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Facing the Gathering Storm

A perfect storm of deferred care, rising costs, and record-breaking inflation is going to hit every employer in 2023. While funnel clouds can be incredibly destructive, they’re also somewhat fragile. Here's how to apply mitigating pressures and save your team from the worst of this economic turmoil.

Stormy sky

By Brian Whorley

I live in a part of the country where, especially in the summers, the wise keep an eye on the sky. Usually it’s just for the joy of watching the sunset, when the warm orange glow of day melts into the cool purple of night. But those with long memories keep a watchful eye out for certain gathering clouds; they understand that the right conditions can be quite dangerous.

Every year, somewhere within an hour’s drive of mid-Missouri, a tornado touches down. And every year, once the wind and heartache have passed, the affected community begins to rebuild.

As I look at the horizon beyond today’s headlines, I see a once-in-a-generation storm brewing — one that will touch down with damaging impact on employers in 2023 and 2024. Here’s what I see.

1. There is still pent-up demand for health care.

If you’re an employer or benefits advisor, you know that insurance premiums have been rising annually for a couple of decades now. The primary pressure release valve has been to shift costs to the employee in the form of higher cost-sharing.

While this solved the immediate fiscal challenge for employers, it created an unseen issue: Many employees defer or skip care. By 2019, Gallup reported one-third of Americans had delayed medical treatment due to cost concerns.

Then came the COVID-19 pandemic. By May 2020, the Kaiser Family Foundation reported that 50% of Americans delayed care due to the COVID-19 pandemic, and patient volume has still not returned to pre-pandemic levels. The spike of virtual visits, while promising in concept, has abated. Health care, like life in general, is returning to in-person exchanges.

Unaddressed health issues will worsen until they can no longer be ignored and will require serious medical interventions. Pent-up demand for care will eventually come home to roost in 2023 and 2024, which should worry every self-funded employer keeping an eye out for large claims.

2. Inflation has roared into everyone’s lives.

While employers have plenty of reasons to worry about inflation driving up their costs amid global supply chain issues, they might not fully appreciate what it will do to the cost of health benefits for their employees.

With the Consumer Price Index up more than 8% from 12 months ago, the share of employees’ budgets available for health care costs has shrunk dramatically. The average employee making $50,000 annually has $4,250 less to spend on health care today than they did one year ago.

This will further increase the rate of deferred care except in the most serious of cases, which will worsen large claims and create a productivity headwind as employees become more absent, stressed, and sick.

3. Our health systems are stressed.

The pandemic revealed the immense value and vulnerability of our medical professionals — particularly nurses — and our medical supply chain. Providers and health systems that compassionately cared for all of us during the pandemic silently struggled to keep their doors open, staffed with people, and stocked with supplies.

The Cleveland Clinic reported an operating loss for the first quarter of 2022 amid higher costs and lower overall admissions. Some hospitals are reportedly looking to increase prices by as much as 15% to afford nurses’ salaries. These higher prices will work their way through the system over the next two years and eventually wash ashore upon self-funded employers.

4. Employers will continue to look for savings.

Facing higher interest rates, economic uncertainty, and the increasing likelihood of a recession, employers will be slower to hire and will look for savings to improve earnings. Tech giants like Meta have already begun to freeze hiring, though there are still more job openings (11.5 million at time of publishing) than available talent in the market.

Many who read this magazine are people leaders and benefits decision-makers who recognize that health plans have been a source of significant savings over the past 20 years as employees have transitioned to plans with higher deductibles and lower premiums. At the same time, all people leaders know that a valuable benefits package is a key part of recruiting and retaining talent.

Economic challenges and ongoing employee turnover will put employers between a rock and a hard place in 2023 and 2024.

With all of these factors combined, employees who can no longer delay care will be more exposed to the highest pricing for health care that this country has ever seen — at a time when they can least afford it.

The HSA is an insufficient answer.

We’ve moved en masse to consumer-driven health care plans without providing people the means to actually shop and pay for care. That’s especially true today, when people spend their savings from lower premiums just to gas up the car.

When I visit with employers, sometimes we wonder why, nearly 20 years after the inception of health savings accounts, there are only 32 million HSAs open in a country of 330 million Americans. That looks even worse when you consider that most HSAs are functionally empty (with balances well below their annual deductible).

An empty HSA can’t pay for care. About 20% of HSAs have $0 in them, and 20 million accounts have less than $1,000 at a time. In fact, 75% of HSAs have less than the average high deductible ($2,349).

The vast majority of dollars accumulated in HSAs ($64 billion of the $100 billion in all the HSAs in the U.S.) are held by savvy savers and investors who are banking those funds for later in life. (I’m one of them.) While we should care about everyone, those folks will weather the coming storm. Our most urgent attention, however, should be on the vast majority of folks who lack shelter.

There is shelter from the storm.

In the face of this gathering storm, helping employees access and afford care should be our first order of business. When we rebuild after each storm in the Midwest, we do so with better and more durable structures.

We are building Paytient because we believe credit (always free and without interest) is the simple and affordable way to give employees time to pay for care on their own terms. We take the stress out of the most painful part of health care: paying for it.

Provided without financial risk by employers to their employees, Paytient can give every employee access to $2,000 or more in health care credit on a Paytient Visa card for less than $4 per employee per month. The Paytient card works for medical, dental, vision, pharmacy, and mental health care — it even covers veterinary care for pets.

Paytient empowers our members to effortlessly avoid unexpected out-of-pocket expenses by giving them time to repay. Financially savvy employees often are the first users in any employer group because they use the pay-over-time feature to protect and grow their HSA accounts.

We turn today’s patients into Paytients.

But Paytient is so much more than interest-free credit and a fix for next year’s challenges. The experience we’ve created is one that transitions a person from being a patient — beholden to the aches and pains of the current system — to one where they’re equipped with the resources they need and the dignity of control over their health care choices.

The word “patient” is a fascinating homonym. While the Oxford dictionary describes the adjective as being “able to accept or tolerate delays, problems, or suffering,” the noun relates to “a person receiving or registered to receive medical treatment.” Why is it that those two definitions seem to be so inextricably linked?

Our vision is to turn today’s patients into Paytients — empowered consumers of care who can effortlessly access and afford care for themselves and their families.

This year, we’re proud that nearly half a million Americans now call themselves Paytients. With an NPS rating of 97, new providers and insurer partners — including Centene and LCMC Health — are beginning to take notice and use Paytient to empower their own patient experiences.

Whether you partner with Paytient or find other innovative ways to address these challenges, I hope you’ll take steps to insulate your organization and your team from the vicious cycle of deferred care amid rising costs in this inflationary environment.

While funnel clouds can be incredibly destructive, they’re also somewhat fragile. A slight shift in the wind, a slight warming of air temperatures, and they evaporate into thin air. Let’s apply those mitigating pressures and save our teams from the worst of this economic turmoil. If we can help in any way, please get in touch.

Brian Whorley is the founder and CEO of Paytient, a company dedicated to helping people better access and afford care. Paytient works with employers, partners, brokers, and health systems to provide a healthier way to pay for out-of-pocket care expenses.

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