It alarmed many last summer when a Gallup Economy poll found that 4 in 10 Americans (42 percent) reported spending more on healthcare in 2014 than the year prior. After all, the Affordable Care Act promised Americans access to health insurance and, well, affordable healthcare.
On one hand, it can be argued that Obamacare proved successful in this feat. After 2014 open enrollment, HHS officials reported that more than 8 million Americans gained ACA-compliant health insurance through state-based and federally facilitated exchanges. Of those enrollees, the vast majority (85 percent) received financial assistance in the form of premium tax credits and/or cost-sharing subsidies.
However, the number of enrollees has since dropped. Marilyn Tavenner, administrator of the Centers for Medicare & Medicaid Services, reported that 7.3 million people were current with their health insurance premiums, as of Aug. 15. While the reason that approximately 700,000 Americans dropped their health insurance plans has not been studied further, potential causes for lost coverage include obtaining it through other means, such as employment or a spouse; moving and enrolling in a non-exchange plan; and failing to pay premiums for reasons such as difficulty affording them. At the end of the day, 91 percent of initial enrollees remain enrolled.
A recent survey sponsored by the Transamerica Center for Health Studies found that 15 percent of the population remains uninsured, despite dropping from 22 percent in the past 11 months. Cost is most commonly cited as the barrier, with 11 percent saying health insurance coverage was too expensive and 27 percent claiming that paying the tax penalty for going without a health insurance plan was less expensive than buying one.
Affording premiums is one thing. Paying for care is another. In 2014, the average deductible for bronze plans, which typically carry the lowest monthly premium, was $5,072 for an individual and $10,327 for a family. Silver plans, which were the most popular selection for 2014 coverage, had an average deductible of $2,829 for an individual and $5,889 for a family. This is in addition to monthly premium costs, out-of-pocket expenses, and in come health plans, a percentage of co-insurance costs. Can Americans realistically afford these amounts?
Medical debt in America
In March 2014, NerdWallet reported that medical bankruptcy accounted for the majority of personal bankruptcies. The NerdWallet study predicted that 1 in 5 American adults would struggle to pay medical bills this year and that, despite having year-round insurance coverage, 10 million Americans ages 19 to 64 would be unable to pay medical bills. An estimated 1.7 million will declare bankruptcy over their inability to pay medical bills (3 in 5 bankruptcies), and more than 25 million will not take prescription drugs as indicated to save costs.
It comes as little surprise when even a couple thousand dollars in unexpected expenses can place financial stress on most Americans. A 2011 paper published by the National Bureau of Economic Research reported that nearly half of Americans say they are “probably unable” or “certainly unable” to come up with $2,000 for an unexpected expense within a month. Another study, the National Financial Capability Study, found that 40 percent “probably could not” or “could not” come up with $2,000 for an unexpected need. More than a quarter of respondents (26 percent) stated they had unpaid medical bills from a healthcare or medical service provider that were past due.
The Kaiser Family Foundation’s January 2014 report “Medical Debt Among People with Health Insurance,” provided even more recent and equally bleak data. According to Kaiser’s study:
- 1 in 3 Americans reported having difficulty paying medical bills
- Most (70 percent) had health insurance
- Cost-sharing for care covered by health insurance was behind most insured persons’ medical debt
- People with higher-deductible health plans (34 percent) were more likely to have trouble paying medical bills than those with lower-deductible health plans (24 percent)
Furthermore, the financial strain was seen across income levels. While 4 in 10 nonelderly Americans with incomes below 200 percent of the federal poverty level struggled to pay medical bills, those with incomes above 400 percent FPL also struggled to pay medical debt. Of the 23 individuals and families age 20 to 60, with incomes ranging from less than $10,000 to more than $100,000, most had medical debt in excess of the $6,500 national average for a family in 2010. Six had unaffordable medical bills totaling just $5,200 or less.
Kaiser also reported that two-thirds of the U.S. population is below 400 percent of FPL and has less than $3,000 cash on hand and consumer debt exceeding the amount of cash they do have on hand.
Yes, cost-sharing and deductibles have gone down under the Affordable Care Act, but considering these studies and looking back on average premiums and annual out-of-pocket spending caps under the Affordable Care Act, as reported by HealthPocket, it seems reasonable to assume these amounts are out of reach for the many Americans.
How can you make health insurance affordable in 2015?
The above studies took place before the Affordable Care Act mandated health insurance coverage for all Americans; however, it seems that unpaid medical bills and difficulty coming up with cash for unexpected expenses remain a problem for many. The cost of medical care and monthly premium rates will continue to inch upward as well.
The Kaiser Family Foundation 2014 Employer Health Benefits survey found that group health insurance premiums rose 3 percent this year and workers’ earnings rose 2.3 percent. PwC Health Research Institute reports that individual health insurance premiums nationwide are increasing an average of 6 percent in 2015 and some places will see decreases as great as 22 percent and increases as great as 35 percent.
What consumers can do is educate themselves about the healthcare law, research plan options on and away from their state exchanges, and consult certified helpers and licensed agents and brokers who can guide them in selecting the right coverage for their healthcare needs and financial situation.
It is important to keep in mind that the lowest premiums may not always be best, especially if you require more frequent medical care or regularly take prescription drugs. As such, consider how much you will pay in premium annually as well as annual deductible amounts, copay amounts and coinsurance percentages. Compare these from plan to plan and factor in any cost-sharing subsidies and premium tax credits for which you may be eligible.
Sites such as HealthCare.com can provide you with access to plan and rate comparisons in their area—as well as informative articles that can help you make savvy health insurance decisions at open enrollment time. Use the Obamcare Tax Credit Subsidy Calculator to see if you qualify for financial assistance. If you do, shop and enroll through your state’s exchange. If you do not, you can shop and enroll through HealthCare.com.
Those with certain financial and life circumstances may qualify for an exemption from buying coverage—visit your health insurance exchange to apply for an exemption. If you qualify for a hardship exemption, you may be able to purchase an ACA-compliant catastrophic health insurance plan, which comes with a lower monthly premium rate, benefits for unexpected accidents and illnesses, and three primary care visits at no additional cost. You may also consider a non-compliant short-term health plan.
 Fleming, John. “Consumers Spending More, Just Not on Things They Want.” Gallup Economy. July 11, 2014. http://www.gallup.com/poll/172532/consumers-spending-not-things.aspx.
 U.S. Department of Health & Human Services. “Enrollment in the Health Insurance Marketplace Totals Over 8 Million People [Press Release].” May 1, 2014. http://www.hhs.gov/news/press/2014pres/05/20140501a.html.
 Condon, Stephanie. “Administration Updates Obamacare Enrollment Figures.” CBS News. Sept. 18, 2014. http://www.cbsnews.com/news/administration-adjusts-obamacare-enrollment-figures/.
 Kristof, Kathy. “Many Americans Still Lack Health Insurance.” CBS MoneyWatch. Sept. 24, 2014. http://www.cbsnews.com/news/many-americans-still-lack-health-insurance/.
 Average deductibles calculated from HealthCare.com’s propriety database
 LaMontagne, Christina. “NerdWallet Health Finds Medical Bankruptcy Accounts for Majority of Personal Bankruptcies.” NerdWallet. March 26, 2014. http://www.nerdwallet.com/blog/health/2014/03/26/medical-bankruptcy/.
 Izzo, Phil. “Nearly Half of Americans are Financially Fragile.” The Wall Street Journal. May 23, 2011. http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/.
 Finra Investor Education Foundation. “Financial Capability in the United States: Report of Findings from the 2012 National Financial Capability Study.” May 2013. http://www.usfinancialcapability.org/downloads/NFCS_2012_Report_Natl_Findings.pdf.
 Pollitz, Karen, et al. “Medical Debt Among People with Health Insurance.” The Henry J. Kaiser Family Foundation. January 2014. http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8537-medical-debt-among-people-with-health-insurance.pdf.
 The Henry J. Kaiser Family Foundation. “Employer-Sponsored Family Health Premiums Rise 3 Percent in 2014.” Sept. 10, 2014. http://kff.org/private-insurance/press-release/employer-sponsored-family-health-premiums-rise-3-percent-in-2014/.
 PricewaterhouseCoopers LLP. “A Look at 2015 Individual Market Health Insurance Rate Filings.” Oct. 3, 2014. http://www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml.