Why Isn’t Health Insurance or Care Affordable?

Who Has Affordable Care?

We look at the Affordable Care Act, asking why many people’s medical insurance or care is unaffordable.

Although many who once didn’t have access to affordable care now do, which is a major plus for tens of millions, some once secure middle-income people are now grappling with higher costs (as a result of both health care inflation and the effects of the ACA on those without sufficient cost assistance).

The bottom line is that while we all feel the effects of health care inflation, some individuals face unaffordable insurance and medical care bills along with a decrease in financial security and a growing risk of bankruptcy despite the recent healthcare reforms which increased assistance and helped cut the rate of bankruptcy in half.

We deal with this complex situation below.

How Did ObamaCare Affect Health Insurance?

The Affordable Care Act known as ObamaCare made health care affordable for nearly 20 million Americans since 2010 in a liberal view of the data that considers all of the ACA’s coverage provisions.^[1] Even a very conservative view of the data, for example, data that only consider marketplace enrollments minus those who lost their plan and then enrolled in other coverage, puts the number of people who have gained health insurance at over 10 million.^[2]

We have some facts.

• Young people are now more likely to be insured because of expansion of the Children’s Health Insurance Program known as CHIP and by being allowed to remain insured under their parent’s health insurance until the age of 26.
• States that chose to expand Medicaid coverage to low-income people cut their uninsured population drastically.
• Many people were able to afford health insurance under the ACA or ObamaCare when insurance companies were prevented from excluding or rating people based on gender or pre-existing conditions.
• Insurance companies were no longer allowed to impose annual or life time maximum payments so people with ongoing medical issues could retain medical coverage.
• Companies were no longer allowed to refuse insurance to sick policy holders.
• May people with lower incomes gained access to federal subsidies that help pay for their insurance premiums. Not all of those who received subsidies could afford both insurance and medical care, however.

Who was left with Unaffordable Care?

The ACA has helped formerly uninsured or under insured low-income Americans gain coverage, but much of the middle class has been left behind.  Many people don’t realize how expensive health care has become because their employers pay a significant share of their insurance costs. The people who are now least able to afford health insurance or health care costs are now single people earning over $47,520 and families of four earning $97,200.^[3]

Many people who used to have affordable health insurance are now unable to afford either the premiums or the cost of care or both. This is especially true when you look at older, middle-income, and lower-income adults. This group is most likely to face enormous out of pocket costs of health insurance and deductible costs that use up savings and lines of credit and may even result in bankruptcy.^[4]

According to the Commonwealth Fund report on a Princeton Survey, people who shopped for insurance and could not find an affordable plan fell from 60% in 2010 to 34% in 2016. Among those with preexisting conditions, 70% were unable to find a plan is 2010 compared to 42% in 2016.^[5] It’s an improvement, but hardly affordable care for all.

What Happened to Health Insurance?

The price of healthcare has been rising steadily for decades due to increasing costs of specialty procedures, medications, salaries, hospitalization, and virtually every other aspect of care. As the cost of care rose, the cost of medical insurance rose with it. Insurance is a profit-based industry, after all.

The ACA’s government mandated perks also come with a cost. Covering sick people is part of what drove up the price of insurance although rates were rising since the 80’s on their own and there are many factors beyond the ACA involved. Additional benefits mean higher deductibles and more costs.

Fact: As the cost of medical care rose, medical insurance policies became more expensive and began involving more out-of-pocket costs.

The high deductible health insurance plan has been around for a long time but is now increasingly common and a good part of the reason people with insurance cannot afford medical care. People with high deductible accounts have to pay the first several thousands of dollars in medical costs out of pocket before their insurance begins covering any expenses other than the essential benefits.

Many people have reacted by skipping doctor’s visits or canceling their medical insurance because they feel they cannot afford both the insurance and medical care.^[6]

We have a for-profit system of health care in America. That means that every person and company involved in providing services, products, and care will build profit into their pricing system. While most Americans are covered by a single-payer system such as the VA, Medicare, or Medicaid, the rest rely on employer-sponsored insurance or the open market.

Ten years ago, few people had high-deductible insurance plans. In fact, the Kaiser Family Foundation found that only 10% of the workers in 2006 had even a $1,000 deductible. The growth in health care spending is greater than growth in wages or income. Now it is common for families to pay hundreds and sometimes thousands, of dollars a month, face deductibles of many thousands of dollars, and not have enough money left to pay medical bills.

Insurance companies theoretically began offering high deductible plans as a way to encourage consumers to become more careful consumers of medical services. People were expected to save money in Health Savings Accounts (HSA) accounts and use pre-tax dollars to offset medical costs. Some people do, of course, but many more Americans live from paycheck to paycheck and do not have the money to save.

Why Did Medical Costs Rise?

Medical practices have moved away from primary care to specialties. The wealth gap between primary care doctors and procedure-driven specialists is increasing, and the primary care physician who is theoretically crucial to people’s health care is a vanishing breed.^[7]

Specialists are paid more as they can profit from increased efficiency. Technological developments allow medical procedures to be streamlined and performed more quickly. Medical providers are rewarded through insurance payments for providing services. As services are provided more quickly, they become more profitable.

Medical specialization allows practices to rely increasingly on paraprofessionals and technology to increase productivity and, therefore, income. We have seen greatly increased roles for paraprofessionals in the medical workforce. At the same time, there has been a boom in technology, including wearable tracking devices, teleconferenced medical visits.

The primary care doctor, on the other hand, has been unable to streamline patient interaction to anywhere near the same degree and so has become less profitable. The need for computer record keeping has tended to redirect physicians’ attention from the patient to the keyboard. There is a limit to the amount of patient care time that can be cut from a schedule before it becomes ineffectual. This is especially true of physicians who accept single-payer clients like those on Medicare and Medicaid whose systems require specific record-keeping software and cap fees below the private payer.

As a result, we now have fewer primary care doctors (who are often affordable) and more expensive specialists (who may be priced out of many people’s reach.)

In Conclusion

It is clear we need to find a better path forward. A few tweaks to shift around winners and losers does little to address the core problems with the economics of healthcare. We don’t need a band-aid; we need a 21st-century cure.

1. Nearly 20 Million Have Gained Health Insurance Since 2010
2. How Many are Insured Because of ObamaCare? Great Question
3. Is Obamacare Really Affordable? Not for the Middle Class
4. For Many, Obamacare is Becoming the Unaffordable Care Act
5. 2016 Biennial Health Insurance Survey
6. The Painful Rise of High-Deductible Health Insurance
7. Disparity in Pay Divides Doctors