💡 What’s Happening?
Ask a room full of people what affordable healthcare actually means to them, and you’ll get as many answers as there are folks in the room. The Texas House Select Committee on Health Care Affordability is examining that very question this interim, and on Sept. 1 will be exploring suggestions to improve the delivery system, novel financing models and consumer-accessible ways to strengthen health coverage cost and quality.
For employers, what’s affordable can determine what kind of coverage is offered; for health plans, it can shape how benefits are designed and what services patients can access; for patients, affordability can determine whether they seek care at all. And for hospitals and other providers, the way care is paid for ultimately affects whether they can continue providing it.
The bill a patient ultimately receives from a hospital is the product of extensive hospital efforts to trim expenses without sacrificing quality of care. Hospitals do their best to make healthcare affordable – but welcome additional support in examining processes and policies that limit costs.
🏥 Prime Delivery
The quality of care one can receive locally is part of the pride of Texas; but hospitals and health systems are regularly seeking ways to balance investments in innovative and cost-efficient care delivery with rising expenses for labor, pharmaceuticals, technology and growing demand for complex care.
As such, financing plays a central role in whether those efforts can succeed. Hospitals rely on payments from health insurers, governments at all levels, and individuals. But government payment rates fall short of the cost of care, health insurers deny and delay payment, and the increasing prevalence of high-deductible plans means patients have, over time, been saddled with a higher share of their hospital bill. Fresh financing models create opportunities to stabilize payment and, in turn, improve quality and outcomes. Prompt payments = efficient delivery of quality care = better health outcomes = lower costs for everyone.
“Value-based care is a way of structuring and paying for care that can improve affordability through a better patient experience, improved health outcomes and stronger alignment across the services a patient needs and what will be covered. Instead of paying providers based primarily on the volume of services they perform, value-based care gives hospitals, physicians and other caregivers flexibility to change how they deliver care and shifts payments toward ensuring that care delivery better aligns with patients’ needs. The goal is to help patients receive the care they need while reducing fragmentation, avoidable complications and services that do not improve their health by enabling healthcare providers to be innovative in redesigning care.”
AHA: Value-based Care Can Make Healthcare More Affordable for Patients
⛓️💥 Flex or Snap?
Big insurance companies like to blame hospitals as the main culprit in the affordability discussion in order to veil how, in fact, many of their solutions will ultimately limit the scope of coverage available to Texans.
Premiums, deductibles, copayments and coinsurance all shape what patients ultimately pay. Plans with broader benefits can be more expensive for employers and consumers, while plans with lower premiums may come with higher out-of-pocket costs or narrower networks. Trading high premiums for high out-of-pocket costs doesn’t improve patients’ ability to pay the bill. A recent analysis by Kodiak shows the problem clearly: hospitals can expect to receive at most 40% of a patient’s responsibility for services, leaving patients and providers holding the bag.
Flexibility in plan design could give employers and consumers more choices. But greater flexibility doesn’t change patients’ healthcare needs, raising two important questions: What does a plan need to cover for patients to meaningfully access the care when they need it? How does healthcare become more affordable by simply shifting patient dollars from premiums to deductibles and coinsurance?
Affordability and access are therefore difficult to separate. A health plan can be less expensive on paper while still leaving patients unable to afford the services covered by that plan – not to mention whether the cost of their care is fully reimbursed by the plan at all.
“Wide-ranging ACA changes pushed by the administration were finalized in mid-May, including new offerings such as plans with 30% higher out-of-pocket costs, and others with no set networks of doctors and hospitals. …The rule stated, though, that the combined effect of the new provisions could not only cost $1.3 billion each year to implement, but also reduce enrollment by up to an additional 2 million next year. That would come on top of already anticipated sign-up decreases this year because of higher premiums and smaller subsidy payments. Over time, lower enrollment can boost premiums if insurers suspect their costs are rising because healthier people drop coverage more than sicker members do.
… ‘Even more people will lose coverage as healthcare costs and administrative burdens rise,’ said Katie Keith, director of the Center for Health Policy and the Law at the Georgetown University Law Center, who writes frequently on changes to the ACA. ‘All of this comes at a time when millions of consumers are already experiencing a healthcare affordability crisis.’”
KFF Health News: Long-Awaited Rule Aims To Boost ACA Choices While Embracing Higher Deductibles
👥 Working Together
For nearly half of Texans, health insurance is tied to employment. The sustainability of employer-sponsored coverage depends on employers balancing the cost of coverage with wages, hiring, retention and the overall financial health of their business.
For employees, the availability of good coverage can affect both their health and their career pursuits. Losing employer-sponsored insurance can mean higher premiums, different networks or gaps in coverage – and potentially delaying care. New research also finds that 24% of Americans say they are “job locked” – that is, they feel they can’t leave their current job because they need employer-sponsored health insurance benefits. That rate climbs sharply for employees who have chronic conditions.
As high-deductible plans became more widespread and price transparency laws took effect, some believed patients would more readily shop for care to manage out-of-pocket costs. But even when prices are available to all, the fact remains: healthcare is unlike a typical consumer good. Patients do not always choose when they need care, and urgent or complex conditions can make comparison shopping incredibly difficult. A patient arriving at a hospital with a serious illness or injury is not necessarily able to research prices or evaluate competing providers before they need care.
Improving transparency and consumer engagement can help patients make informed decisions when they have a choice. But placing full responsibility for solving systemic healthcare and economic costs entirely on the individual, isn’t a viable solitary solution.
“Small businesses in Texas can’t catch a break when it comes to healthcare expenses. Last month, the Texas Tribune spoke with Texas employers who are carrying a huge burden in the form of rising healthcare prices. New data released just this month indicates that the burden is expected to get a lot heavier in coming months. …Small businesses in Texas are facing a premium increase of 16.88% on average for 2027 according to current federal data. Not only is that above the national average, every insurer has requested a rate increase above the national average.”
Texas Employers for Affordable Health Care: Texas Small Businesses Still Getting Hammered By Healthcare Prices
🔄 Healthcare Circuit
The healthcare system operates like wiring on a computer chip – a miniscule shift eventually impacts the processing capabilities. Changing how care is delivered can affect how it is financed. Changing insurance design can affect what patients can access. Expanding employer coverage can affect business costs. And asking consumers to make more decisions requires giving them information they can actually use.
As far as hospitals are concerned, the goal is not simply to provide more care at a lower price no matter what. It requires collaboration with other stakeholders to improve the healthcare system so that it remains financially sustainable while ensuring Texans can access the right care, at the right time, without cost becoming an insurmountable barrier.
⭐ The challenge ahead is finding solutions that address how to cover cost of care as wholly as possible without shifting the burden onto patients, employers or providers.
Taken together, these pressures aren’t hypothetical or superficial factors affecting affordability – they’re the unsustainable financial reality of hospitals and healthcare across Texas right now. Below are more resources and some of the latest developments to put things into further context.
📖 Learn More
The Dry Side of the Dam: Major Medicaid funding and reimbursement from the Centers for Medicare and Medicaid Services is being withheld from Texas hospitals – resulting in an absence of at least $27 million a day starting Sept. 1, critically impacting Medicaid-heavy service lines statewide. Learn more here.
THA Testifies: On Sept. 1, THA CEO John Hawkins will be testifying before the Texas House Select Committee on Health Care Affordability, sharing hospital perspectives and solutions to lower the cost of healthcare for Texans. Watch the hearing here.
What’s Driving the Cost of Care?
AHA: Current and Emerging Payment Models
Hospitals Want to Bring Costs and Prices Down. Let’s Attack the Root Causes of the Problem.
