How Health Insurance Design Affects Access to Care and Costs

How Health Insurance Design Affects Access to Care and Costs

Health insurance is meant to ease the strain of medical bills for individuals. However, due to its complexity, sometimes it can seem like more of a burden than a benefit. Many people go without care due to various reasons, including the design of policy procedures. We take a look at how the way plans are structured affects access to care and costs.

High Costs

Cost-sharing health policies are often too difficult for the average person to understand easily. It’s a complicated process to estimate the expenses in advance. Research shows that the uncertainty in the payments is affected by four design characteristics:

  • Type of charges, including copayments, coinsurance, or deductibles.
  • Rate of payments.
  • Annual caps on cost-sharing.
  • When fees are due (point of care, billing after treatment)

Many of these aren’t explained adequately to the individual, and when the bills start piling up, they can’t understand why. Even if people have a good plan offering a broad spectrum of coverage, they’re less likely to use it. 

This is because they lack an understanding of what the insurer covers and what shortfall they need to pay for.  

Policy Choices in the Design of Cost-Sharing Programs

The four design characteristics are used in several combinations for most health insurance programs. For example, in America, copayments are typically used to pay for prescription medicine. It’s combined with different levels to encourage people to use generic or lower-cost alternatives. 

Annual out-of-pocket costs are limited per person or family unit. Specific health services, such as pregnancy care, are exempt from cost-sharing. Current packages are designed in the context of fee-for-service. In other words, providers get paid for any services they provide. 

This is changing from a volume-based outlook to a more value-oriented health care provision. One example is that bundled payments will pay for the full cycle of care provided by multiple medical professionals. 

The cover is worked out as one overall price for a group of treatments. Insurance providers can offer packages to stimulate the use of in-bundle therapies rather than only focusing on a cure.  

Lack of Health Literacy 

Often doctors aren’t sure themselves whether a policy covers a particular procedure or not. Medical practitioners aren’t able to tell patients which combination of treatments their insurance covers. 

This is primarily because these vary across health plans, and some groups may be exempt from these payments. The lack of clear information may cause people to forego treatment since they fear that it could cost them a lot of money. 

However, there are other alternatives they could consider which fall within the insurance plans package. This knowledge is ‘health literacy.‘ It’s the ability to process and comprehend the information needed to make appropriate health decisions. 

Policy Design Improvements

With so much information gathered from individuals regarding current policies, it’s clear that the most crucial factor is cost transparency. People want to know precisely how much they’ll need to pay to a provider if they need treatment. 

This clarity needs to be from both sides, and doctors should know how the policy covers various therapies. Personnel must understand the factors that affect copayments, coinsurances, and deductibles. 

They need to inform the patient so they can make an informed decision. In this way, the individual can carefully choose whether or not they want to proceed with the medical care required. 

Final Thoughts

Medical insurance is essential, so if you get ill or injured, you’ll get the care you need. Unfortunately, due to the lack of health literacy and the complex calculations required to estimate costs, many people forego much needed medical treatment altogether. 

Some changes can be made to current policy designs that offer clarity on both charges and the cover that a person has. Insurers need to consider how present design flaws affect how their clients use the medical policy and adjust it accordingly, so it’s fair for both parties.

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