Could a Cash-Based System Help Eliminate Health Care Barriers?

If you were to Google the biggest barriers in health care, you’d almost immediately identify the issue of affordability of vital health care services for the average American. For one, there’s the massive gap in health insurance. A whopping 27.5 million Americans are uninsured according to KFF,¹ and though recent federal reports show a decrease in the uninsured rate, much of this is attributed to Medicaid, which we know is running out for millions. There’s also the problem of being under-insured, a term describing individuals who have high health plan deductibles and high out-of-pocket medical expenses relative to their incomes. Both groups are more likely to have difficulties paying medical bills and to forgo medical care and essential treatments because of cost. Furthermore, the insurance process is often a barrier for primary care physicians and other clinicians as the regulations often impede their ability to provide the best care. It is apparent that the concept of inadequate insurance and poor health care are intrinsically linked but very little has been done to address this problem.

But what if insurance wasn’t a part of the equation? What if we lived in a world where high deductibles and out-of-pocket costs were not a barrier to receiving life-saving, or even preventive care? We are starting to see this new world actualize as the role of cash in health care becomes increasingly vital. Already, providers across various segments of health care services have begun pivoting away from insurance, instead offering customers unlimited care at a fixed monthly cash price. They’ve discovered the beauty of not having to deal with insurance companies, yielding better financial returns for them. Moreover, this shift puts primary care physicians in a position to democratize health care, while still earning money for providing valuable services. Perhaps even more significantly, this shift is positively impacting the most vulnerable and disadvantaged Americans who find cash options to be consistently cheaper and more accessible.

That said, we’ve yet to achieve this system universally. Before diving into what a cash-based health care ecosystem looks like, it’s important to understand why cash is so essential and to whom it matters most.

America’s most disadvantaged groups need cash options

Disadvantaged groups are feeling the sting of health care costs – so much so that many are foregoing health care because they can’t pay for it. Studies suggest that social determinants of health account for 30% to 55% of health outcomes and JAMA Network reports racial and ethnic minority populations have a greater burden of disease than more advantaged groups.² This has been the case for some time as socioeconomic and racial disparities in health care endure.

The relationship between one’s identity and/or socioeconomic status and ability to pay for insurance is a nuanced conversation. We know, however, that more than half of Americans rely on employers for insurance. Given that unemployment rates are typically higher for Black and Hispanic communities in the U.S. than for the White population, for example, we can see that access to insurance through an employer is a huge barrier to care. This results in a disproportionate amount of marginalized groups in the unemployed population without insurance and, therefore, without health care.

In addition to racial disparities, the future of work is not favoring employer insurance as the rapid expansion of the “gig economy” is thrusting a huge crop of part-time workers into the uninsured category.

It’s becoming increasingly obvious that the insurance model is not sustainable if the goal is to ensure every American has health care access.

Imagine a cash-based health care system

Ushering in a cash-based health care system has the potential to democratize health care, making it accessible for everyone and not just those who can afford it.

One of the largest opportunities to expand this idea is in primary care. Consumers are concerned about the cost of care, and they need a predictable, low-cost, monthly cash option that is way lower than the typical combination of paying premiums, deductibles and copays. Such a monthly subscription framework, where everyone in a group will pay a fixed monthly fee, will ensure sustained and viable income for the providers, while the larger pool of subscription payments than actual monthly utilization will ensure that the cost per subscriber is lower. These options will benefit consumers in both individualized models as well as group models.

Furthermore, if costs are more predictable for consumers, they’ll be much more able to get the care they require, which continues to be a barrier for those uninsured and underinsured groups. Kyna Fong articulates the uniqueness of the patient-provider relationship in the primary care setting and asserts that process-based health care for primary care physicians is taking away (rather than providing) the tools they need to perform their jobs successfully. Making primary care more accessible will produce better overall health outcomes at a much lower cost.

The players who can bring the cash-only revolution to fruition

Consumers are playing a large role in driving the change towards cash-only care, but they can’t do it alone. Health-tech startups, lawmakers, and even health care legacy companies are going to be essential in actualizing an equitable health care system through a cash-only model.

Fortunately, we are beginning to see some of these changes take shape. Direct primary care (DPC) clinic chains such as Nextera and virtual primary care (VPC) platforms such as CaringWire and Mishe are offering cash-based membership options – offering fixed monthly subscriptions or other cash pay options covering primary care services including clinical and laboratory services, consultative services, care coordination, and comprehensive care management. There are also platforms attempting to bring pricing transparency to consumers (GoodRx), providers (Fairmarket Health), brokers (Ease) and self-funded employers (myDrugCosts).

However, as many innovative companies attempt to usher in change and transparency, they do face obstacles in creating awareness and then driving adoption. This is due to the fact that the health care system is tightly gridlocked with system intermediaries whose recommendations, for the most part, are driven by how their incentives stack up rather than what options realistically benefit their clients. Since the entire health care system at the federal level (Medicare, Medicaid, etc.) and state level define their savings through the quantum of rebates they earn off a high reference price for reimbursement, rather than accessing care at significantly lower reference prices, lawmakers, too, have a long way to go to understand how much a cash-based primary care system can benefit their constituents.

Moving towards a cash-only health care system is not going to solve all of our problems. There are still many systemic barriers preventing vulnerable groups from getting the health care they need and deserve. But this is a first step, and it’s one that is paving the way for even more democratization in health care – a future we all can and need to get behind.

This article originally appeared on Medical Economics.

References

1. Key Facts about the Uninsured Population. News Release. KFF. December 19, 2022. Accessed June 30, 2023. https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/

2. Hamad R, Galea S. The Role of Health Care Systems in Bolstering the Social Safety Net to Address Health Inequities in the Wake of the COVID-19 Pandemic. JAMA. 2022;328(1):17–18. doi:10.1001/jama.2022.10160