The Affordable Care Act (aka ObamaCare) was designed to help provide health insurance for those who could not previously afford insurance, and it appears to have succeeded in that goal. (Given that insurance coverage is becoming a mandate punishable by fines, how could it not?)
However, the underpinning of ObamaCare is to spread costs out through subsidies toward a greater use of higher deductible health plans (HDHPs) to control costs. Higher deductibles tend to contribute to a different problem — underinsurance. You may have insurance now, but is your deductible so high relative to your income that you tend not to use it? The latest findings from the Commonwealth Fund Biennial Health Insurance survey suggest that was the case for many people in 2014.
According to the survey report, approximately 23% of the respondents between 19 and 64 years of age who had continuous insurance over a twelve-month period were underinsured. That means that approximately 31 million insured people have insufficient coverage. Unfortunately, the 23% value shows no statistical difference since the report became biennial in 2010, but it does show a doubling in the underinsured rate since the first study in 2003 — as well as a tripling of those with HDHPs.
The consequences of underinsurance are significant. According to the report, just over half (51%) of the underinsured had problems with medical bills and corresponding debts. Debt loads of at least $4,000 were noted by half of the underinsured and another 41% of the privately insured with HDHPs. Worse, 44% of the underinsured avoided some form of medical care because of the cost.
To be underinsured for study purposes, you had to meet one of these criteria:
- High Medical Costs – Out-of-pocket costs (premiums excluded) over the previous twelve-month period were at least 10% of household income. If you were below the poverty line (under 200% of the federal poverty level (FPL)), the threshold percentage was 5% of household income.
- High Deductibles – Your deductible was at least 5% of your household income, regardless of that income level.
By that definition, we would expect lower income families to make up most of the underinsured — and they do, at more than twice the rate of higher income families. At least the numbers have improved slightly. The 2014 survey shows 42% of those below the poverty line on the survey were underinsured, down from 44% in 2012 and 49% in 2010.
Meanwhile, the number of the insured with deductibles that are more than 5% of income has steadily risen from 3% in 2005 to 11% today. Those with employer-provided coverage were more likely to have HDHPs if they were employed at a smaller firm with less than one hundred employees (20% compared to 8% at larger firms). For those with individual coverage through any source including the exchanges, the HDHP share was 24%.
Overall, deductibles of at least $3,000 are paid by 11% of the fully insured, up from 4% in 2010 and a paltry 1% in 2003. One-quarter of the respondents have no deductible, 37% have deductibles below $1,000, and the remaining 27% have deductibles between $1,000 and $3,000.
In fairness to ObamaCare, since the survey was conducted between July and December 2014, the effect of the ACA cannot possibly be measured in this survey (since most coverage through the exchanges could not cover the entire twelve-month period). However, the effect should be measurable in the next biennial survey.
Will ObamaCare and the upcoming employer mandates truly provide affordable insurance for all, or will there primarily be a shift from the uninsured to underinsured who do not use their benefits? By the time the next survey comes out in 2016, we will know the answer. The only sure thing is that both friends and foes of ObamaCare will be spinning the results to meet their preferred view of health care.
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