Summary: The Affordable Care Act has made health insurance available to many people who were uninsured, but the cost has been high for many. The most common insurance plans purchased under the A.C.A. tend to have lower premiums, which mean higher deductibles — leaving individuals on the hook for hefty payments, in some cases. Good research on this topic is hard to find, because some of the research and anecdotes come from people with agendas. So here’s a good report citing government figures, from the Kaiser Family Foundation.
“A recent report issued by the Consumer Financial Protection Board (CFPB) finds that medical debts account for a majority (52%) of debt collections actions that appear on consumer credit reports. This report offers yet another reminder that a broader view of health insurance – not just at how many have coverage, but also the effectiveness of coverage – is warranted. An earlier Kaiser Family Foundation report found that 1 in 3 Americans struggle to pay medical bills, and that 70% who do so are insured,” Karen Pollitz wrote for the Kaiser Family Foundation on Jan. 8. 2015.
“The CFPB report confirms that medical debt frequently occurs among people with no other history of credit problems. When it does, it can have serious and long range financial consequences. Referral of medical debts to collections damages a person’s credit rating significantly and for many years, limiting access to mortgages, car loans, and other consumer credit. Health consequences are also possible; as the Kaiser report observed, once in debt, people may delay or forego other needed care to avoid incurring further unaffordable medical bills.
“How is it that medical debt can be so prevalent among the insured? The Kaiser report observed that cost sharing is one primary contributor.
“Cost sharing levels under many health plans now exceed the resources that most families have on hand. In its most recent report on the economic well-being of US households, the Federal Reserve found that only 48 percent of Americans would be able to completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money. Unforeseen medical expenses could trigger such an emergency – though under most health plans today, consumer’s cost liability could be much greater than $400.
“The average annual deductible – the amount a patient must pay out of pocket before health insurance reimbursement begins – under job-based health plans exceeded $1,200 for an individual in 2014. For non-group health plans sold on new health insurance marketplaces, deductibles are even higher. For silver plans (the most popular plan type in 2014) offered in federally administered marketplaces, the average annual medical deductible in 2015 is $2,563 for plans with a combined medical/prescription drug deductible; in silver plans with separate medical and drug deductibles, the average annual medical deductible is $3,456. (In the 37 federally facilitated and partnership marketplaces in 2015, 55% of silver plans feature a combined annual deductible while 45% of silver plans apply separate annual deductibles for medical and prescription drug expenses.) For less expensive bronze plans, the average annual deductible exceeds $5,300 in 2015. Some policymakers have discussed the option of making available so-called copper plans, which would have even higher cost sharing. Under the ACA, cost sharing subsidies are available to low income consumers up to 250% of the federal poverty level.” Karen Pollitz, Medical Debt Among Insured Consumers: The Role of Cost Sharing, Transparency, and Consumer Assistance, The Henry J. Kaiser Family Foundation.