The Risks of Healthcare Unbundling

There’s been a great deal written lately around the concept of “Unbundled Healthcare.” Some describe it as “on-demand healthcare,” allowing patients to choose granular levels of coverage from a large menu of options. In theory, this system leads to lower costs as people only pay for what they need. Plus, people are able to “comparison-shop” between different doctors.

One way to look at "unbundling" is to view it as analogous to airlines now charging extra for each checked bag or for an exit row seat. Unbundling in the medical industry has led to separate fees for ever-smaller components of care. As an example, one patient in North Carolina was charged $722.50 in fees each time a nurse had to "push" drugs into her IV, a process that takes seconds.

Industry professionals warn unbundling plans can expose patients to big financial risks. Obviously, when you or a loved one is facing a medical emergency, you’re not going to be shopping around for healthcare. Illness is often urgent and unpredicted. In addition, many of these “unbundled” plans avoid the federal law of limiting annual in-network limits on out-of-pocket expenses by having no network. This could leave patients with huge costs, as individuals have little bargaining power with hospitals.

In fact, little stands in the way of hospitals charging whatever they like, especially in a place like an emergency room, where a patient has few choices. A report from National Nurses United?found that hospital markups have more than doubled since 1999, according to data from the U.S. Bureau of Labor Statistics. Industry analysts call this increase in hospital prices "alarming" and "unsustainable."

However appealing an unbundled health plan may be, the take away is buyer beware. What looks like impressive savings could end up costing patients dearly.

Sources: Kaiser Family Foundation, March 2019; NPR, June 28, 2021