Hospitals and health systems are already seeing bad debt and charity care from unpaid patient medical bills rise this year.

But the problem of unpaid patient medical bills is only expected to worsen as employer cost increases jump by rates unseen in more than two decades.

A new analysis from Kaufman Hall, a Vizient company, shows “uncompensated care pressures are intensifying” for hospitals and health systems as hospital bad debt and charity care grew “in dollar terms and as a percentage of gross revenue year-to-date through June.”

The Kaufman Hall report comes ahead of projections by several employee benefit consultancies including an analysis earlier this month from Marsh showing employer premium increases that will jump at least 8% for next year – more than double general inflation. Since employers almost always pass cost increases along to their workers, it’s going to be more difficult for workers and their families to pay their share of the premium plus out-of-pocket costs.

“The trend is moving in the wrong direction,” said Erik Swanson, managing director at Kaufman Hall. “Charity care is a leading indicator that more patients are underinsured, uninsured or unable to pay their share of the bill, while bad debt will continue to grow over the next year. Unless coverage and affordability improve, hospitals should expect uncompensated care to put increasing pressure on already-thin margins.”

The Kaufman Hall report, which draws data from more than 1,300 hospitals across the country, shows bad debt and charity care as a percentage of revenue jumped 5% year-over-year for the period ending in July of this year but it was up 7% year-to-date through July 31 compared to the same period last year.

Meanwhile, more patients are flocking to emergency rooms, which is also a sign they cannot afford medical care. Emergency room visits to hospitals were up 3% year-over-year as of July 31 compared to the same period a year ago.

“The national data suggest that rising emergency department use is increasingly a coverage issue, not simply a volume issue,” Kaufman Hall’s Swanson said. “More uninsured and underinsured patients are relying on emergency departments as a last resort because they lack access to primary or lower-cost alternatives. That puts additional strain on hospitals, particularly as EDs face longer stays, more behavioral health patients and worsening payer mix.”