How Rising Healthcare Costs are Changing Consumer Behavior

As employers are searching for cost cutting measures due to rising healthcare costs, copayments and coinsurance are the main culprits. 

A study by the Employee Benefit Research Institute (EBRI) investigated what factors are the most expensive healthcare costs for employers and individuals and how those costs are affecting people’s use of care. Before we continue let’s clarify what these two things are.

Copayments are the set of costs that  a patient must pay for a service. Coinsurance is the share of the cost that the individual patient needs to pay for the service, while the remaining share is picked up by the insurance company. Copayments are fixed due to the rates of the insurance company, but coinsurance does fluctuate and because of this, is often a reason people may use healthcare services less and less. 

The research found that: The average employee-only deductible was $1,045 and the average family deductible was $1,858. Further, “Almost all employees (98 percent) had to cover coinsurance for their inpatient stay at an average rate of 18 percent. For those who had to cover a copay, the average copayment cost around $304 for each inpatient stay. For emergency department visits, 52 percent of plan enrollees had coinsurance with an average coinsurance rate of 20 percent. The remaining 48 percent had copayments, which averaged around $162. Likewise, 44 percent of enrollees had coinsurance for outpatient office visits and 56 percent had copayments. Those with coinsurance typically covered around 20 percent of the cost, while their counterparts payed an average copayment of $26 for primary care visits and $41 for specialist visits.”(healthpayerintelligence.com) 

To summarize, the study found that coinsurance and copayments were more/less expensive in various circumstances but both resulted in deterring people from accessing the healthcare system due to the cost. It seems that for any healthcare that is “required” such as followup physical therapy after surgery, psychotherapy, and emergency room visits stayed at their usual usage, but other types of healthcare that are more elective, are used less and less. 

The research interpreted these trends and suggested that employers seek to manage the use of healthcare services and spending by moving away from  copayments and toward coinsurance. 

Due to the pandemic, the Families First Coronavirus Response Act mandated that payers waive coinsurance and copayments in order to offer much needed relief to Americans already struggling to stay financially afloat and healthy. 

Given one of our previous posts about employers facing high premiums for drug costs, reducing or eliminating copayments and coinsurance will also reduce drug costs.