The ‘Unaffordable Care Act’ Causing High Medical Bills for Insured People

Liberal public health advocates and left-of-center health policy wonks have long thought every American needs health insurance (they don’t, but that’s another discussion). Lefties assume health insurance is the only way Americans can access medical care. After all, the purpose of the Affordable Care Act was to insulate Americans from the financial hardship of medical care they couldn’t afford to pay for out of pocket. Moreover, many pundits believe having to reach for one’s wallet during a medical encounter is unacceptable. So imagine my shock when I read a headline in the New York Times claiming that Obamacare is no guarantee against crushing medical bills.

In a survey of non-seniors, the New York Times/Kaiser poll found about one-in-five people struggle with medical bills even though they have insurance. Among insured people who reported crushing medical debts, about three-quarters reported putting off vacations, major purchases and cutting back on household spending. Nearly two-thirds used up all or most of their savings. Far fewer had to resort to second jobs, take on more hours or ask family members for funds (42 percent to 37 percent).

Why are these insured Americans having to reduce their standard of living and – and in fewer instances – having to resort to more drastic measures? Was it entirely because they’re sick? A common refrain among those struggling with medical bills was that money was tight prior to a family illness. This includes high-income households as well as low income households.

Money is fungible; it can be spent on vacations or medical needs. However, there are trade-offs in life. Like it or not, medical care is a component of household budgets. Funds spent on vacations cannot be spent on medical care; and funds spent on medical care are no longer available for vacations. Yet, putting off a vacation to pay medical bills is certainly not a travesty. Most would consider vacations a luxury, not a necessity.

One final thought about polls. A couple weeks ago in an earlier Town Hall commentary, I explained that people tend to report problems paying bills they don’t want to pay. Yet, they are seemingly willing to purchase items they should probably have left at the store. For example, people may report experiencing problems paying medical bills, but are unlikely to say they have trouble affording alcohol. They may report problems buying cigarettes but continue to buy them anyway. Americans report putting off vacations and major purchases because of medical bills. But why didn’t they report no problems with medical bills, but problems paying for vacations or major purchases? It’s a reflection of their priorities. Consider this: in the survey the uninsured reported problems with medical bills at a much higher rate than those with insurance. Just over half of the uninsured people surveyed reported problems with medical bills compared to about 20 percent of the insured. But when asked what they’ve had to give up to pay medical bills, the uninsured actually had an easier time with medical bills when compared to the insured. Less than two-thirds of the uninsured put off vacations, major purchases and had to cut back on household spending. Only half used up savings. Those are smaller proportions than those with health coverage.

However, an increasing problem is the cost of Obamacare policies – even if you don’t experience an illness. Take the example of my family. Insurance for my wife and me costs approximately $12,000 per year. Annual deductibles for that level of coverage are nearly $13,000 per year. Suffice it to say that $12,000 in premiums and any health care spending we may encounter before our deductibles are met would buy a lot of amenities that would enhance our standard of living. Indeed, the cost of our health insurance would buy a months-long stay at a renovated farm house in the Spanish, French or Italian countryside.

The cost of Obamacare is undoubtedly straining other Americans’ household budgets just as it is straining ours. After paying $1,000 per month for family coverage, few families can afford any type of health complaints which requires another $13,000 annually in deductibles. As an earlier article in the New York Times explained, high premiums and high deductibles are causing many people to weigh the cost of forgoing coverage entirely and just pay the penalty. In many people’s minds, it’s already a given that they will have to pay out of pocket for all their day-to-day medical needs. So what good is expensive insurance if you have no funds left over to see a doctor?

Whether your priorities are medical care or vacations, Americans will increasingly find they cannot afford both Obamacare and a decent standard of living on the same budget. I have an idea: why don’t we take a vacation from Obamacare?

An earlier version of this Heath Alert appeared in Town Hall.


Comments (4)

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  1. Ron Greiner says:

    I have an idea: why don’t we take a vacation from Obamacare?

    Devon, I believe you are going to get your wish. Even the politicians are saying we don’t have to repeal Obamacare because it is going to die all by itself.

    The best clue for people is that United Healthcare quit paying commissions on Individual Medical (IM) but are still paying commissions on their low-cost Short-Term-Medical (STM) which only takes healthy people. So, the sick people go to the Exchange and the healthy go to STM. It won’t take long for the Exchange plans to experience the death spiral that those who understand insurance know is right around the corner.

    I kinda feel sorry for Hillary trying to defend Obamacare after the 2017 rate increases are announced during the Presidential Debates, poor thing. Hillary is going to need a lot more than new tax credits to pay for Obamacare’s deductibles.

    I did a quote today for a 30-year-old male and United Healthcare’s PPO with a $4,000 IM product is $357 a month and my STM product with a $3,000 deductible is $88 a month. So with a smaller deductible my STM is 25% of the cost of United Healthcare’s Obamacare plan. Plus, my STM has only $100 deductible on accidents. I know the Liberals will say that the STM is Cherry Picking, only taking the healthy, but I submit Life Insurance is Cherry Picking too.

  2. Bob Hertz says:

    Devon, the following comment may sound obvious but it is worth saying:

    The people who face those thousand dollar insurance premiums are really caught in the middle.

    They are not employed by generous corporations. After all, the millions of Americans who work for large businesses or government never face $1000 premiums.

    And in addition, the persons who pay $1000 premiums make too much money to get Obamacare subsidies. An older couple making $45,000 a year pays only about $500 from their own pocket for insurance. If this couple makes over $63,000, which sure ain’t rich, then their cost can be $1000 a month or more.

    Obamacare has corrected some of the inequality between the pampered employees of corporations and everybody else.
    Just not all of it.

    • Devon Herrick says:

      Obamacare has corrected some of the inequality between the pampered employees of corporations and everybody else.
      Just not all of it.

      Bob, I think it will get worse before it gets better; them perhaps maybe it will get better. Even corporate employees are now facing high deductibles. It’s a mixed blessing. On the one hand, thousands of frustrated, desperate people are hardly anything to celebrate. They’re in a pickle. But when enough people (multiplied dozens of times per day in thousands of doctors’ offices and at hospital business offices), transparency will hopefully begin to take hold. It’s painful waiting for it to happen. We are in a bubble health care economy of sorts. The money flowed so freely for so many years that nobody cared what anything cost. Now, the inevitable result is painful. Now it’s painful for those caught in the middle, next it will be painful for doctors and other providers who have to face those irritated patients. Of course, this will only work for the small stuff. Maybe once providers (doctors, outpatient clinics, imaging centers, etc.) become accustomed to answering the painful questions, such as “how much does this cost?” then maybe more will begin competing on price.

      Health plans that feature high deductibles need to be more proactive with decision-support tools like Vitals and Compass Health Services. These firms have a database of provider prices (from vast claims database) and can direct patients to where costs are lowest. In my family we’ve had to be proactive and compare prices. But, then again, I’ve been researching this type of consumerism for years. It’s easier for me because part of my job involves research on how to shop for health care.

    • rex says:

      What exactly does older couple mean? 80 years old! They would qualify for medicare. 60 years old. I would never tell a 60 year old that they are old. 60 seems young to me. So you are arguing that $500 per month with high deductible is affordable for an “older” couple making $45,000.

      As for pampered employee. I had no idea that my company was digging into their own personal wealth to generously pay my health care premium. I was under the impression that my salary, bonus, salary increase, and health care premium are all connected. Higher health care premium means less money for bonus. It is nice to know that my company is so generous.