Rising Out-of-Pocket Medical Costs Pose New Financial Challenges for Patients

In a concerning trend identified in a recent report by Cedar and The Health Management Academy (THMA), patients are increasingly responsible for a growing percentage of their medical bills despite having insurance coverage. This report, titled "Patient Affordability as a Strategic Imperative: How 5 Leading Health Systems Are Responding to Rising Out-of-Pocket Costs," indicates that out-of-pocket expenses now account for nearly half, precisely 49.3%, of the total amounts in large, slow-to-resolve hospital balances in early 2026, up from 37.5% just a year prior.

Financial Burden on Patients

The report highlights that total billings for these large balances increased by $16 million, rising from $307 million to $323 million over the span of a year. Most alarmingly, out-of-pocket costs grew significantly as well, with patients’ contributions rising by $44 million—from $115 million to $159 million—indicating a worrisome trend where approximately $28 million was transferred from insurers to patients. For smaller bills, typically under $200, the out-of-pocket contributions remained relatively stable, suggesting that the rising costs predominantly affect larger medical expenses.

The study attributes this drastic shift to the proliferation of high-deductible insurance plans and a type of co-insurance, where patient costs rise in line with the scale of their medical bills. As a consequence, a notable underinsured population has emerged—these individuals earn just enough to surpass typical financial assistance thresholds but are still unable to shoulder substantial healthcare expenditures. According to the Kaiser Family Foundation (KFF), over the last decade, deductibles have surged by 43%, and a staggering 62% of insured adults express anxiety about their ability to afford healthcare before their insurance coverage kicks in.

A Deepening Crisis

“This research highlights a critical issue for health system leaders,” stated Coltin Ball, Associate Director at THMA and the leading researcher behind the report. “Patients are bearing an increasingly heavy load of their healthcare expenditures. Those who are underinsured are particularly at risk of severe financial strain, and our existing healthcare infrastructure is inadequately equipped to support them in times of need.”

THMA’s analysis incorporated case studies from five diverse health systems, examining their responses to this growing financial burden. Through discussions with chief financial officers and operational staff, it became evident that many systems are ill-prepared to provide support to underinsured patients.

While adequate support structures exist for the uninsured and low-income patients, those with coverage who still struggle with bills often find themselves in a challenging position. To combat this, systems are reevaluating their charity care thresholds, duration of payment plans, discount offerings, and criteria for presumptive assistance, aiming to create a more inclusive approach to financial support.

Improving Coordination

One of the most significant gaps identified was the need for better coordination rather than purely technological solutions. The tools necessary to assist patients are largely available, but there is a pressing need for collaboration across various teams and departments to effectively implement these tools in response to an ever-evolving marketplace.

The findings underscore that the most significant successes originate from customizing financial assistance based on individual patient circumstances. Notably, an academic health system that helped self-pay patients enroll in marketplace coverage expected to enroll between 200 to 225 individuals in the first year but succeeded in enrolling about 350.

Furthermore, healthcare leaders agreed that success should not only be defined by financial metrics but also by patients' ability to access necessary care and manage their financial obligations without undue stress. A shift in this understanding would ensure that improvements in revenue do not inadvertently transfer financial burdens to patients.

Addressing the Challenge

Florian Otto, CEO and co-founder of Cedar, expressed that “the current moment presents an acute challenge for patients and is where many billing systems still falter.” He emphasized Cedar’s commitment to bridging existing gaps by addressing individual patient needs through tools for financial assistance, payment options tailored to how individuals pay, and proactive outreach before medical bills begin to accumulate.

The report further answers vital questions surrounding the issue of rising out-of-pocket costs and identifies who constitutes the underinsured segment of the population. It also details how health systems are transitioning support earlier in patients' financial journeys through enhancements such as self-service estimates and presumptive charity screenings.

Ultimately, the complete report, which includes an in-depth analysis of the strategies of five health systems, and a framework highlighting dimensions shaping their responses, can be found in the full report available through Cedar and THMA. Addressing the concerns highlighted in this research is critical to ensuring that patients receive the care they need without the overwhelming burden of financial strain.

Cedar's innovative approach exemplifies an effort to modernize the patient billing experience, with a goal of maximizing efficiency in how health systems engage with the increasing number of patients who now represent healthcare's fastest-growing payer category.