Increasing numbers of people with consumer-driven health plans could cause problems for a hospital near you.
Fitch, the credit rating agency, says this about the impact of consumer-driven health plans on for-profit hospitals in 2007, “Bad debt will continue to be driven primarily by the growing uninsured population and secondarily by increasing deductibles, co-pays and co-insurance among policy holders. “
While “bad debt” — the term used to describe a consumer’s defaulting on debt — is still primarily driven by uninsured, the growth of consumer-driven plans is a significant problem because “it is more challenging for hospitals to collect payment from individuals than from managed care providers, resulting in a potential for increased bad debt if these plans become more prevalent. Since these plans are still relatively infrequent, the impact in 2007 should be limited…However, CDH represents a significant trend to monitor in the coming years.”
Why? Fitch describes what much of the academic literature describes: “…participants often delay medical care and may put themselves at risk for severe health events for which they will shoulder a large portion of the responsibility to pay.”
As California explores options to cover the uninsured, particularly looking at Steve Burd’s consumer-directed Safeway plan model, the impacts and strains on the existing system must be weighed as well.