U.S. nears next health insurance cliff with affordability crisis growing

dive-180x300Even as Congress lumbers into creating the next crisis for millions of Americans and whether they can access and afford health insurance, the giant, built-in flaws in the current coverage system keep sending far too many patients and their loved ones into a financial morass with which politicians and policymakers refuse to reckon.

Successive Democratic and Republican administrations have clashed over health insurance, notably the coverage extended to poor, working poor, and middle-class folks under Obamacare. But the people in charge have erred, big time, by blindly accepting a health care fallacy that plagues the U.S. system, according to Aaron E. Carroll,  the chief health officer for and a distinguished professor of pediatrics at Indiana University. He said this in a New York Times Opinion article:

“The Affordable Care Act was supposed to improve access to health insurance, and it did. It reduced the number of Americans who were uninsured through the Medicaid expansion and the creation of the health insurance marketplaces. Unfortunately, it has not done enough to protect people from rising out-of-pocket expenses in the form of deductibles, co-pays, and co-insurance. Out-of-pocket expenses exist for a reason; people are less likely to spend their own money than an insurance company’s money, and these expenses are supposed to make patients stop and think before they get needless care. But this moral-hazard argument assumes that patients are rational consumers, and it assumes that cost-sharing in the form of deductibles and co-pays makes them better shoppers. Research shows this is not the case. Instead, extra costs result in patients not seeking any care, even if they need it.

“Cost-sharing isn’t set up in a thoughtful way such that it might steer people away from inefficient care toward efficient care. Deductibles are, frankly, ridiculous. The use of deductibles assumes that all medical spending is the same and that the system should disincentivize all of it, starting over each Jan. 1. There is no valid argument for why that should be.”

An irrational view of ‘rational’ patients

The moralistic belief that patients putting “skin in the game” makes them savvier shoppers may hold true in other areas — but not in medical spending, Carroll wrote:

“People are not smart shoppers or rational spenders when it comes to health care. When you make people pay more, they consume less care, even if it’s for lifesaving treatment.”

He cites, for example, research by the National Bureau of Economic Research. The federal government, seeking to increase the efficiency of Medicare, sought to force seniors in an already comprehensive coverage plan to pay a few dollars for prescription medications. The results, the bureau’s experts found, were bad:

“[A] simple $10 increase in cost-sharing, which many would consider a small amount of money, led to about a 23% decrease in drug consumption. Worse, they said it led to an almost 33% increase in monthly mortality. In other words, making seniors pay $10 more per prescription led to people dying.These seniors weren’t taking optional, esoteric, exceptionally expensive medications. This finding was for drugs that treat cholesterol and high blood pressure. In fact, they were considered ‘high value’ drugs because they were proven to save lives. Further, those at higher risk of a heart attack or stroke were more likely to cancel their prescriptions than people at lower risk.”

Most Americans get their health coverage through their employers, of course. And corporations, confronting relentless health care costs, have not only shunted increasing financial burdens for the cost of health coverage onto their workers, but they have also done so by embracing the “skin in the game” argument: Workers, if using their own money, will spend less, and this will help restrain health costs, right? Wrong, as he reported:

“The average deductible for insurance offered by large companies in the United States was more than $1,200. At small companies, it was more than $2,000. Those are only the deductibles. After they are paid, people must still cover co-pays and co-insurance until they hit the out-of-pocket maximums. The good news is that [Obamacare or the Affordable Care Act] limits these in plans sold in the exchanges. The bad news is that they’re astronomical: $8,700 for an individual and $17,400 for a family. A large majority of Americans don’t have that kind of money sitting in accounts, certainly not after paying an average of about $5,000 in premiums each year for a benchmark individual silver plan. Half of U.S. adults don’t have even $500 to cover an unexpected bill. Anyone who requires significant health care will be out the entire deductible, meaning thousands of dollars, and if severely ill, is likely to hit the out-of-pocket maximum. Of course Americans are in medical debt. The Kaiser Family Foundation estimates the country’s collective medical debt is almost $200 billion.”

Rethinking medical costs

The good doctor has his own prescription for this mess (obviously not fully fleshed out due to the constraints of an Op-Ed), including:

“It’s worth noting that the cost of health care in the United States is so high that even expensive premiums are not enough to cover the full amount without significant out-of-pocket spending. That doesn’t mean no better options exist for cost-sharing. We could treat those with diagnosed chronic diseases differently, as many countries in Europe do. It makes sense to try to disincentivize healthy people from overtreatment, but lots of people, including me, need care that costs money every day. It makes no sense to try to persuade me to rethink that. U.S. leaders could also consider adapting a reference pricing system, where the health system determines what constitutes the lowest-cost, highest-quality care and makes that available without any out-of-pocket spending. Cost-sharing can then be applied to other options that might cost more or have less evidence behind them.”

In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the cost, complexity, and uncertainty of treatments and prescription medications, too many of which turn out to be dangerous drugs.

Health insurance is a necessity for people to protect not only their well-being but also to protect their financial health. Coverage allows patients — all of us who are one devastating illness or injury from calamity — to share bankrupting costs and risks in a welcome and collective altruism. Under the current system, the insurance itself is key because it, for example, unlocks significantly better rates for therapies because insurers negotiate better rates with doctors, hospitals, labs, and other providers. The uninsured get gouged for the highest rates, even though they are least able to pay — and providers don’t do much to let them know they might qualify for charitable care at lower costs.

Alas, the national political conversation about health insurance has been dominated by a religious fervor by partisans (yes, the Republicans) who deny any federal role in the U.S. health care system. They cannot embrace the commonsense idea that, in the wealthiest nation in the world, health care should be a privilege but a right, with a bulwark in safe, affordable, and accessible health coverage.

The coverage cliff ahead

During the coronavirus pandemic, President Biden and lawmakers agreed to a giant aid package to keep the nation from major economic problems as the infection spread and caused big business shutdowns. That rescue package included funding for expanded subsidies for workers laid off and seeking ACA coverage, as well as for others who needed an economic boost, as the Wall Street Journal reported:

“With Americans spending more on just about everything these days, one big expense has been uncharacteristically tame lately for nearly 15 million of them. Premiums for so-called Obamacare health-insurance plans mostly declined this year but are set to rise sharply as subsidies expire in December. That could spell trouble for American families as well as care providers such as hospitals just as the economy slows down. While health care expenditures continue to rise, people insured through the Affordable Care Act have been spared because of generous federal funding as part of the $1.9 trillion American Rescue Plan Act. The legislation temporarily increased subsidies across the board and for the first time allowed those with income that exceeds four times the poverty level to qualify for government help as well.”

The subsidies expire just before the midterm elections, and lawmakers in Washington, D.C., have jawed for months about whether to extend them — knowing their loss will be a big blow to those who have benefited from them, the newspaper noted:

“The result would be that a typical enrollee making $40,000 a year, or a bit more than three times the federal poverty level, would see a 55% increase in premiums for a ‘silver’ plan, while someone making $60,000, or just below five times the poverty line, would experience a 36% increase, or around $1,800 more a year, according to the Kaiser Family Foundation. The end of the subsidies, given through tax credits, would have a pernicious effect on the health care system. More than three million people would drop their insurance plan because of rising costs, according to U.S. Department of Health and Human Services estimates. Jonathan Gruber, a key architect of Obamacare, says Republican efforts to weaken the Affordable Care Act make it unaffordable for many unless the government steps in.”

The newspaper reported that the health care system itself, which has struggled through the economic shocks of the pandemic and the significant delays that so many patients decided to take with their treatment, would be hard hit, too, by a sudden end to the ACA subsidies.

The $20 billion cost of extending the subsidies, as reported by the Wall Street Journal, is roughly equivalent to what the Pentagon will spend on its military space programs, by the way.

Here’s hoping lawmakers don’t ignore real, down-to-earth needs for the sick and injured. We have much work to do to ensure that our health care is safe, efficient, affordable, accessible, and excellent.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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