An article by doctors David U. Himmelstein and Steffie Woolhandle, published by the Boston Fed, gives a stark picture of the extent and severity of medical indebtedness in the US, and why Obamacare won’t remedy that problem. And we’ll discuss later that getting the machinery running looks likely to be another serious shortcoming with the program.
Himmelstein start by reviewing the scale of the medical bankruptcy problem. In 2001, medical bills contributed to 50% of bankruptcies. By 2007, they played a role in 62%. The medical debtors were typically middle class. And of the people who declared bankruptcy for medical-related reasons, 78% were had medical insurance.
As bad as that is, it masks the size of the overall medical debt problem. Consider:
53 million working age adults reported having trouble paying medical bills in 2010. 30 million were contacted by a debt collector. 44 million were paying off medical debts on an installment plan
In 2010, 20.9% of all Americans lived in a household that struggled to pay medical bills. And insurance didn’t make a dent, since it a virtually identical proportion, 20.2% of insured, non-elderly people lived in a household with medical expense problems
A 2011 survey determined that 51% of uninsured 19 to 29 year olds had trouble paying medical bills or debts. But so did 29% of people in that age group who did have insurance
Consumer Reports found that the biggest financial problem for American households is paying for medical care
The article also stresses that Romneycare has not put a dent in medical bankruptcies in Massachusetts, that the 59% of bankruptcies before the program that had medical expenses as a trigger is “statistically indistinguishable” from the 53% afterwards. And if you look under the hood, you can see why. It’s crappy insurance. The authors write:
Consider that the cheapest coverage available through the state’s health insurance exchange to a single 56-year-old Bostonian who is not eligible for subsidies (in other words, one who has an income above 300 percent of poverty) costs $4,744 and comes with numerous restrictions on which doctors’ and hospitals’ bills it will pay. If the policyholder is sick, the policy doesn’t start paying bills until after the policyholder has taken care of the $2,000 deductible. The patient also is responsible for about 20 percent of the next $15,000 in medical expenses.
Obamacare also leaves individuals shouldering a large proportion of medical costs:
Nationally, the Kaiser Foundation estimates that in high-cost regions like New England, the unsubsidized premium in 2014 under the ACA will run $10,585 with additional out-of-pocket costs adding up to $6,250. Such costs will predictably leave tens of millions with large medical debts and drive more than a million into medical bankruptcy every year.
And not only is the ACA looking oversold in terms of outcomes, it looks also to be oversold in terms of when it will be operational, at least in any reliable manner, if you happen to be living in a state where the Federal government is responsible for the exchanges.
While some of the states are making good progress in building their infrastructure (see Maryland as an example), the Wall Street Journal tells us tonight that the Obama administration is insisting that all systems will be go, a GAO report casts doubts. Remember that there are two key deadlines: October 1, for the websites (the famed exchanges) for insurance shopping and enrollment and January 1, when hospitals and doctors need to be able to exchange billing and eligibility information with the insurers. To make matters more complicated, there are actually two types of exchanges, one for individuals (expected to serve seven million people) and another for small businesses (which will provide insurance for two million individuals). The small business exchanges are in the most trouble. From the Journal:
Government officials have missed several deadlines in setting up new health-insurance exchanges for small businesses and consumers—a key part of the federal health overhaul—and there is a risk they won’t be ready to open on time in October, Congress’s watchdog arm said…..
The GAO report on the small-business exchanges said officials still have big tasks to complete including reviewing plans that will be sold and training and certifying consumer aides who can help companies and individuals find plans.
It said that the 17 states running their own exchanges were late on an average of 44% of key activities that were originally scheduled to be completed by the end of March. “While interim deadlines missed thus far may not impact the establishment of exchanges, any additional missed deadlines closer to the start of enrollment could do so,” the report said.
Notice that the GAO report ONLY covers how a sample of states are faring. The Obama Administration continues to pull a veil of secrecy over how the Federal efforts are going. As Bob Laszewski of the Health Care Policy and Marketplace Review blog writes (hat tip Lambert):
…. apparently the Federal Data Hub is up and running. While that is what the Obama administration has been telling us, it has been hard to find anyone who has actually seen it or used it…
I continue to be puzzled by the way the Obama administration is developing the federally run exchanges in the 35 [sic, 34] states in which they will have to run them.
We don’t know any details on just where they are and if they are on track. They continue to tell us they will be ready on October 1 to begin enrollment and on January 1 to exchange billing and eligibility information with the health plans––by far the toughest challenge.
But why all of the secrecy? Why aren’t we getting the same reports from the Obama administration we are getting from Maryland? Why isn’t the GAO doing a report on just where the administration is in the 35 states’ exchanges they will now manage?
Even more, all of the health plans intending to do business on the new federal health insurance exchanges had to submit their plan and rate data to the Obama administration weeks ago.
Will we have rate shock in the federal exchanges? The Obama administration has all of the rate data. They know if we will or won’t. True, all the rates are preliminary but they are preliminary in California and Ohio and all of the other states that have released that data.
Why won’t the Obama administration release the detailed information on which health plans are participating in which states and what they are charging?….
It’s notable that more is now known about that national security enterprise than exactly where HHS is on “ObamaCare” implementation!
Why is the implementation of “ObamaCare” by the Obama administration a top-secret enterprise?
The answer to Obama’s insistence on “all secrecy all the time” is becoming more and more obvious. As we said back in 2010, Obama thinks any problem can be solved by better propaganda. Having reality be less observable makes it easier to pull off a snow job.