Addressing Out-of-Pocket Costs Is Key to Health Improvement

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More than 190 million Americans suffer from chronic diseases. For them, healthcare reform isn't a political football -- it's a matter of life and death.

Unfortunately, both parties keep pushing reforms that won't improve patients' lives.  The health care reform discussion to date has not focused on the key driver of rising spending -- the growth in chronic disease -- and has not addressed how to improve the care they receive. One side is focused on making insurance coverage skinnier and cheaper; the other on having the government takeover large segments of the healthcare system, setting prices, and sacrificing innovation and consumer choice. 

Both these approaches would make it harder for patients to get the care they need and impose a more significant burden on the health of Americans and our healthcare system in the long run. To cut costs and help patients save billions, politicians ought to focus on making preventing and managing chronic diseases more accessible by addressing out-of-pocket costs.

Chronic diseases account for 90 percent of all U.S. healthcare spending. Today, six in 10 Americans live with at least one chronic condition like cancer, diabetes, or high blood pressure. Four in 10 suffer from multiple chronic diseases.

More and more, people with chronic conditions face unreasonable out-of-pocket costs making necessary care unaffordable. On average, individuals with two or more chronic diseases spend five times more out-of-pocket than patients without any chronic conditions. People with three or more conditions pay 10 times more.

These out-of-pocket burdens have grown as insurance has steadily shifted more costs onto patients under the assumption that it will make people better consumers. Because of such trends, average out-of-pocket spending has grown 58 percent over the past decade.

Consider the growth of high-deductible health plans, which typically require patients to pay thousands of dollars out-of-pocket before coverage begins.

This year, 30 percent of workers have a high deductible health plan compared to just 4 percent in 2006. While for healthy individuals these plans may work well, for people living with chronic conditions, surging out-of-pocket costs often mean delaying or forgoing care altogether. And that means higher total costs -- and poorer health -- long-term. 

A recent study showed that even women receiving a breast cancer diagnosis delayed treatment at every step -- screening, testing, surgery, radiation, and therapy -- when insured under a high deductible health plan.

This harms patients and adds to overall costs. Medication non-adherence alone causes approximately 125,000 deaths and adds nearly $300 billion to America's healthcare bill annually. In fact, we spend more failing to optimize adherence and medication benefits than we do on drugs themselves. Reducing out-of-pocket costs would improve adherence -- thus keeping people healthy, saving money and lives.

Next consider how insurers have narrowed their provider networks to cut costs. Often, patients don't even realize they went to an out-of-network hospital or specialist until they receive huge, surprise bills in the mail. Lawmakers could solve surprise billing by removing that cost burden from patients. This fragmentation in coverage undercuts the care coordination so vital to patients with chronic conditions.

Spreading out-of-pocket costs over a longer time period would also help. Coverage occurs over the course of a year and many people with serious chronic illnesses pay thousands to meet deductibles all at once. Spreading those costs out over the plan year would ease a lot of financial pressure on those patients. Tax-based reforms that reduce patients' exposure to out-of-pocket expenses for chronic disease care would also help.

As Congress considers legislation to improve our healthcare system, it is shortsighted to focus on just one silo of care in our continuum.

For instance, solely focusing on drug prices misses the mark. Currently, brand name drugs command a 30 percent discount, on average, but the patients taking them never see those savings at the pharmacy counter. Consumers pay full list price while meeting deductibles and a percentage of list for coinsurance. There is no assurance that government price controls would be any different. What is certain is the innovation drought that would result from reduced private R&D investment -- again striking hardest against people living with chronic diseases in need of new treatments.

Instead, policymakers should focus on ways to lower out-of-pocket costs for people living with chronic conditions to promote care coordination, medication and disease management, and the ongoing care needed to maintain and promote health. Improving access to high quality chronic disease care could save our nation $6.3 trillion in spending.

Chronic diseases are the number one cause of death, disability and rising healthcare spending in the United States. The only way to save lives and sustainably reduce costs is to invest in better treatment -- and address out-of-pocket costs so treatment is accessible to the people who need it most.

Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.

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