Survey: Consumers Blame Insurance Companies for Cost Surprises

Published October 24, 2018

Fifty-three percent of respondents said they had received surprise bills for a doctor’s services, 51 percent for lab tests, 43 percent for hospital or health care services, 35 percent for imaging screenings, and 29 percent for prescription medications.

NORC surveyed approximately 1,000 adult patients, 57 percent of whom said they had been surprised by a medical bill. The poll included 1,002 interviewees chosen as part of a sample of Americans using NORC’s probability-based AmeriSpeak panel, designed to be representative of U.S. households. The reported margin of error was +/- 4.2 percentage points at the 95 percent confidence level.

‘Little Incentive’ for Understanding

Shikha Dalmia, a senior policy analyst at the Reason Foundation, says the nation’s current insurance-heavy health care system, a product of government policies, fosters patient confusion.

“There are two aspects of our current health care system that encourage patients’ ignorance of benefits: the reliance on a third-party system of insurance in which patients don’t have to shop for individual health care services, and the fact that a vast majority of consumers don’t even shop for their own coverage, because someone else does it for them,” Dalmia said. “[Patients] purchase insurance, and insurance pre-covers a whole slew of benefits, and they use them as the need arises. They have little incentive to ask for prices in advance.”

Relying on Employers

Ed Haislmaier, a health care policy and markets expert at The Heritage Foundation, says coverage information is readily available to consumers, but people tend to rely on their employers to explain their coverage and benefits.

“There are requirements in law for explanation of benefits,” Haislmaier said. “And more requirements were added by the Affordable Care Act. It doesn’t seem to be a matter of not telling people. Most people with private insurance are getting it from their employer. They are not actively going out and buying it themselves. It’s being given to them. They are less likely to know about [their coverage] because they didn’t have to go out and research and make a purchasing decision, like with homeowners insurance, car insurance, or people who go out and buy their own insurance coverage.

“This is particularly true for people who do not have a chronic or known medical condition,” Haislmaier said. “Unless you have a chronic condition like diabetes, where you are likely to investigate the policy to understand what is or isn’t covered, you probably don’t put in the effort finding out.”

Narrowing Networks

The majority of respondents in the NORC survey said unexpected charges came largely from an in-network provider. Haislmaier says this is the result of the industry’s recent shift to narrower provider networks.

“There is this question of who is or isn’t in the network of providers,” Haislmaier said. “In some cases, that is driven by the payer system. People will identify the insurance company to blame, but the insurance company is usually just administering it for the employer.

“The other issue you get into with narrow networks is dealing with consolidation on the provider side, particularly with the hospital system, which has a tendency to drive up costs,” Haislmaier said. “You will see some of these monopoly or dominant systems and health insurance plans trying to work around them because they’re charging higher costs.”

‘Hyper-Aware’ Elsewhere

Dalmia says the people who find themselves most surprised by the insurance system tend to be those who don’t use it much.

“By and large, the people who are surprised that something isn’t covered or who discover what’s covered at the point of service are the people who have employer-provided coverage and are probably in relatively good health and don’t use their coverage that often,” Dalmia said. The key is to return direct consumer choice to the system.

“Bringing consumers back into the purchasing equation would help alleviate patients’ ignorance of benefits,” Dalmia said. “In India, where I come from, when people purchase coverage, they are given an upper limit of how much a plan covers and, within that limit, how much their insurance would cover for each service. So, for example, the plans tell patients in advance that if they need a heart transplant, the insurance would kick in X amount. The patients then can compare various plans to see which one suits their needs best.

“There are obviously problems with this, too, but patients are hyper-aware of the prices of medical services and don’t encounter surprises,” Dalmia said. “It also produces price competition that forces insures to provide better quality at lower prices. None of that exists in America, where prices always go up.”

INTERNET INFO:

“New Study Reveals 57% of Americans Have Been Surprised by a Medical Bill,” National Opinion Research Center, University of Chicago, Sept 4, 2018: http://www. norc.org/NewsEventsPublications/ PressReleases/Pages/new-survey- reveals-57-percent-of-americans- have-been-surprised-by-a-medical- bill.aspx.