As health care costs in the United States continue to rise, affordability challenges persist, even among individuals with insurance. A 2023 KFF survey of insured adults found that 41 percent of respondents “skipped or delayed some type of care in the previous year due to cost,” while two-thirds of respondents in “fair” or “poor” health reported a problem with their insurance in the previous year, including claim denials, prior authorization delays, and unexpected expenses. Robust consumer protections can address these challenges, helping individuals with insurance receive the full value of their coverage.
The United States reached a record-low uninsured rate of 7.7 percent in the first quarter of 2023—and ensuring the affordability and value of that health insurance is a major priority for consumers and policymakers. Accordingly, states are building on federal efforts to implement their own reforms to protect individuals from common provider and insurance industry practices that can compromise affordability and hinder access to care.
In the second session of the Center for American Progress’ series on state health care affordability, CAP Health Policy Director Natasha Murphy moderated a discussion with Dr. Deidre Gifford, executive director of the Connecticut State Office of Health Strategy and senior adviser to the governor for health and human services, and Jonathan Wolfson, chief legal officer and policy director at the Cicero Institute, who shared insights from Connecticut, Tennessee, and Texas on regulating facility fee billing and allowing consumers to apply the cash prices they pay for health care toward their insurance deductibles.
Connecticut is prohibiting facility fees for certain services and requiring hospital and health system reporting
Connecticut has one of the lowest uninsured rates in the country. The state is now prioritizing protecting residents from unnecessary health care expenses by sharply limiting the use of facility fees. Facility fees are charges billed by a hospital or health system for outpatient services provided in a hospital-owned facility (including facilities not located at a hospital) and are intended to compensate for operational expenses. Connecticut’s approach, which Gifford described as a “facility fee mandate,” is a multipronged effort that is a part of a coordinated and intentional strategy to comprehensively reduce health care costs while simultaneously improving out-of-pocket affordability for all Connecticut residents.
By requiring insurance companies to credit cash payments toward deductibles, Texas and Tennessee are enabling consumers to seek lower-cost care options
People with insurance may be surprised to learn it can sometimes be cheaper to pay cash for a health care service rather than use their coverage. This is because any payments made using a person’s insurance are based on the insurer’s negotiated, or “allowed,” amount for a service. Unfortunately, if a person decides to save money by paying in cash, that payment often does not count toward meeting their insurance deductible. This comes at the expense of patients: A 2023 Cicero Institute analysis found that a patient in Nashville could save more than $1,900 on a colonoscopy by paying the cash price instead of the insurer reimbursement rate. Patient’s Right to Save legislation, which Tennessee and Texas recently passed, requires insurers to count cash payments toward deductibles, rewarding consumers for making price-conscious decisions and enabling them to save money while using their insurance. Wolfson noted that the law creates a new incentive for more cost-effective care.
Federal-state partnerships are critical to advancing affordability via consumer protections
Gifford and Wolfson acknowledged that while states can lead and innovate, they often reach a point where federal support becomes essential to realize the full effect of consumer protection policies, especially given the federal government’s oversight role for different segments of the health care market. A collaborative federal-state approach is crucial to creating a health care system that is both affordable and accessible, as it ensures that innovative policies at the state level are supported and amplified by federal leadership and enforcement.