Medical Debt is a $195 Billion Problem: Here’s How Employers Can Help

Medical debt in the US is a serious and worsening issue, with combined debt reaching over $195 billion in 2022. In the last five years, over half of American adults – more than 100 million people – reported having medical debt. Of people with medical debt, one in five do not expect to be able to pay off their debt in their lifetime. And with the average out-of-pocket maximum at $9,100 and $18,200 for individual and family plans, in 2023, studies have shown that medical debt can also devastate people with health insurance. Medical debt has been shown to increase the risk of food and housing instability, making people more vulnerable in multiple areas of their lives. Fear of going into medical debt is increasingly causing people to delay or skip necessary care. This can lead to decreased overall health, worsening health conditions, and higher medical bills when patients do seek treatment.

Medical debt is a growing concern for employers because when employees are stressed and worried about being able to meet their health needs or the needs of their loved ones, they cannot work productively. Because heightened stress and skipping care to avoid debt can lead to more health complications in the future, employers can expect employees who do not utilize healthcare to require more time off to deal with health issues in the future. Self-funded employers can also expect more expensive claims from employees diagnosed with issues that were not caught earlier and became more difficult and costly to treat.

Benefit Plan Design

Self-funded employers can help reduce healthcare costs for their employees and their business with an effective health plan. A well-designed benefit plan makes choosing the right care more convenient, accessible, and transparent for employees by providing them with financial incentives to choose providers that deliver better results at lower costs. 

TIERED NETWORK

A tiered benefit plan is one way employers can design their benefit plan to help employees make smarter healthcare decisions. With tiering, high-value healthcare providers are made to be more affordable (usually through lower or even no co-pays) for plan participants. The Alliance offers custom tiered benefit plans to fit the employers’ individual needs. The Premier Networks offer the most customization of The Alliance networks. With up to four tiers, employers can guide their employees and their family members to make smarter decisions within a broad provider network. The Alliance networks also include alternative care solutions like direct primary care and virtual and telehealth services that can expand access to care while reducing cost.

SMARTER HEALTH^SM ANALYSIS

We help self-funded employers reduce their healthcare spend by providing – and helping them understand – their data.  The Alliance uses deep data mining and analysis to create a customized report, our Smarter Health^SM Analysis. Employers can see the aggregate data of where their employees are seeking care so they can better focus incentives and employee education efforts to guide their employees toward high-quality, low-cost care. This means the employer and their employees pay less for better healthcare.

Incentives

Employers can encourage employees to utilize preventative care services and engage in healthy habits to reduce future healthcare costs. Incentives could include providing paid time off to attend appointments, cash rewards for using specific high-value providers for procedures, or contributing to employee health savings accounts (HSAs) or health reimbursement accounts (HRAs) for completing biometric screenings. In some cases, it is even less expensive for employers to pay for their employees to travel to centers of excellence for certain procedures, like knee replacements, than it would be for an employee to have the procedure done locally. Employers can also provide incentives for participating in wellness programs that will reduce healthcare costs for their employees and business long-term. For example, employees who attend smoking cessation programs, receive preventive screenings, and engage in healthier habits will likely need less healthcare in the future. 

Employee Education

HIGH-VALUE PROVIDERS

One of the best ways employers can help their employees save money on healthcare is by making sure they understand their benefit plan and how to make prudent decisions when they need care. Employers should ensure their employees are aware that cost and quality are not the same for all providers. Certain providers charge more for similar services, while others provide the same, if not better, quality service at lower costs. Through the Find a Doctor tool, employees whose employers are members of The Alliance can search for in-network providers by location and specialty. And with our Smarter Care Advisor employees can compare prices and find the care they need at the best possible price. This helps employees compare prices and find the care they need when they need it.

PRESENTATIONS AND VENDOR FAIRS

Employers can invest in teaching their employees the importance of utilizing free preventative care and how prioritizing their health in the present can save them in the long run. This can be done through presentations where the Human Resources team explains the company benefit plan in detail. Another option is to have a vendor fair where all the company’s health benefit partners are in one room for employees to ask questions and have their needs and concerns addressed. This tactic gives employees immediate access to health education directly from the source.

SUPPORT RESOURCES

Human Resources teams can also let employees know they are a resource for them and a source of support. Having support can make a big difference for employees who may feel overwhelmed in their care process and don’t know where to start. Finally, employers should make sure employees know about any employee assistance programs (EAPs) and care navigation services included in the benefit plan.

The Alliance can help you design your benefit plan to encourage employees to make smart decisions about their healthcare. We also provide resources employers can use to educate their employees to be smarter healthcare consumers and get the most out of their benefit plan saving themselves and their self-funded employers money.

Reach out to our Business Development team to learn how The Alliance can help you reduce healthcare costs for your employees and your business.