Thursday, February 26, 2015

ACA Plans Unaffordable?

An American Health Policy Institute report reveals that over 105 million Americans will find health care plans offered on the public exchanges to be unaffordable when both premiums and deductibles are taken into account, and 10.4 million employees who head up a family face an average family premium and deductible that could consume more than 9.5 percent of their family income. Under the ACA, an employer-sponsored plan with premiums less than 9.5% of an employee’s income is deemed "affordable", and therefore does not assess that employer a penalty for offering unaffordable health coverage.

In spite of promises of broader coverage and subsidies under the ACA, millions of people still face serious challenges in paying for health care purchased on the public exchanges.

Health care costs saw a rapid increase from 1998 to 2005, which forced businesses to shift more costs to employees. Part of that cost-shift was also to make workers better health care consumers, armed with more information about the true costs of health care. But employer costs are still rising, twice as fast as inflation. These rising costs add to the affordability or unaffordability of health insurance plans

The Health Policy Institute survey points out some very interesting scenarios. For some 20.2 million nonelderly adult Americans who currently have no health insurance and who might seek coverage on the public exchanges:

11.5 million (56.9%) will see an average ACA premium and deductible that would consume more than 9.5%of their individual income–for 7.4 million (36.%), the average ACA premium and deductible would consume 15.5% or more of their individual income. Almost 96% of the 11.5 million held jobs in 2013; 73% in the private sector, 18.3% were self-employed, and 8.7% worked for the government or armed forces.

9.4 million (46.%) of the 20.2 million nonelderly adult Americans with no health insurance would find the average employer sponsored coverage affordable and the average ACA plan unaffordable, while 8.8 million (43.6%) would the average ACA plan affordable and the average employer sponsored coverage unaffordable; 2.0 million would find both types of coverage unaffordable.

Last month, the Baltimore Sun ran an article about the high costs of prescription drugs on the health exchanges. In a survey conducted by the Partnership to Fight Chronic Disease, participants said it cost them less to purchase medications directly from the drugstore using coupons and other discounts, rather than through their Exchange insurance plans. Officials with the Maryland Health Benefit Exchange declined to comment on the survey, as did CareFirst BlueCross BlueShield, the dominant carrier on the state exchange.

The survey looked at mid-level or silver plans, sold on the state exchange. Insurers pay about 70 percent of costs under these plans, while the policy holder pays the rest. The survey compared those plans to what people on a typical employer-sponsored plan might pay for drugs. The comparison revealed that on, average patients with one or more chronic conditions would pay 66 percent more for medicine than if they were on an employer's plan. People with one chronic condition would pay even more - 89%. The sickest Maryland patients, with four or more chronic conditions, would pay the most for medicine, $1,391, compared with $972 under an employer-based plan.

In reviewing the study, Gerald Anderson, a professor at the Center for Hospital Finance and Management at the Johns Hopkins University said that people who can't afford their medicine may not take it all or cut pills in half. That may result in them becoming sicker and end up in the hospital or emergency room, which would of course cost more than managing the disease with drugs.

Recently, after my very small employer’s health care plan premiums nearly doubled, I could no longer afford to carry my husband as a dependent on my plan. We had to find other coverage – quickly. I went onto the Maryland Health Exchange website to look for and compare available plans. Honestly, I was shocked. The basic rule of thumb (the higher the deductible, the lower the premium, and vice versa) certainly held true. However, I found no mid-level plan that had an individual deductible less than $2000.00; and after the deductible, no plan I saw paid better than 70% of costs, and included rather high co-pays on prescriptions. For many, many people, the premium on a plan like this would still be too high. In order to get a premium they can afford, the deductible would have to be much higher. Such plans would not be more than catastrophic coverage. You may have a monthly premium you can manage, but if you’re essentially out of pocket for thousands of dollars when you consider the deductible and then prescription co-pays on top of that; it’s far less affordable we’ve been led to believe.

Few people would argue that our health care system is broken; and I certainly have no viable fix for it; however, it doesn’t appear that the ACA has fixed anything. Remember, the law has no provisions that affect the actual cost of health care (treatment, prescription drugs, diagnostics, etc.); it only provides a scheme to lower premiums by forcing more people to be covered – thereby more people paying into the system. It remains to be seen if that scheme will truly work. Many more young and healthy people will have to buy into the ACA in order for the promise of "lower premiums" to be realized.

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