November 25, 2014

Obamacare: More Insured, But Out-Of-Pocket Costs Burden Many

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From all indications, the second enrollment for Obamacare is going smoothly for Connecticut residents.

moneyBut then, Connecticut residents had a relatively easy time the first go-round, even while the federal exchange’s website crashed beneath the weight of would-be applicants.

If enrollment is easier all around this time, the law itself faces some of its toughest challenges. The Supreme Court will hear a case that will examine the legality of important federal subsides that help low- and middle-income Americans pay for policies in states that haven’t set up their own exchanges. At issue is the law’s language that refers to subsidies being paid in exchanges “established by the state.” Roughly 4 million people receive those subsidies.

This is serious business for states without exchanges, but not so for Connecticut, where we have the much-lauded Access Health CT. The state’s official insurance marketplace was the subject of a Harvard Business School case study, and the left-leaning Center for American Progress produced a video titled “Affordable Care Act Enrollment: Lessons From Connecticut.” The process has been simple, and the exchange is doing what it’s supposed to do. According to Access Health CT, a little more than half – 54 percent – of new exchange customers did not have insurance beforehand.

All this is going on in an economic environment where incomes have remained stagnant or worse, while health care costs have been going up. Caught in the middle are some of the most financially vulnerable state residents. A new report from The Commonwealth Fund says that people who earn low incomes actually pay the most, percentage-wise, out-of-pocket expenses for health care. In fact, in the last decade, all of us have been paying more for health care. From the report:

• More than 20 percent of adults aged 19 to 64 paid 5 percent or more of their incomes on out-of-pocket health care costs. That figure does not include paying for premiums.

• Of that same age group, 13 percent paid more than 10 percent in out-of-pocket costs. That figure doesn’t include premiums, either.

• Three of five adults with low incomes and half of those with moderate incomes say their high deductibles present a hardship.

During a year when hourly wages for workers across the economic spectrum have dropped, insurers have continued their decade-long trend of requiring more cost-sharing by consumers – in part to discourage customers from seeking unneeded health care. But high deductibles and co-payments have actually had a far more damaging effect. The report said that adults who are struggling financially – despite the gains made with Obamacare, or the Affordable Care Act – end up delaying medical procedures because they simply can’t afford them.

Can Obamacare change that equation? Opponents of the law like to worry over its complexity, but much of that comes from, as Mother Jones’ Kevin Drum says, the “sausage-making process” of getting the law passed in the first place.

The Affordable Care Act was supposed to make insurance coverage accessible and affordable for everyone, but nothing happens in a vacuum. Unless something is done about wages and health care costs, the already troubled landmark law could have scant impact on the health of the nation.

As the Commonwealth report said, nearly 400 pages of the Affordable Care Act are devoted to improving the quality of health care, and bringing down costs to consumers. Those pages are directed at improving Medicare, and we can only hope that some of that innovation and cost-savings will affect the rest of the system, too.

 

 

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