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RESEARCH Healthcare When It’s Needed

How to Mitigate High Costs and Deferred Care



Healthcare markets have been extraordinarily dynamic over the past year, with significant public policy changes implemented—or at least contemplated—at both State and Federal levels. Employers, insurers, and providers are trying out new ways to contain costs and improve services. In order to be sustainable and effective, it is essential for public policy and private innovation to be designed with the consumers of healthcare at the focus.

In January 2018, the JPMorgan Chase Institute released Deferred Care: How Tax Refunds Enable Healthcare Spending highlighting the powerful role that cash flow dynamics play in determining when consumers get healthcare. The report focused on one of the most important cash flow events of the year—tax refunds—and found that consumers delayed care in the months before receiving their refund and immediately increased their out-of-pocket healthcare spending by 60 percent as soon as the tax refund arrived. Moreover, 62 percent of the tax refund-triggered additional healthcare spending was paid for in person and represented deferred care (just 37 percent represented deferred bill payment).

Key Takeaways

Bringing together the perspectives of an employer, healthcare provider, insurer, and an innovator reinforced three key takeaways for how to reduce total healthcare costs and help consumers receive the care they need when they need it and not just when they have the cash to pay for it.

  • Key Takeaway 1: We should focus on achieving medical adherence and behavioral change, rather than merely applying price pressures on consumers to drive behavior change.
  • Key Takeaway 2: Healthcare providers need to be incentivized by paying them more for better health outcomes.
  • Key Takeaway 3: We need to apply bureaucracy-busting processes, data, and technologies to bring down disproportionately high administrative costs in the healthcare system.

Coinciding with the report release, JPMC Institute President & CEO, Diana Farrell, led a panel discussion on the implications of these findings for insurers, healthcare service providers, market innovators, and employers at the 36th Annual J.P. Morgan Healthcare Conference. Representing these perspectives were Bruce Broussard, CEO of Humana; Toby Cosgrove, the former CEO of the Cleveland Clinic; Bob Kocher, a Partner at Venrock; and Bei Ling, the Global Head of Compensation and Benefits at JPMorgan Chase.


J.P. Morgan Healthcare Conference Panel from left: Diana Farrell, Bob Kocher, Bei Ling, Bruce Broussard, and Toby Cosgrove. January 8, 2018.


These top-of-the-line practitioners validated the report findings that affordability plays a role in healthcare utilization. When Medicaid expanded in Ohio, Cleveland Clinic saw a 60 percent increase in the number of Medicaid patients and an 86 percent increase in outpatient visit but only a 20 percent increase in inpatient visits.

They also highlighted potential links between the growth of high deductible plans and consumers’ healthcare utilization patterns. As an insurer, Humana sees evidence of care being delayed but also care being skipped entirely. In addition to the cash flow problems identified in our study, out-of-pocket costs appear to drive consumers to skip even “high value” care, such as preventive care and medication adherence. Unfortunately, it appears that giving consumers more "skin in the game" causes them to defer “high value” care.

As the degree of coinsurance in standard plans has expanded, the Cleveland Clinic has seen a shift in demand for outpatient and diagnostic services toward the last quarter of the year, when patients are more likely to have reached their deductibles (but no shift in the timing of demand for inpatient care).

But these outpatient services almost always reduce complications and bring down the total cost of care. High levels of coinsurance encouraged consumers to avoid using all healthcare services, not just the high-cost care. This is not an effective way to contain healthcare costs.

Yet, reducing total cost is crucial for ensuring that consumers get the care they need, when they need it. Across government, employers, providers, charities, and patients—someone has to cover these costs. Shifting the burden back and forth among these players will not address the fundamental problem of affordability. Bringing together the perspectives of employers, healthcare providers, insurers, and innovators, the panel reinforced a few key takeaways for how the healthcare system can reduce total healthcare costs in order to help consumers receive the care they need when they need it and not just when they have the cash to pay for it. We highlight three key takeaways that deserve continued attention and focus at a time when healthcare costs are on the rise and too many families do not have enough cash to weather extraordinary medical payments.