Despite reforms, health care is less affordable for many
CBS News and The New York Times recently conducted a poll and I found the results both interesting and alarming (although not surprising).
Fifty-two percent of Americans say they find basic medical care affordable, but that’s down from 61 percent last December. Today, for 46 percent of Americans, paying for medical care is a hardship, up 10 points.
Most attribute the rise of out-of-pocket costs to more expensive medical treatment, rather than an increase in the amount of treatment they are receiving.
When Americans are asked about some specific ways they may have tried to cut down on their medical expenses, nearly a third (31 percent) say they have gone without medical treatment because of the cost, and a quarter (25 percent) have not filled a prescription or have cut pills in half. Few have bought prescription drugs from Canada (6 percent) or have traveled outside the U.S. for medical treatment (2 percent).
Because of reforms, more are underinsured
It seems counter intuitive that a health care reform law that seeks to increase insurance coverage actually creates a larger financial burden for many families, doesn’t it? But, hey, that’s the ACA.
How is this possible? The high deductibles and co-pays attached to most lower-cost plans on the exchanges are unaffordable for most families. The plans with the cheapest monthly premiums (bronze) often have family deductibles in the $7000-$12,000 range ( my family’s is $10,500).
As Aaron Carroll, MD, of the blog The Incidental Economist, explains:
Before the A.C.A. was passed, underinsurance was prevalent. Of adults age 19-64 in 2010, 16 percent, or 29 million, met the Commonwealth Fund’s definition of being underinsured: one’s out-of-pocket health care costs exceeding 10 percent of income (5 percent when income is less than 200 percent of the federal poverty line), or one’s insurance deductible being more than 5 percent of income. The number of underinsured Americans had grown by 80 percent from 2003 to 2010.
But the A.C.A. has not done as much as many had hoped it would to reduce underinsurance. In fact, it may be helping to spread it. And proposed modifications to the law, like those that would introduce a new tier of “copper” plans in addition to bronze, silver, gold and platinum, might make underinsurance worse.
The Expanded Consumer Choice Act, co-sponsored by six Democratic senators and one independent, seeks to add a new level of insurance coverage. “Copper” plans would have 50 percent actuarial value. Such plans would have significantly lower premium costs than bronze plans, which might increase the number of people who will buy insurance.
But this would be accomplished at the expense of higher out-of-pocket costs. Deductibles for these plans might have to be as high as $9,000, which would mean increasing the out-of-pocket maximum allowable by law. This would lead to even more people being underinsured.
Dr. Carroll gives the following example in another post on the topic of underinsurance:
Let’s say a nice family of five in Indiana has a combined income of $120,000 earning them too much for subsidies. The median income, by the way, for a family of 5 in Indiana in 2013 was $67,189. So this family is doing well. This plan – a silver plan, mind you – would cost them $16,591 in premiums each year. Then, they’d have a $7000 deductible. They’d spend more than $23,500, almost 20% of their income, before insurance would start to kick in.
Subsidies are available for individuals and families with incomes below 400% of federal poverty level, with premiums being capped at 9.5% of income. Those with incomes slightly over the 400% cut off could spend a considerably higher percentage.
Related post: Obamacare, taxes and subsidies
Call me crazy, but I still think paying almost 10% of your income on health insurance premiums—not health care—is unaffordable, even with a subsidy.