Millions of Insured Americans Can't Cope with Medical Costs

According to a study recently published in JAMA, when it comes to concerns about high health care costs, having health insurance does not always help. NPR.

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The researchers found that despite the expansion of coverage associated with the Affordable Care Act (ACA), high health care costs continue to worry many Americans. About 11 million citizens faced “catastrophic health costs” in 2017 (last surveyed), and more than half of these were privately insured.

“Catastrophic spending” is a term coined by the World Health Organization that refers to health care costs that account for more than 40% of a person’s income after food and housing costs.

During the study period from 2010 to 2017, 6 million people aged 20 to 64 with private insurance bore such a financial burden, and their share of the total number of those who reported their expenses increased from 46% to almost 54%. The study found that by 2017, catastrophic spending in general had declined, particularly for people on Medicaid, but not for privately insured people.

Dr. Charles Liu, one of the study's authors, called the results "surprising."

Despite advances in health insurance, he said, many Americans can still be vulnerable to unmanageable bills, including high insurance premiums and high cash costs. As a doctor, he is concerned that these costs may deter people from seeking medical attention.

"I think it's going to create a new culture of, 'I don't go to the doctor because I don't know how much it will cost and I'm afraid of what it might do to my wallet,'" he said.

On the subject: How to Reduce US Medical Bills

Liu cited two reasons he believes people with private insurance do not see optimal financial protection against huge costs: high-deductible plans and inevitable trips to non-networked facilities such as emergency departments. These situations can put patients in a difficult position due to high bills.

“Many insurers [employers] offer high-deductible plans to their employees because healthcare is so expensive, and this way companies can stay afloat,” Liu said. “Even if you've reached your benefit maximum and don't owe more than that, that figure alone could be more than 40% of your net income.”

The authors noted that while earlier studies had demonstrated the benefits of the ACA in helping the lowest income groups and uninsured groups obtain health insurance, little was known about its impact on higher income people or people who have private insurance through employers or the individual market. This group includes low-income people who still earn too much to qualify for Medicaid or government subsidies (also called tax credits)—two pillars of the ACA.

The researchers analyzed income, insurance coverage, and cost data from a large sample of American adults.

Privately insured low-income people had the worst results. They see no benefit from ACA: they had the highest level of catastrophic health spending before the law was passed in 2010, and the picture was no better in 2017: 35% versus 8% of Medicaid participants.

Dr. Martin Gaynor, president of the American Society of Health Economists, noted that Americans who use private health care from employers have long borne the burden of higher health care costs when employers pay higher employee premiums and, as a result, lower wages.

“Some economists believe that higher health care costs are a major reason why wages have stagnated for many American workers,” Gaynor said.

The study notes that with the expansion of the Medicaid ACA program, more than 7 million Americans became Medicaid during the study period (2020 million added to Medicaid as of 14). Government insurance has proven effective in providing affordable health care to eligible individuals and families.

“People who have Medicaid actually had fairly low rates of catastrophic spending,” Liu said, and explained that the program has strict limits on what it can charge, and that premiums are typically zero or very low , and low out-of-pocket costs for the recipient of insurance assistance.

Expanding Medicaid to 12 more states could help provide better protection against catastrophic spending for certain groups of people, said Dr. Ellen Meara, a professor at Harvard TH Chan School of Public Health.

“In states that haven't expanded Medicaid, there is strong evidence that people are losing out on this,” Meara said. “The purpose of insurance is to protect us from catastrophic costs, and if just over half of the people facing catastrophic costs are privately insured, I think we're still failing.”

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Meara ranks prescription drugs at the top of the list of financial burdens across all insurance, and she expects elected officials to be more pressured to change that.

While the Supreme Court is considering arguments in a case that could partially or completely overturn the Affordable Care Act, President-elect Joe Biden has pledged to try to develop and improve the law, saying it is vital to protect American health.

Expanding insurance coverage may only be the first step to making health care affordable for many Americans, Liu said. He believes that the current health care system still “leaves out many people”.

Liu hopes that constant monitoring of the American health care system will improve accessibility.

“We still have a lot of work to do - we need more and more reforms, more innovative ideas and more support,” he concluded.

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