Will the ACA Increase Underinsurance?

The Affordable Care Act (ACA) may actually increase the number of underinsured according to an editorial by Drs. Steffie Woolhandler and David Himmelste in the April Journal of General Internal Medicine. About 40% of those gaining coverage will get Medicaid. However, many current Medicaid enrollees are woefully underinsured. Disturbingly, CMS will probably allow state Medicaid programs to demand copayments and deductibles, even from the poorest of the poor.

Underinsurance among Medicaid recipients will probably increase since several states have already reduced benefits, cut provider payments, and narrowed provider networks. More ominously, the White House is encouraging state officials to use federal Medicaid expansion funds to purchase private insurance, a shift that’s likely to raise both taxpayers’ costs and poor patients’ copayments.

Insurance exchanges offered to near poor and middle income individuals will also leave many underinsured. Bronze plans (the minimum coverage mandated by the ACA) will only cover 60 % of average medical expenses. Silver plans will cover 70 %. That’s far worse than the roughly 80% coverage under today’s average job-based policy equivalent to the ACA’s Gold plans.

In concrete terms, a 56-year-old making $45,900 will pay $4,361 in premiums for individual Bronze coverage, and up to $4,167 in additional deductibles and copayments for covered services. Subsidies disappear at 401% of poverty ($46,100). The mandatory premium would be $10,585,with out-of-pocket costs for covered services capped at $6,250. In effect, the federal government is endorsing skimpy plans that offer scant protection from impoverishment, according to the authors.

They say that Massachusetts’s health reform has not reduced the number of medical bankruptcies. Researchers say that both Massachusetts and the ACA have avoided the social insurance approach, which makes care health free at the time of use; puts the burden of health costs on those most able to pay (the healthy and wealthy); and relies on readily enforced global budgets for cost control. Instead, they embraced market-based policies that demand more (percentage wise) from the middle class than the rich and compound the misfortune of illness with financial penalties.

International evidence indicates that cost sharing is neither necessary nor particularly effective for cost control. The U.S. has high cost sharing and the highest costs. Canada, which outlawed copayments and deductibles in 1981, has seen faster health improvement and slower cost growth. Canadian provinces control costs by tax-based funding, global hospital budgeting, binding, negotiated physician fee schedules, and a simple unified single- payer structure that minimizes administrative burdens and costs. Scotland, which has avoided market-based policies and patient payments, has health care costs that are about half of those in the U.S. For more information, visithttp://org.salsalabs.com/o/307/images/JGIM%20Underinsurance%20Proofs%20Un-Corrected(1).pdf.

Trends in Health Coverage

Researchers at the Commonwealth Fund reveal why they feel that it is critical for ACA implementation to continue on schedule. Forty-six percent of adults 19 to 64 did not have insurance for the full year in 2012 or were underinsured and unprotected from high out-of-pocket costs; 41% had problems paying medical bills or were paying off medical debt; and 43% had cost-related problems getting needed health care.

The major health coverage provisions of the Affordable Care Act go into effect in January 2014. The Congressional Budget Office projects that the combination of new subsidies for health insurance and consumer protections will enable 14 million uninsured people to gain coverage in 2014, and 27 million by 2021. Seventy-nine percent of young adults were insured in 2012, up from 69% in 2010. This trend reverses a decade-long upward climb in the number of uninsured young adults.

In 2012, 46% of U.S. adults 19 to 64 did not have insurance for the full year or had inadequate protection from health care costs. Thirty percent were uninsured at the time of the survey or had spent some time uninsured in the past year. An additional 16% were underinsured due high out-of-pocket medical costs in relation to their income.

Many Americans with low or moderate incomes are uninsured or have coverage with high cost-sharing requirements, whether copayments or coinsurance. People with incomes under 250% of poverty comprised 72% of the total number of Americans who were uninsured or poorly insured in 2012. Three-quarters of working-age adults with incomes under 133% of the federal poverty level were uninsured for a period in 2012 or were underinsured. The same is true for 59% of adults earning 133% to 249% of the federal poverty level.

Gaps in health insurance, inadequate coverage, and large medical bills leave millions of U.S. adults burdened with debt. In 2012, 41% of adults 19 to 64 had problems paying medical bills or were paying off medical debt. Forty-two percent of those who said they had difficulties paying medical bills or paying off medical debt also said they got a lower credit rating as result of unpaid medical bills.

In 2012, 43% of adults faced financial barriers to getting needed health care – up from 37% in 2003. That includes 67% of those who were uninsured at any time and more than 51% of those who were underinsured. People who were uninsured were significantly less likely to have a regular source of care or to be up-to-date on recommended cholesterol, blood pressure, and colon cancer screenings, and mammograms.

Eighty-seven percent of those who had a gap in coverage in 2012 would be eligible for subsidized health insurance under the ACA. In addition, 85% of underinsured adults in 2012 would be eligible for Medicaid or subsidized health plans, with reduced out-of-pocket spending.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology, has estimated that about 5 million undocumented immigrants will remain uninsured in 2016. Gruber also predicts that many Americans will not be insured, even though they are eligible for the new coverage options because they are not aware of their eligibility; they are unable to find an affordable premium; or they chose not to enroll. For more information, visit www.commonwealthfund.org

Last Updated 06/29/2022

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