With inflation in the United States reaching its highest point in 40 years, many consumers are changing their shopping habits and spending their money differently. 1 These cost-based behavior modifications could also affect their health care decisions—and the timing couldn’t be worse. Health care affordability has been a major concern for US consumers for many years. Compounding this is the fact that health care prices have historically increased faster than rest of the economy. From 2001 to 2021, health care costs increased faster (3.3%) than the cost of all goods and services (2.2%). 2 And even though employee wage growth rose to its highest in years during the COVID-19 pandemic, consumers’ incomes aren’t keeping pace with inflation. 3
No industry is spared from this current inflationary period, but health systems and health plans are facing unique pressures. Labor and supply expenses are growing while hospital margins continue to decline. 4 According to the US Bureau of Labor Statistics, health insurance prices in September 2022 were up 28% from a year earlier, which is higher than inflation growth at 8.2%. 5 However, because health care organizations set prices and negotiate reimbursement rates two to three years in advance, inflation will likely continue to impact consumers’ out-of-pocket (OOP) costs and health insurance premiums in the coming months and years. And that will hit at a time when consumers are already financially challenged by today’s high food, household, and transportation costs. This raises two important questions: Will consumers be able to afford routine and preventive medical expenses? And how can health care organizations prepare for this eventuality?
The Deloitte 2022 Pulse Survey of US Consumers found that consumers are already showing signs of health-related cost concerns. The survey findings show that 28% of consumers, or roughly 72 million US adults, feel less prepared to pay for unexpected medical costs than they did last year. This raises several concerns, including how consumers can balance everyday expenses like putting food on the table and fuel in their cars with paying for the care they need. It’s more critical than ever to find a way to help consumers navigate this heightened barrier to care—before they opt out entirely.
The Deloitte Center for Health Solutions conducted two nationally representative consumer surveys to understand how inflation is affecting consumers’ perspectives on their health care needs and on health care spending. The first survey, the Deloitte 2022 Survey of US Health Care Consumers (n = 4,545) was fielded between February and March 2022. And the follow-up survey, the Deloitte 2022 Pulse Survey of US Consumers (n = 2,005), was fielded in September 2022 (See appendix, “Inside the consumer surveys.”).
Our research surfaced two potential areas of focus for health care organizations to help soften inflation’s ongoing impact on consumers: offering hybrid (virtual and in-person) care delivery options and focusing on trust.
Nearly one in three consumers (28%) feel less prepared to handle unexpected health care costs today than they did last year (figure 1). With 258 million adults living in the United States, according to 2020 data, that means roughly 72 million US adults feel less prepared to pay for health care. 6
Of the nearly one-third of Americans who are concerned about paying for an unexpected health care need, 75% say inflation is increasing all their expenses, 53% have less money in savings, and 33% have a lower household income.
In response to rising personal expenses, some consumers are delaying routine care, cancer screenings, preventive care, and other essential medical care. 7 Delays of routine care can exacerbate health issues and could eventually force people to turn to high-cost settings like emergency departments, especially when minor health issues turn into major ones. In parallel, cases of COVID-19 have taken a toll on patients, particularly those with, or at risk for, chronic diseases. These costs—some of which could be prevented—could ripple through the health care ecosystem and push future health care spending higher.
Inflation comes at a time when health care systems are already struggling financially. The average hospital operating margin was negative in 2022 and declined by 20% from the prior year. 8 This is due in large part to the continued recovery from the volume declines experienced during the height of the COVID-19 pandemic and the talent emergency many organizations face. The industry has a shortage of 1.1 million nurses, forcing many organizations to use contract labor. 9 Since 2019, per patient labor expenses grew by nearly 20%. 10 Labor is nearly half of a hospital’s budget creating an unsustainable financial position for many organizations. Here are a few other health care ecosystem entities that could feel the pinch of inflation on top of ongoing cost pressures:
Consumers are facing economic pressures they weren’t just one year ago. Consider: Prices for food at home rose 12% between June 2021 and June 2022, the largest increase since April 1979. Energy prices rose 42% over the same period, the largest 12-month increase since April 1980. 13 As prices increase in other areas of consumers’ lives, one likely outcome is that they’ll have less money to dedicate to their health care needs.
Based on findings from the Deloitte 2022 Pulse Survey of US Consumers, we expect that the pressure of inflation will change consumers’ health care behaviors—and force them to make tough decisions. For example, as of September 2022, 30% of consumers are either “planning” (13%) or “still deciding” (17%) to change their health insurance plans to cut costs for the upcoming 2023 health insurance enrollment. This is likely to increase next year because health care insurance prices have a “lag effect,” so consumers likely won’t feel the impact until the 2024 open enrollment period. 14 Here are a few other ways we see consumer behaviors shifting:
Consumers will want a hybrid and human-centered virtual care model. Since the start of the pandemic, consumers have become more comfortable with and accustomed to accessing health care virtually. Even before inflation hit, the consumer uptake of virtual health visits increased from 22% in 2018 to 44% in early 2022, according to the Deloitte Survey of US Health Care Consumers. When we examined the reasons why consumers use virtual health tools, we found that nearly two-thirds of consumers who had a virtual health care visit since September 2021, cited convenience (38%) or cost (27%) as the top reasons why. With virtual visits, consumers often spend less time and money on transportation, parking, and dependent care.
We also found that some consumers would consider changing health plans if they don’t offer virtual visits and other more affordable and convenient options. According to our pulse survey, 26% of consumers with a health plan that doesn’t cover virtual visits plan to change their health plan. To accommodate consumers’ preferences, health plans could offer tools that help consumers calculate the best financial options, connect them with clinicians they want to see, and offer access to virtual visits.
Despite consumers’ interest in virtual health care options, health care organizations still have hurdles to overcome in providing the right services. And aligning their offerings with consumer preferences is a big one. For example, consumers who aren’t satisfied with a virtual visit are less likely to schedule another one. Consumers might pursue another option when they’ve been matched with a virtual provider with a poor “webside manner,” haven’t made a connection with the provider, or are experiencing low quality of care compared with in-person visits. 15
It’s important that health care organizations think of other ways to offset the impact of inflation on consumers’ ability to interact with the health system—even beyond the location of doctor visits. Clinical trials, for example, play a vital role in advancing treatments and cures, and if consumers are feeling a pinch in their budgets, they may be less likely to participate. The cost (both from a monetary and time perspective) of traveling to clinical trial sites and taking time off work are well-known barriers for consumers participating in clinical trials. Deloitte’s research on increasing clinical trial diversity, found that offering clinical trials at more convenient sites—virtually and at or near the home—would increase consumers’ willingness to participate by nearly 20 percentage points. As costs remain top of mind for consumers, having opportunities to participate in clinical trials at alternative sites will be important for participant engagement and retention.
The combination of inflation, a tight labor market, and ongoing supply chain issues is putting financial pressure on hospitals, health systems, and clinicians. To offset these pressures, organizations should work on building trust and maintaining strong relationships with consumers. This is particularly critical as consumers are under pricing pressure themselves, and therefore may be more likely to scrutinize how and where they access care. Right now, consumers will likely care even more about having a good experience, getting high-quality care, and developing a relationship with the clinician based on trust.
With the rise in consumer agency, health care consumers know they have options and are empowered to make decisions that impact their own care. Consider that 63% of consumers are willing to switch doctors if they don’t like the way their doctor communicates. According to our research on trust, about half of the participants in our focus group said they’d be willing to trade in-person visits and the convenience of a closer location for a provider who relates to them and understands their needs. Participants told us they are willing to make tradeoffs if they cannot find a “similar” provider that they can trust in their area. For example, we found that more than half of the participants who identify as Asian (56%) and Black (55%) are willing to travel farther to see a provider who meets their needs. And, at least half of participants who identify as Hispanic (54%) and Black (49%) are willing to use virtual visits, as are 41% of Asians. 16
These findings demonstrate that consumers want a trusted health care experience and are willing to move on when they don’t receive it. Thus, trust is a crucial design feature that should be weaved throughout health care offerings. Here are a few avenues for health care organizations to explore:
Between consumers putting off low-cost health care needs due to concerns about inflation and providers nearing a profitability crisis, the topic of health care costs is weighing heavily for many. But it may be just the push the industry needs to align its strategies with Deloitte’s vision for the Future of Health™. Otherwise, health care organizations could find themselves at risk of a massive affordability crisis.
The pandemic clearly accelerated the industry’s adoption of virtual tools and services, but it also reminded many of the importance of personal and clinical relationships. Our research reinforces the potential power of a hybrid model of care, one in which virtual and affordable options are integrated seamlessly alongside existing workflows and in-person patient encounters. In this model, clinicians, peers, and family members can help consumers navigate care both in person and virtually. And we could harness the power of trust to yield cost-effective, convenient options that might offset cost pressures in a year when affordability and inflation are on everyone’s minds.
2022 Pulse survey of US Health Care Consumers (September 2022): A nationally representative sample of 2,005 US adults (18 and older). The survey was designed to understand how current economic conditions are weighing on consumers’ views of health care affordability and the decisions they are making.
2022 Survey of US Health Care Consumers (February-March 2022): Since 2008, the Deloitte Center for Health Solutions (DCHS) has surveyed a nationally representative sample of US adults (18 and older) about their experiences and attitudes related to their health, health insurance, and health care in general. The national sample is representative of the United States census with respect to age, gender, race/ethnicity, income, geography, and insurance source. As part of this effort, from February 24 through March 14, 2022, DCHS conducted an online survey of 4,545 US adults.
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