Insured but not protected: Time to eliminate cost-sharing for trauma care

The fundamental purposed of health insurance is to protect against financial distress when paying for medical care. When patients are required to pay less than the full price for healthcare, however, they are more likely to consume both necessary and unnecessary healthcare services. The risk that an individual would over-consume unnecessary healthcare services when they are protected against the full costs of care is referred to as the “moral hazard” of health insurance.¹ Traditionally, insurance companies have used consumer cost-sharing—in the form of deductibles, copayments, and coinsurance—to reduce patients’ likelihood of consuming unnecessary care. Over the past decade, as healthcare costs have risen dramatically, insurers have increasingly shifted the burden of healthcare costs to patients in the form of high-deductible health plans (HDHPs).² Today, over 30% of privately insured individuals are enrolled in HDHPs,² with maximum out-of-pocket (OOP) spending limits as high as $7,000 for individuals and $14,000 for families. In this edition of Annals of Surgery, Dr Fu et al. use thoughtful and robust analyses to shed light on the potential for significant harm to patients enrolled in HDHPs when cost-sharing is used as a blunt instrument for a condition that is not subject to moral hazard.³

Although major traumatic injury is the archetypical example of why health insurance and risk pooling exist, it is also an excellent example of healthcare use that is not subject to inappropriate overuse. During debates around the passage of the landmark Affordable Care Act, President Barak Obama used the catastrophic cliché of getting ‘hit by a bus’ and ending up in the emergency department to highlight the importance of health insurance coverage for otherwise healthy adults. This example is commonly used because traumatic injury is crosscutting and affects individuals of all ages, races, socioeconomic strata, and baseline health levels. However, although everyone in society is at risk of sustaining a major traumatic injury, no one would be at risk of overconsuming an unnecessary emergency splenectomy or resuscitative thoracotomy if cost-sharing were eliminated. While patients with minor cuts or sprains may be at risk of overconsuming emergency care if their OOP costs were zero, the arguments underlying the moral hazard of health insurance coverage simply do not apply to the victim of a motor vehicle crash who is intubated in the field and transported to the hospital via ambulance.

Nonetheless, in this edition of Annals of Surgery, Dr Fu et al. demonstrate that patients admitted to the hospital for traumatic injuries face thousands of dollars in OOP healthcare expenses.³ As one might expect, OOP spending increased as injury severity and hospital length of stay increased. However, even patients who were only admitted to the hospital for a single day paid an average of $3,400 OOP in the year after discharge. Most notably, however, was the finding that patients with high-deductible health plans spent an average of over $5,000 OOP after admission for traumatic injuries. These numbers are striking given the findings from a recent national survey by the federal reserve which determined 46% of adults could not cover an emergency expense amounting to $400.⁴ Accordingly, Dr. Fu et al. find that almost 13% of patients with HDHPs had OOP spending levels that surpassed the World Health Organization’s threshold for so called “catastrophic healthcare expenditures.”³

Unfortunately, high OOP costs and associated medical debt are not the only contributors to the “financial toxicity” associated with major traumatic injuries. Working-age patients who become severely injured are often unable to return to work due to the development of trauma-associated chronic conditions such as new mental health challenges or physical disabilites.^5,6 The inability to return to work may result in income loss and subsequent difficulty with non-medical expenses such as food and housing costs.⁵ As a result, additional healthcare spending may become unaffordable, and thus patients are forced to forgo the very care that they need to fully recover from their injuries so that they can return to work, reestablish their income, and pay off their new medical debts.^5,6 Unsurprisingly, worse financial toxicity is associated with worse physical health, mental health, and quality-of-life after major traumatic injuries.⁶ This vicious cycle represents the “double jeopardy” of injuries in the United States, whereby those with more severe injuries are also at greatest risk for severe financial toxicity after injury in the forms of higher OOP spending, unemployment, and income loss.

One potential strategy to mitigate the risk of financial toxicity after major traumatic injury is to eliminate cost-sharing. Cost-sharing for trauma care is minimal for patients insured by Medicaid, Medicare, no-fault automobile insurance, or workers compensation. Conversely, Dr. Fu et al. highlight the catastrophic levels of OOP spending commonly experienced by working-age adults with commercial insurance who are admitted for traumatic injuries.³ Value-based insurance design (VBID) is a compelling alternative to using consumer cost sharing as a blunt instrument. By reducing the scope of low- or no-value services covered by the insurer, cost-sharing can be reduced or eliminated for higher-value services without increasing premiums.⁷ The so-called “V-BID X” plans take a more clinically nuanced approach to incentivize the health care services that improve patients’ health and disincentize the services that do not.⁷ As outlined above, elimination of cost-sharing for major traumatic injury would not result in increased use of unnecessary healthcare services. Concerns that elimination of cost-sharing could result in overuse of the emergency department for minor injuries could be addressed by application of some minimum injury severity threshold to the no-cost-sharing provisions, especially in cases where patients may be able to seek care at lower-cost alternatives.

There are multiple strategies and multiple reasons to improve financial risk protection after major injury. Given the negative impact of high OOP spending and financial strain on long-term metal health, long-term physical health, and subsequent return to work after major traumatic injury,^5,6 employers would be prudent to provide their employees with health insurance plans that protect them from catastrophic financial strain after injury. Provisions that exclude spending on major traumatic injury from patient cost-sharing, which could reasonably be cost-neutral to insurers,⁷ could thus benefit the economy, employers, and most importantly--our patients. A second potential strategy would be to use means-based deductibles, in order to protect low-income employees who are most at risk for financial toxicity due to high OOP spending. A third strategy would be the expansion of a minimal cost-sharing public option to more of the US population, as championed by proponents of “Medicare-for-all” or “Medicare-for-more” policies. However, regardless of which strategies are taken, these changes are long-overdue. The time has come to eliminate cost-sharing for traumatic injuries so that we not only help our patients survive after their injury, but also thrive.