About 40% of collectible healthcare dollars in the U.S. now come from uninsured patients, according to research released this week by healthcare billing company Cedar.
The share of dollars from uninsured Americans has risen by 54% in just three years, the report said.
The reasons behind this are bigger than any single policy change, noted Cedar CEO Florian Otto. Medicaid redeterminations, decreased ACA subsidy support and coverage churn absolutely matter, but he thinks these factors are interacting with a much broader shift in the market.
“The deeper issue is that more financial responsibility is being pushed onto individuals at the exact moment many families are less equipped to absorb it. That is why uninsured patients are becoming a larger and more consequential part of the revenue picture. In that sense, I would not treat this as a temporary spike. I would treat it as a signal of where the system is headed if affordability and coverage stability continue to erode,” Otto remarked.
The fact that so many Americans are unable to afford health insurance changes the economics of providers’ revenue cycle in a profound way, he pointed out.
When more of an organization’s revenue depends on uninsured patients, collection becomes more labor-intensive and far less predictable.
“For providers, that means higher bad debt risk, higher cost-to-collect and more operational strain. It also has an outsized financial impact because every additional dollar collected from a patient does not just add to top-line revenue — it can flow directly to margin. In an environment where reimbursement is constrained, those dollars matter enormously, but they are also some of the hardest and most expensive dollars to collect,” Otto explained.
It’s difficult for hospitals to strategize for this new reality, he added. A generic billing strategy could work reasonably well when the balance is straightforward and the patient is well-insured, but it doesn’t really work if the patient is uninsured, financially stressed, confused by the bill or moving in and out of coverage.
This is why Otto believes patients are “the fastest-growing and least protected payer class in healthcare.”
To help address this issue, he encouraged providers to modernize the financial experience so patients are less puzzled about their bills, as well get better at identifying financial risk earlier.
“Too many organizations still treat patient balances with a one-size-fits-all approach. The better approach is to understand the behavioral, financial and coverage complexity behind the bill, then guide people toward the path most likely to lead to resolution — whether that is a payment plan, financial assistance, a simpler explanation or a different channel of outreach,” Otto declared.
These days, the patient balance is no longer a side issue within a hospital’s revenue cycle — it’s quickly becoming the center of it.
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