Amidst the major health care policy differences highlighted at Tuesday’s Democratic debate, we must not forget one telling statistic: While the Affordable Care Act (ACA) has extended insurance coverage to millions, a majority of Americans who were uninsured prior to passage of the law still remain uninsured today.
Relative to the most credible forecasts from premiere agencies including the Congressional Budget Office (CBO), far fewer people enrolled in the ACA’s new private insurance markets than anticipated. And this was no small margin of error; the estimates were off by about 10 million people.
As I show in a new study and working paper, there’s a common-sense reason for this: For about one in four adults uninsured prior to the ACA, it would be cheaper to file for bankruptcy than to meet the deductible of the benchmark ACA private insurance policy.
As might be implicit from that fact, the ACA’s private policies have very high deductibles. In fact, the median deductible for a benchmark policy (to which the subsidies are tied) was about $3,000 in 2016—meaning half of the deductibles were even higher. Because most consumers will not exceed the deductible in a given year, they pay their monthly premiums and all of their health care out-of-pocket for the peace of mind that they’d be protected in a worst-case scenario.
These high-deductible policies are designed to “pay off” for a consumer in those very rare scenarios of very poor health, when unexpected medical expenses can balloon outrageously high. But are patients truly getting any financial protection out of it? I find that, for many, the answer is no.
Hospitals are required to treat patients in emergency situations without regard for ability to pay, but very few uninsured households have the money to pay the full cost of an emergency hospitalization. They attempt, but usually fail, to recover their costs. In the aggregate, the uninsured paid for about 30 percent of the health care they consumed in 2013, the year before the ACA’s implementation. The saying “you can’t get blood from a stone” applies here.
As a result, designing a form of insurance coverage where the primary emphasis is on covering the cost of unexpected catastrophic expenses will have limited benefits for uninsured consumers—since these are precisely the costs they weren’t going to have to pay for in the first place.
For-profit hospital consortiums, however, realized that they stood to gain from the introduction of these new, publicly-mandated catastrophic policies. On the day that the Supreme Court upheld the individual mandate of the ACA, the top three stocks of the day were for-profit hospital consortiums. You can look at the stock values up until the time of the decision being announced—flat, flat, flat, and then a huge spike following the announcement. Tellingly, the same decision struck down the law’s expansion of Medicaid and only upheld the mandate that individuals purchase this high-deductible coverage.
When corporations write the rules, they might end up securing benefits for themselves that are of marginal, second-order benefit to the population.
We can and must design the next round of insurance reforms with patients as a priority. With low deductibles that actually facilitate the consumption of care, our health care system can directly benefit the well-being of low- and middle-income people—not just the holders of for-profit hospital stock.