President Obama promise “if you like your insurance you can keep it” has generated a lot of attention lately, but long-term the failure of an even more oft-repeated promise will be more important. Obama has frequently implied using the Affordable Care Act will stop people from going broke if they get sick, even though this will not be true.
As part of my running series looking forward at structural problems with the law that will soon be encountered, I consider this to be one of the most serious. In the coming months some people who thought they were safe because they bought approved coverage through the Obamacare exchange are going to be hit with medical bills they simply can’t afford.
For example, a family making $55,000 with one child will be paying $4,900 in premiums for a silver plan, but if one of them gets really sick they will face an out-of-pocket limit $12,700. That is a total of $17,600 spent on health care in a year.
In reality, the actual amount the family is spending to deal with the illness will be higher because there are things this out-of-pocket limit doesn’t cover. Everything from hospital parking fees, babysitting during doctors visits, to many over-the-counter medical purchases. There is also a real chance the insurance company will not pay for some of the procedures by deeming them medically unnecessary.
Many middle class families don’t have that kind of money for a surprise expense.
High deductible plans and out-of-pocket limits don’t offer true protection for those who get really sick. That is why the Massachusetts health care law –which the ACA is based on– has not made a big impact on the number of medical bankruptcies in that state.
Even Jonathan Gruber, who helped design the ACA and has been one of the biggest promoters, has acknowledged, “There are some groups for whom affordability remains a concern. Most important are those with high out-of-pocket spending—in particular those in the income range from two to three times the poverty level. For all those below five times the poverty level, more than 10 percent of families cannot afford both premiums and out-of-pocket costs if they are very sick.”
Soon some people are going to buy “Obamacare” coverage. They are then going to get real sick and go broke as a result of big medical bills.
In the future this might not get as much media coverage as the “keep your insurance” pledge because it does not play into partisan fights, but it should be a big scandal because stopping medical bankruptcy was supposedly a main justification for the law.
Just like with the exchange subsidy cliff issue, this is a problem Democrats could have easily fixed when they designed the law, but again they decided getting a nice CBO score was more important than better policy outcomes.
Photo by José Goulão, used under Creative Commons license