During the protracted Congressional fight over the Affordable Care Act, its supporters kept stressing the importance of extending coverage to tens of millions of uninsured. But some observers, including your humble blogger, warned that having overpriced insurance that didn’t cover much was a headfake, not real progress.
Physicians for a National Health Program has gotten access to an editorial approved for publication next week in the Journal of General Internal Medicine titled Life or Debt (hat tip martha r). It which takes aim at the lousy job Obamacare does for the group it was billed as benefitting, the un- and underinsured, keying off an article in the same journal, “Prevalence and Predictors of Underinsurance Among Low-Income Adults,” whose lead author is Hema Magge.
If you’ve had a look at how the bronze plans work, you’ll find the conclusion of this article to be no surprise. Bronze plans for individuals are expected to cost between $4,500 and $5,800 a year in 2016. But if you make less than 4 times the Federal poverty line ($11,170 in 2012), you’ll pay less by virtue of receiving tax credits. Someone making up to 133% of the FPL will get credits so that his net payment will be only 2% of income, while those making 300% to 400% of FPL will pay 9.5% of FPL.
But the real problem is that this is only a portion of what lower-income people will pay. They’ll presumably only be able to afford the lowest tier plans, which are bronze plans. And bronze plans are terrible. They are designed so that the insurance covers only 60% of costs. The insured is expected to pick up 40%. And this is inadequate.
62% of bankruptcies in 2007 had medical bills as a contributing factor. Only 22% of those individuals were uninsured. And Obamacare-style coverage does nothing to lower this risk. The Massachusetts health care program, whose bronze plans are more generous, designed to cover 70% of medical expenses as opposed to Obamacare’s 60%, did not reduce medical bankruptcies. (By contrast, current employer-provided policies typically reimburse roughly 80%).
When authors Steffie Woolhandler and David U. Himmelstein take you through the numbers, you can see why:
125 In concrete terms, a 56-year-old making $45,900 (399 % of poverty, and hence eligible for premium subsidies) will pay an estimated $4,361 in premiums for individual Bronze coverage, and up to $4,167 in additional deductibles and copayments for covered services.13 At 401 % of poverty ($46,100) subsidies disappear; the mandatory premium would be $10,585, with out-of-pocket costs for covered services capped at $6,250. In effect, the federal government has lent its imprimatur to skimpy plans (long-promoted by private insurers) that offer scant protection from pauperization.
What is even more evil about this is that for most employers, coverage over time will migrate towards the inadequate Obamacare level. Sure, many will provide more as an inducement, but with this low a bar to beat, over time you can expect a decline in the average level of private coverage.
And don’t kid yourself that making individuals and families bear more of the costs is an effective way to rein in health-care spending:
International evidence indicates that cost-sharing is neither necessary nor particularly effective for cost control; the U.S. has high cost-sharing and the highest costs. Canada, which outlawed copayments and deductibles in 1981, has seen both faster health improvement and slower cost growth. Canadian provinces control costs by tax- based funding; global hospital budgeting; binding, negotiated physician fee schedules; and a simple unified single-payer structure that minimizes administrative burdens and costs. Scotland, which has eschewed market-based policies 161 and patient payments—even going so far as to abolish parking fees—has costs about half those in the U.S. Scots view patients as owners of their health care system, not its customers.
And in parallel, a stealth plan to weaken Medicare and force more low-income people into these lousy private plans is underway:
About 40 % of those gaining 102 coverage will get Medicaid. As Magge shows, many current Medicaid enrollees are woefully underinsured. Disturbingly, CMS looks set to allow state Medicaid programs to demand 105 copayments and deductibles, even from the poorest of the poor. Several states have already reduced benefits, cut provider payments, and narrowed provider networks. Hence, underinsurance among Medicaid recipients will probably increase. More ominously, the White House is 110 encouraging state officials to use federal Medicaid expansion funds to purchase private insurance, a shift likely to raise both taxpayers’ costs and poor patients’ copayments.
Catfood isn’t an adequate comparison for this scam. Cat insurance is a better deal because it is targeted to people with middle to high incomes who can shop for options and for the most part, won’t buy a bad policy out of desperation (there are lots of consumer sites comparing pet policies, so a minimal level of research will screen out overpriced products). Obamacare, by contrast, is all about enriching entrenched interests. And the worst is that it offers the poor and uninsured the promise of a better deal when it instead serves them up to the very same insurance industry that helped get us in this cost mess in the first place. While this is yet another face of the “Change you can believe in” con, it’s particularly despicable for treating the health of low income Americans as another looting opportunity.