The Executive Suite: Is medical debt making patients sicker?

People are often unaware of all the expenses associated with healthcare, until they are racking up their own medical bills.

With a disease diagnosis, for instance, medical expenses can include the doctor’s visits, prescriptions, diagnostic tests, surgery and devices. Health insurance can help, but even people with employer-provided insurance will likely need to pay several direct out-of-pocket costs for copayments, deductibles and coinsurance, in addition to their share of the premium. Then there are the indirect costs for related expenses, such as travel, meals and lodging, as well as lost earnings due to needed time off from work.

It can add up fast and many Americans are not prepared for those costs. In fact, half of U.S. adults report difficulty affording health care. The stress from all those bills can take a toll on a person’s finances, as well as their health. The negative impact from medical care costs, known as “financial toxicity,” has emerged as a key factor in health outcomes.

The harm likely results from a combination of material deprivation (access to resources and care) and psychological distress and can affect health equity and access. Psychological distress alone is associated with significantly higher healthcare expenditures, outpatient expenditures, and outpatient visits. Yet, treatment plans seldom account for the economic distress that can be caused by the cost of care.

Evidence suggests that addressing financial toxicity may improve outcomes.

The real cost of financial toxicity

The emerging evidence shows an association between financial toxicity and worse health outcomes, including the risk of mortality.

In cancer care, for instance, severe financial distress after a cancer diagnosis leads to 80% greater mortality risk in patients with colon and prostate cancer.

“Financial toxicity” has been often associated with oncology, both because of its prevalence – 2 million Americans receive a new cancer diagnosis each year – and for the size of the financial burden treatment can place on families.

Cancer often requires several treatments, including radiation therapy, chemotherapy, surgery, and hospital stays. Extensive treatments make cancer one of the most expensive medical conditions to treat. In fact, a cancer diagnosis increases the odds of a person declaring bankruptcy by 2.65 times.

In today’s healthcare environment, treating cancer is becoming even more expensive as patients are considering newer treatments, including immunotherapy, that carry hefty price tags.

The financial burden of cancer extends into survivorship as well. Even after treatment, cancer survivors report out-of-pocket expenses exceeding 20% of their annual income for ongoing treatment or care for late effects from their treatment.

More than a cancer problem

Financial toxicity is associated with several other disease states as well, including atherosclerotic cardiovascular disease (ASCVD), diabetes and kidney disease.

In fact, financial toxicity is even more prevalent in ASCVD than cancer, impacting 54% of adults with the disease (vs. 41% of adults with cancer). People with ASCVD are 22% more likely to have difficulty paying medical bills, and have 25% higher odds of inability to pay, 28% higher odds of cost-related medication nonadherence, 39% higher odds of food insecurity, and 17% higher odds of foregone/delayed care due to cost. ASCVD impacts about 18.7 million adults in the U.S. Moreover, national expenditures for ASCVD are projected to increase by more than 250% by 2035.

In ASCVD, financial toxicity can lead to cost-related medication non-adherence, delaying needed medical care, food insecurity, depression, and lower quality of life. In diabetes care, financial strain can lead to medication underuse, poor diabetes control, and increased healthcare utilization.

Among social factors, financial hardship has stronger associations with poor glycemic control than other psychosocial and demographic factors. In addition, financial hardship has been associated with a 32% higher likelihood of developing diabetic kidney disease (a debilitating, costly, and preventable complication) compared to individuals without financial hardship.

Financial stress also appears to be a stronger predictor of poor health outcomes in women. In women, financial distress is associated with increased risk of congenital heart disease (CHD), and increased risk for recurrent events, including all-cause mortality, new acute myocardial infarction, and unstable angina pectoris.

The employer’s role in addressing financial toxicity

For many Americans, employment provides a safeguard against the deleterious effects of medical expenses. One of the reasons many employers offer employer-sponsored health insurance is to promote employee health while alleviating worries about finances.

Yet, increasing costs of health insurance and healthcare have led many employers to find savings where they can, sometimes by adopting high deductible health plans (HDHP) and minimum essential coverage (MEC) plans that can lead to higher out-of-pocket costs that leave employees vulnerable to medical debt.

There are tools available to help employees manage their healthcare costs and even erase some of their medical debt, and employers who bundle these tools into their benefits package may benefit from providing these resources to their workforce.

Financial education is one way to help workers prepare themselves in advance for the cost of care and reduce anxiety about costs. Yet, although educational remedies might buffer the psychological distress, they fail to address the root cause of the problem: reducing the burden of out-of-pocket costs.

A healthcare navigator can help with those costs. The navigator swings into action when medical care is imminent (or even after care has been initiated). It can compare prices for medical procedures at different facilities, review bills to guard against errors and negotiate with providers on behalf of the employee.

A navigator can also help identify when an employee is eligible for hospital financial assistance. The Affordable Care Act requires that nonprofit hospitals provide some form of financial assistance. These programs can eliminate out-of-pocket costs for patients who meet certain income requirements and, in some areas, reduce costs for patients from households making up to 600% of the federal poverty line. Yet, more than half of Americans are unaware that these programs exist.

These tools and programs might not eliminate financial toxicity in American healthcare, but they can help reduce it and allow patients to focus more of their energies on their physical health.