Unpaid bills push hospitals and uninsured patients to the edge – Can AI save them?
Medicaid was the solution. Then there is the Affordable Care Act. But despite the uninsured rate in the United States hitting historic lows, the financial burden for patients is still rising.
According to recent estimates, 26 million Americans are uninsured – half of the ACA’s previous numbers – but uninsured patients can account for nearly 40% of hospital debts. Despite the expansion of coverage through Medicare, Medicaid and ACA, the gap remains, with millions remaining uninsured or underinsured. As a result, hospitals are seeing an increasing number of revenues associated with patients struggling to pay, resulting in an increasing number of bills that affect individuals and healthcare providers.
For the healthcare industry, this crisis involves not only financial risks, but also consumer trust. When patients can’t afford the care, they get disconnected, and they are usually believed to be not built for them. When trust erodes, the result is also – because people who do not trust the system are simply unlikely to seek care. Surprise bills, opaque pricing and unaffordable out-of-pocket expenses give a clear message: “You’re alone.”
We know from medicine that prevention is the best approach because early intervention reduces costs and improves prognosis. Healthcare finance must adopt the same mindset. Providers must accept financial preventive care, rather than responding to financial difficulties, but invest in active participation, smart navigation and real-time financial matching to connect patients with the right resources before they can get into a crisis.
So, who is who is now, why are there so many?
The Medicaid “relaxation” process divested more than 25 million people in just two years. While some have transitioned to market plans with enhanced federal subsidies, many are still stuck in the gap and are forced to pay for currencies they can’t afford. Financial stress is more than just a burden to patients; it is devastating for providers, and when services are not paid, they may recover less than 10 cents in dollars.
This is just the beginning. Medicaid funds are under scrutiny, potential cuts, changes in expansion funding, and new job requirements are under scrutiny – threatening to cover the 79 million Americans who rely on the program. Unless Congress intervenes, the program’s ACA Market Plan enhances subsidies for the ACA Market Plan, which will expire by the end of 2025. If they disappear, premiums could soar as much as 75%, forcing millions of dollars into uninsured people. The Congressional Budget Office expects that between 2026 and 2034, an average of 3.8 million Americans may lose coverage each year, causing them to suffer a medical emergency in a financial disaster.
Without federal intervention, hospitals are absorbing the increased burden of patients’ financial distress and are now responsible for charging more dollars from patients with the least likely payments. But it also depends on hospital changes, not only to protect their balance sheets, but also to restore the confidence of patients. One answer lies in redefining financial experiences, not as a transaction process, but as an extension of patient advocacy. This means guiding patients with their financial resources before they get into a crisis and ensuring they don’t just deal with affordability challenges.
However, addressing this problem at a large scale requires not only new policies or better communication, but also patient-centric care and technologies that anticipate financial stress and interventions before they become a crisis.
AI-driven automation can provide hospitals with scalable preventive solutions. Every year, billions of dollars in financial aid are useless due to the dispersed system and lack of awareness. For example, there is an estimated $138 billion in HSA accounts, and $3 billion is lost every year in an unused FSA account. Another example: Despite $5 billion spent per year on patient support programs, drug manufacturers estimate that only 3% of eligible patients participate and use their programs.
AI tools can proactively connect patients to these underutilized financial resources, such as automated Medicaid enrollment, pharmacy co-payment aid, and HSA/FSA funding, eliminating barriers that often fail to reach out. By identifying high-risk patients early and guiding them to get the right support before they become difficult to manage, hospitals can reduce the financial stress of patients while also improving their bottom line.
The future of healthcare affordability will not be shaped solely by policy, but by no means. Hospitals and health systems have the option to lead today. Personalized billing experience for patients, automate the pathways that connect them to funding resources, and determine through upstream interventions that the patients with the highest default risk of payment will begin to deal with the swelling crisis. Those who invest in financial navigation solutions can not only protect their financial stability; they will redefine what it means to provide patient-centered care.
Image source: Mkurtbas, Getty Images
Seth Cohen is president of Cedar, a leading patient financial platform for healthcare providers, and is a member of its board of directors. Previously, Seth was the CEO and co-founder of Ooda Health, a healthcare technology company, which was acquired by Cedar in June 2021. He was on the Castlight board until May 2022, when CD&R acquired Castlight and merged with Vera Whort Health. Seth was a management consultant for healthcare payer and provider practice at McKinsey & Company during his time at Castlight. Seth received an MBA from Harvard Business School, serving as a baker scholar and an MPA from Harvard Kennedy School. Seth completed his undergraduate studies at Stanford University, at the time PHI Beta Kappa. Outside of work, Seth enjoys spending time outdoors and performing improvised musicals with his three little kids.
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