Both the insured and the uninsured receive help; benefits are temporary
Even those with health insurance can have trouble paying large medical bills.
Medical debt is the number one contributor to personal bankruptcy in the US, and naturally, the more than 31 million uninsured Americans are most at risk. But many of those who do have coverage are actually “underinsured,” plagued by high deductibles, copays and other out-of-pocket costs they can’t afford.
Hospital financial assistance programs are designed to ease this burden for both the insured and the uninsured by forgiving past bills and reducing future cost sharing for patients.
The programs have another benefit, a worksheet suggests: Help patients get treatment they might not otherwise be able to afford for serious, chronic health problems.
Financial assistance means more access to care
The study, forthcoming in the American economic review —written by Alyce S. Adams and Neale Mahoney of Stanford, Raymond Kluender of Harvard, Jinglin Wang of New York University, Francis Wong of the National Bureau of Economic Research, and Wesley Yin of UCLA Anderson— analyzed hospital medical records from over than 18,000 participants in the financial program. Kaiser Permanente health maintenance organization assistance program in Northern California.
The authors found that patients who were eligible for the program received more diagnostic tests than similar patients who did not receive assistance, and these tests revealed cases of heart disease, diabetes and other serious conditions that, if caught early, can be controlled. The analysis also showed increased use of prescription drugs for the treatment of high cholesterol, diabetes and depression.
“The increased detection of abnormal health conditions, a precondition for appropriate treatment, along with the increased utilization of medications for treatment-sensitive conditions suggest that financial assistance increases the use of high-value care for at least some patients,” the authors write.
The Kaiser program also showed a large, positive but short-term effect on the use of other health care services: participants were 20% more likely to seek outpatient care, 58% more likely to visit a hospital or clinic and almost 53% more likely to go to the ER within three months of receiving care.
A study published in 2021 in the Journal of the American Medical Association estimated that the total number of Americans medical debt amounted to $140 billion. (Kluender, Mahoney, Wong, and Yin coauthored the study.)
Hospital financial assistance programs help fill the gaps left by the health insurance system, offering debt relief and reduced out-of-pocket costs for those who qualify, helping to ensure participants continue to receive the health care they need .
The programs are also required for hospital tax exemption. To maintain that status, hospitals must provide free or reduced-cost care to patients who cannot pay. In 2018, hospitals provided $26 billion in charity care, including $6 billion for patients with insurance. That equates to 1.5% of the total expenses of a medium-sized nonprofit hospital.
For the study, the authors analyzed the electronic medical records of more than 18,000 patients who applied for financial assistance with the Northern California division of Kaiser Permanente. Overall, Kaiser operates in eight states, serving more than 12 million patients with 39 hospitals and more than 700 physician offices. To qualify for assistance, patients’ family income must be at or below 350% of the federal poverty level (about $64,000 for a family of two).
Because Kaiser operates an integrated health system, patients receive all of their care at its facilities. As a result, the authors were able to examine more than 96% of applicants’ health care expenses, including outpatient and emergency room visits, hospital stays, prescription drugs, and lab tests and results. The majority of applicants, about 88%, had private health insurance or coverage under a Medicare Advantage plan.
Due to the income limit, the authors were able to compare applicants who were eligible for assistance with those with similar demographic and health conditions but who did not meet the eligibility requirement.
Limits on U.S. Health Care Funding May Mean Worse Outcomes
The analysis finds that financial assistance increases utilization of health services in the first quarter after a patient is approved. An approved applicant is:
- 3.6 percentage points more likely to have a hospitalization than a patient who does not receive care;
- 13.4 percentage points more to receive outpatient treatment; Y
- 6.7 percentage points more likely to visit the emergency room.
Beneficiaries were also more likely to receive laboratory tests. Thanks to the increased number of tests, there is a greater chance of identifying an abnormal health condition. Participants are twice as likely to have a test that identifies high cholesterol and thus increases their use of cholesterol-lowering medications. Financial assistance increases the use of medications to treat depression by about a third.
The effects are similar to those found in a previous study of Medicaid patients in Oregon, but with one key difference: Medicaid benefits persisted for a year and a half after acceptance into the program, while the effects of the Kaiser program, which reduces patient cost sharing for only six to 12 months, was reduced in the second trimester after acceptance and largely disappeared in the third trimester.
While highlighting the benefits of hospital financial assistance programs, the study highlights some of the limits of the US system for paying for health care, Yin says in an email exchange. The programs are small and, compared to government-sponsored Medicaid, the benefits are limited.
“These programs are not a substitute for formal insurance, despite their benefits,” says Yin. “We have to ask ourselves if it makes sense for hospitals to play the role of insurer of last resort, let alone rely on them to do so.”