Healthcare spending grew to $3.4 trillion in 2016 and is expected to reach $5.5 trillion by the year 2025 (Centers for Medicare & Medicaid Services). Much of this growth has been and continues to be spurred by increasing consumer responsibility for both healthcare services and health plan premiums.
For healthcare services, payment responsibility has increased in part due to high deductible health plans, which have become increasingly more popular with employer groups and in the individual market. In 2010, 10 million consumers were enrolled in high deductible health plans (AHIP) – less than a decade later, 75 million consumers are now enrolled in HDHPs, a more than seven-fold increase. (CDC’s National Center for Health Statistics)
Consumers are paying more to have health plan coverage as well, with rates for health plan premiums on the rise. Premiums for plans available to consumers via HealthCare.gov increased by an average of 22 percent in 2017 (U.S. Department of Health and Human Services).
Despite increases in payment responsibility, many in the industry are slow to acknowledge or encourage the new role of consumers as key stakeholders in the payment process. Instead, consumers are often left confused and frustrated by outdated billing methods and limited payment options.
This disconnect may lie in the persistent generalizations throughout the industry regarding how consumers want to make their healthcare payments, such as: “baby boomer members only pay their healthcare bills by mailing in a paper check directly to their provider” or “only millennials want to pay premiums online.”
The data tells a very different story. When consumers were asked about their payment habits and preferences in the Trends in Healthcare Payments Seventh Annual Report: 2016, there were more similarities in preferences across generations than contrasts.
There is no significant difference between generations when paying their monthly bills online:
- 88 percent of people under 40 pay their monthly bills online
- 78 percent of people over 40 pay their monthly bills online
The same holds true for the preference to pay medical bills and health plan premiums online:
- Medical Bills
- 73% of under 40 consumers want to pay their medical bills online
- 52% of over 40 consumers want to pay their medical bills online
- Health Plan Premiums
- 87% of under 40 consumers want to pay their premiums online
- 76% of over 40 consumers want to pay their premiums online
When survey data is tracked year over year, all generations show an increased preference for online payment channels.
As consumers turn to their smartphones for more of their daily activities, healthcare payments must be an integrated part of the mobile experience. According to the Pew Research Center, 77 percent of Americans own smartphones up from just 35 percent in Pew Research Center’s first survey of smartphone ownership conducted in 2011. When that data is broken out across age ranges, smartphones are ubiquitous as ownership is high across all age brackets:
- 92 percent of consumers aged 18-29
- 88 percent of consumers aged 30-49
- 74 percent of consumers aged 50-64
- 42 percent of consumers aged 65+
As the data shows, healthcare payments isn’t about catering to only millennials or baby boomers – all consumers are demanding a convenient payment experience.
Payers are uniquely positioned to meet consumer demands for payment convenience as members often go to their health plan’s website first for healthcare information such as how much a service is going to cost or what provider they can see, and to view their explanation of benefit statement. Member portals are a largely untapped opportunity for payers to connect with their members in new ways, including allowing members to make payments for medical bills and health plan premiums.
Adding payment functionality to a member portal can significantly increase member engagement and retention. In fact, 73 percent of consumers want to pay all of their healthcare bills in one place according to the Consumer Healthcare Payments Survey 2016. When payment convenience is a top priority, payers are rewarded with member loyalty, brand trust and thereby the revenue to sustain the future of their organization.