High-deductible plans jeopardize financial health of patients, rural hospitals
Kristie Flowers had been sick with the flu for four or five days in July before the 52-year-old registered nurse from Genoa, Colorado, acknowledged she needed to go to the emergency room.
At Lincoln Community Hospital, about 10 miles from her home on the Eastern Plains of Colorado, doctors quickly diagnosed her with pneumonia and sepsis. Her right lung had completely filled with fluid, and Flowers needed much more intensive care than the 15-bed hospital could provide.
Doctors stabilized Flowers and transferred her by ambulance about 80 miles away to St. Francis Medical Center in Colorado Springs. There, doctors put her on a ventilator for 10 days as they slowly nursed her back to health. After two weeks, she returned to Lincoln Community Hospital for another week of rehab before going home.
After her insurance plan had paid its share, Flowers owed $8,000 in medical bills. A big chunk represented the $3,500 deductible from her employer-sponsored health plan. Never one to let the bills pile up, Flowers went to the bank and took out an $8,000 loan to pay off her medical tab.
Plans with annual deductibles of $3,000, $5,000 or even $10,000 have become commonplace since the implementation of the Affordable Care Act as insurers look for ways to keep monthly premiums to a minimum. But in rural areas, where high-deductible plans are even more prevalent and incomes tend to be lower than in urban areas, patients often struggle to pay those deductibles.
That has hit patients like Flowers hard as they grapple with medical debt when emergencies happen - but small rural hospitals like Lincoln Community are suffering, too. These facilities often stabilize critically ill patients and then transfer them to larger regional or urban hospitals for more definitive care.
But when the hospitals submit their claims, bills from the first site of care generally get applied to a patient’s deductible. And if patients can’t afford to cover that amount, those hospitals often don’t get paid, even as the larger urban hospitals where patients were transferred get close to full payment from the health plan.
“As soon as we send them to the city, those things start being paid by the insurance company,” said Kevin Stansbury, CEO of Lincoln Community, “while we’re still chasing the patient around for collections.”
The result is financial headaches for patients and a substantial rise in the amount of uncollectible “bad debt” written off by all hospitals during the past few years. According to the Healthcare Financial Management Association, hospital bad debt increased by $617 million to nearly $56.5 billion between 2015 and 2018. More hospitals, especially those in rural areas, are left teetering financially.
At least 120 rural hospitals nationwide have shut down in the past decade. Without changes, advocates say, more will close, leaving patients such as Flowers in remote areas far from access to immediate emergency care.
According to the nonprofit National Rural Health Association, bad debt for rural hospitals has gone up about 50% since the passage of the Affordable Care Act in 2010.
“People in rural America were buying plans maybe for the first time, but buying plans they couldn’t afford,” said Maggie Elehwany, the group’s vice president for government affairs and policy. The plans “seemed to make sense at the time, until they got sick.”
Part of the problem is that consumers primarily shop based on monthly premiums, and insurance plans can lower the monthly premiums they charge by increasing deductibles and copays. Some consumers take the gamble that they’ll stay healthy and won’t get stuck paying the high deductible. But others simply may not understand they are typically responsible for the full deductible before their insurance kicks in to cover the rest of their bills.