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.

Last Updated 11/25/2020

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