Underinsured... are people better off on ACA plans with Big Deductibles and out of pockets?

May 20, 2015

Let's face it - when people saw the new ACA plans, many were shocked. Silver level Plans in Illinois offer deductibles as high as $3000 and $6000 per person, times 2 for for families with two or more people; out of pockets for a family on these plans started at $12,700 in 2014 and are indexed up too $13,500 for 2015. (NOTE: Some companies did not change plans for 2015 and are still at the 2014 annual maximums.) So while many individuals who were previously uninsured now have insurance, a very large claim could leave them struggling financially to pay this large out of pocket cost. (Read more: Huffington Post. health insurance deductibles )

Two recently studies examined this: The first one was done by the Commonwealth Fund, which for many years has been asking respondents about their medical expenses and how big those expenses are, relative to household income. It looked at people whose out-of-pocket expenses are more than 10 percent of household income. (they lowered this number for lower income levels) These people were defined as "under-insured". Of this group, 47 percent of respondents said they exhausted their savings to pay medical bills, 23 percent were dealing with collection agencies and 7 percent had to declare bankruptcy. Others who were under-insured opted not to get recommended care: 26 percent didn't fill a prescription because of expense, while 24 percent didn't get prescribed follow-up treatment or tests for the same reason.

The second study comes from the Henry J. Kaiser Family Foundation, published in the spring, found that about one-quarter of all non-elderly Americans with private insurance don't have enough liquid assets to pay the deductibles on their health insurance policies. As Drew Altman, the foundation's president, wrote in the Wall Street Journal, those people will "have to put off care or incur medical debt" if they develop any serious health problems.

In addition to making insurance "Affordable", a major goal of the Affordable Care Act, or "Obamacare," is to protect people from precisely these situations - being in debt and filing bankruptcy because they can't afford the deductibles and out of pockets. And this study doesn't even discuss premiums, which continue to go up every year. Economists will argue that high cost-sharing encourages people to be more aggressive consumers for health care -- whether that means shopping for cheaper policies or picking providers of care that can perform the same services for less money.

A third study from the advocacy group Families USA, based on data from the Urban Institute -- examined the benefits of the law. More people had insurance, the report noted, and people buying coverage with federal financial assistance tended to have better protection from expenses. Nonetheless, one in four people in the non-group market were still going without recommended medical care because of the cost. (Read more: Huffington Post. health insurance deductibles )

Some will say the COST of healthcare needs to come down. We still have the most expensive healthcare system in the world - we spend more per person than any other country, and we don't have the best results to show for it. By many measures (number of major diseases, longevity, and overall health), we trail behind many nations. So how has the ACA law helped with costs? No one knows, but it appears that while more people may have insurance, many remain uninsured by choice and others who may or may not have insurance are delaying treatments. The Affordable Care Act has a long way to go to live up to it's name of "Affordable Care".