Families USA: Forgoing health care because of high out-of-pocket costs

 Families USA recently produced a report showing that many families were forgoing health care because even though they had insurance, the health care was still not affordable. The full report is available here.  These are the main points:

  • Just over one-quarter (25.2 percent) of adults who were insured for a full year went without needed medical care because they could not afford it.
  • Adults with lower to middle incomes were the most likely to forgo needed medical care.
  • Adults with high deductibles were more likely to forgo needed medical care.
  • In 2014, half (50.6 percent) of adults had high deductibles of $1,500 or more, and 30 percent had exceedingly high deductibles of $3,000 or more.

Why are people still struggling with out-of-pocket costs?

  • Premium tax credits are tied to silver plans, which often have cost-sharing that is too high for many consumers to be able to afford.
  • Only a portion of the lower-income consumers who are eligible for subsidies to reduce cost- sharing in silver plans receive substantial help to also reduce their deductibles.
  • Insurers are choosing to design silver plans with upfront cost-sharing that is too high for lower- and middle-income consumers to afford.

Policy Recommendations

  • Health insurers should offer more plans at the silver level that have low or no cost-sharing for primary care, other outpatient services, and prescription drugs.
  • Policymakers at the state and federal levels should require health insurers to sell silver plans with lower cost-sharing for primary care, other outpatient services, and prescription drugs.
  • At the federal level, Congress should: Provide cost-sharing reduction subsidies to middle-income consumers (above 250% FPL) and increase the generosity of this help.
  • At the state level, lawmakers can also strengthen financial assistance.

Don McCanne MD, of Physicians for a National Health Program, comments on this report:

Today Families USA released their report that confirms, once again, that many adults insured with high-deductible health plans are likely to forgo needed medical care, especially if they have lower to middle incomes. So what are their recommendations?

In order to remove financial barriers to care, they recommend that more plans offered at the silver level - the benchmark plans -  have lower or no cost-sharing for primary care, other outpatient services, and prescription drugs. This has the advantage of increasing access to primary care services, which most agree would significantly improve the performance of our health care system.

The problem is that the barely affordable silver plans must have an actuarial value of 70 percent (the patient pays 30 percent of health care costs, up to a given maximum). Higher deductibles are used in most of these plans in order to meet this actuarial value. But in a report that Families USA released last year, they explain that if the deductibles and copayments were reduced to more affordable levels, then the required 30 percent of out-of-pocket costs must be shifted to more expensive services.

So this scheme would help the majority who simply need primary care services, but it would make care less affordable, even catastrophic, for those who have greater health care needs. As long as our benchmark plans are set at an actuarial value of 70 percent, this trade-off cannot be avoided.

Families USA also suggests the obvious. We should increase federal and/or state subsidies for both the purchase of plans and for cost sharing for low and middle income individuals and families.

But if you are going to make care affordable for everyone, why continue with this highly inefficient, administratively complex system that wastes so many of our health care dollars. Surely by now Families USA should acknowledge that our dysfunctional system should be replaced by a much more efficient single payer national health program - an improved Medicare for all. We’ve experimented extensively with their preferred model, and it didn’t work.

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