can only do so by understanding these foundational issues.
To start, incentives across all players—employers, employees, providers, and payers—are misaligned. In general, employers and payers want to control costs and clamp down on utilization of care. Employees want affordable access when they need it, and providers are often encouraged to increase revenue by providing care that may or may not be necessary. These incentives can be in direct conflict, and patients get caught in the middle just trying to stay healthy.
Costs are, rightfully, a huge concern and continue to rise faster than inflation year after year, squeezing employers and consumers alike. To remedy this problem, most businesses have simply increased employee cost-sharing through higher deductibles and out-of-pocket maximums. We’re now seeing the highest percentage of people putting off medical care due to cost, in 22 years. Unfortunately, this approach is exactly the wrong medicine for the problem. A seminal study conducted by the National Bureau of Economic Research in 2015 and reaffirmed in multiple studies since, determined that increased cost-sharing for healthcare services saves short-term costs by reducing utilization, but has negative long-term health and cost-control ramifications.
The problem with cost-sharing
By implementing high deductibles, people avoid care and the financial savings disappear quickly; health issues can mushroom into more significant, costlier problems. People even neglected preventive care services such as colonoscopies and mammograms, essential for early detection and cost-effective treatment, due to increased cost-sharing.
Curative’s recent survey of working and insured Americans shows how cost-sharing adversely impacts employees’ health and well-being. Four out of 10 respondents said their out-of-pocket expenses are more than they could afford if they had a major medical event or were diagnosed with a chronic illness. As a result, roughly 50% of those surveyed say they delayed or avoided care when they had a health concern.
We also see record levels of medical debt in the U.S., the single biggest driver of personal bankruptcy today. Our survey highlighted that 55% of working Americans have resorted to alternative means to pay for care, including dipping into savings, cutting back on household necessities like food, and increasing credit card debt. A staggering 40% of respondents failed to pick up medications or take them as directed due to cost, and nearly 10% cut pills in half to get by. These issues clearly spill over into the workplace, as 40% missed work due to a health issue.
Remove financial barriers to care
Something has to give. I believe that the financial barriers of high deductibles, copays, and coinsurance are major contributors to the declining health and financial strain working Americans face today. It is widely recognized that the lack of universal coverage is having an adverse impact on the uninsured. But what’s less appreciated is that even the working-insured lack the critical coverage that should grant them access to care to keep them healthy, productive, and free of medical debt. To drive innovation in private insurance, we must ask the question, “What would happen if we just eliminated copays and deductibles?”
The answer to that question is that it would likely do more good than not, if we’re courageous enough to do it. There’s such an enormous need for solutions that break free from the status quo and the vicious cycle of transferring costs to employees. Several industry players, including Surest, Gravie, and Curative, are bringing products to market that significantly reduce employees’ out-of-pocket expenses.
By removing financial barriers to care and ensuring all Americans can access healthcare when needed, we have the potential to prevent diseases, promote better health, and reduce costs. Furthermore, simplifying the system can reduce the uncertainty individuals face when seeking care, guiding them toward the right care, in the right setting. I am extremely proud of how Curative is boldly leading the way to make healthcare more affordable and simpler in ways that allow so many employees to re-engage and take care of their health.
This transformation is not a pipe dream. The possibility is real, and innovation is happening, but we need more courageous individuals and companies to take on these healthcare challenges. For employers seeking to be innovative, it is crucial to extend that innovation to the health benefits offered to their employees. A more progressive approach to private health insurance enables employees to be fully present, productive, and better able to support business goals. It’s time to better support the physical and financial health of our employees.
Fred Turner is cofounder and CEO of Curative.