Eating the Elephant: Health Care Costs

We all know the expression “the elephant in the room”. It’s a big, obvious, uncomfortable problem that everyone’s trying to ignore. In our “Eating the Elephant” series, we’ll take a good hard look at some of the elephants jostling credit unions and their members. We’ll also discuss some ways credit unions could play a role in taking a bite out of the biggest elephants. We can’t solve all the world’s problems, but maybe we can help launch a few much-needed discussions. 

Let’s start with the biggest financial elephant in the herd: health care costs.

Why is this an elephant?
It’s the biggest elephant in personal finance. According to a Gallup poll last April, health care costs are the #1 financial concern — 15% of Americans rank health care costs and the greatest family financial concern. (And I suspect that number is even higher right now.) Although there have been gains — the number of people without insurance is much lower than it was before the Affordable Care Act, and the rate of cost increase has actually slowed, coverage is expensive, deductibles are high, and the costs are crippling for many families.

Why are credit unions mostly ignoring it?
In a word, politics. The topic of health care has, unfortunately, become poisonously politicized. It’s really hard to have a conversation about health care finance that doesn’t get deadlocked by politics. But does it really make sense to ignore your members’ #1 financial concern just because you’re a little squeamish? It’s time for rational conversation, and credit unions can lead the way.

What’s the impact?
Ignoring this elephant simply isn’t realistic. Health care costs affect all your members, even the ones who are perfectly healthy.

  • Numbers are a little hard to find (again, politics interferes with getting clear, recent statistics free of spin), but it seems clear that about half of all bankruptcies are caused by medical debt (and around 75% of the people filing bankruptcy because of medical debt actually had insurance). What if half your chargeoffs didn’t happen?
  • People crushed by huge medical bills and insurance premiums can’t buy cars as often, buy the homes they want, send their kids to college, or save as much money as they need to. Instead of reaching their goals, lots of people with good middle-class incomes are living paycheck to paycheck. It’s a huge drag on the economy in general, not just your CU.
  • Members facing high medical costs are less healthy. According to a recent survey, 1 in 8 adults with insurance face “major financial hardship” due to medical bills, and 19 percent of insured adults don’t go to the doctor when they’re sick, largely because of high deductibles.

But what can credit unions do?
There’s a silly old joke that goes something like this: “How do you eat an elephant? One bite at a time.” Credit unions can’t eat this elephant, but they could do a lot more to help their members chop up their slabs of pachyderm into bite-size pieces. Following are just a few ideas, but there are lots more great ideas out there. Credit union people are caring and creative — what can you come up with?

Talk about it. It’s tough, but open the lines in person and on social media and listen. Ask your members how health care costs are affecting them. Focus on the real world, on the here and now. Firmly keep the conversation from veering into useless political blather, but drag that elephant out into the light and take a good look.

Get some data. What specifics are your members in your town most concerned about? How many of your members are using ACA plans? How many have health care coverage through their employer? How many are making payments on medical bills?

Become a trusted resource. Politics has poisoned the conversation around health care costs to the point that it’s hard to know who to trust. Credit Unions already enjoy a position of trust when it comes to financial matters, so do what you can to educate your staff, make trustworthy, unbiased resources available online, and to connect members to truthful, unbiased answers.

One-to-one advice. You probably have a financial advisor in-house or available to your members for planning retirement. What if there was someone members could turn to for similar advice with health care finances? That could have a much larger impact on a much wider segment of members than an extra 0.01% on IRAs.

This could even be a paid, income-generating service. I’ve often wondered why you can hire a lawyer or a CPA to negotiate a settlement or help manage your taxes, but there doesn’t seem to be a category of professional who does the same thing with medical expenses. Faced with a huge medical bill, I’d gladly pay a pro to audit the bill and help negotiate with the hospital and insurance company.

Better lending options. If a member asks for a loan to pay off a medical bill, are you there for them, or do you treat it like they wanted to borrow $10,000 to go gambling? There’s a difference — do your underwriting attitudes need a tweak? How can you help members find solutions instead of denials?

Better savings options. People with health insurance plans purchased through ACA exchanges are not eligible to set up HSAs, even with high deductible plans. If you have a lot of members using exchange plans, what could your CU set up to help members manage health care expenses in a similar way?

Advocate for change. Credit unions are perfectly comfortable lobbying when it comes to obscure financial rules. It might make sense to start advocating at the state and national level for real, sensible changes in health care policy.

How would you start chomping on this elephant? We invite your feedback and comments — just keep it non-political.

There are plenty more elephants to come — let us know what “elephant” topics you’d like to discuss next

Brian Wringer

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