Fwd: qotd: Devastating effects of cost-sharing and medical debt

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Subject: qotd: Devastating effects of cost-sharing and medical debt
Date: Wed, 8 Jan 2014 09:59:04 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Kaiser Family Foundation
January 2014
Medical Debt among People with Health Insurance
By Karen Pollitz Cynthia Cox, Kevin Lucia and Katie Keith

An estimated 1 in 3 Americans report having difficulty paying their
medical bills – that is, they have had problems affording medical bills
within the past year, or they are gradually paying past bills over time,
or they have bills they can't afford to pay at all. Medical debt – and
a host of related problems – can result when people can't afford to pay
their medical bills. While the chances of falling into medical debt are
greater for people who are uninsured, most people who experience
difficulty paying medical bills have health insurance. Medical debt can
arise when people must pay out-of-pocket for care not covered by health
insurance or to which cost-sharing (such as deductibles) applies.
Medical debt might also result from health insurance premiums that
individuals find difficult to afford.  The consequences of medical debt
can be severe. People with unaffordable medical bills report higher
rates of other problems – including difficulty affording housing and
other basic necessities, credit card debt, bankruptcy, and barriers
accessing health care.

How does medical debt become a problem for people with health insurance?

* In-network cost-sharing
* Medical bills high relative to income and savings
* Cost-sharing "multipliers"
* Treatments spanning two plan years (doubles cost-sharing)
* Family-level cost-sharing (2 family members doubles cost-sharing)
* Cost-sharing for chronic conditions (cost-sharing restarts
each year)
* Extremely high cost-sharing (deductibles may not apply to OOP limits)
* Out-of-network care
* Fewer cost-sharing protections
* "Inadvertent" out-of-network care
* Balance billing (paying balances exceeding allowed charges)
* Health plan coverage limits or exclusions
* Unaffordable premiums
* Other factors unrelated to insurance
* Income loss due to illness
* Challenges to effective self-advocacy (overwhelmed with bills,
statements)
* Medical debt collections
* Credit card financing of medical debt

Consequences of medical debt

* Damaged credit
* Emotional distress
* Economic deprivation
* Depleted long term assets
* Housing instability
* Bankruptcy
* Difficulty accessing care

ACA will not address all of the underlying causes of medical debt. For
example:

* High cost-sharing will persist under many plans
* Limited protections for out-of-network care
* Limits on essential health benefits standards
* Lack of resources for consumer assistance

The ACA will provide health insurance to millions of Americans who are
currently uninsured, which may also improve access to health care and
lower their out-of-pocket expenses and exposure to medical debt. People
who are insured will also see improvements in the protection that health
coverage offers. However, in light of the limited assets many people
have, the problem of medical debt is likely to persist and lead to
continued debate over the tradeoffs inherent in providing more
comprehensive coverage and limiting federal costs for premium and
cost-sharing subsidies.

http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8537-medical-debt-among-people-with-health-insurance.pdf


Comment: Medical debt is a horrendous problem, and it will still be
with us after the Affordable Care Act is fully implemented. This
important report from the Kaiser Family Foundation and Georgetown
University explains the devastating effects of medical debt with special
attention given to the role of cost-sharing that can create intolerable
debt.

Why did the ACA legislation include such onerous cost-sharing measures?
The answers have to do with ideology and federal budgeting.

Conservatives have long supported the principle that individuals must be
responsible for their own lot. They define insurance as a product to
protect only against catastrophic losses. They are opposed to
comprehensive prepaid health care since they believe that individuals
should use their own personal funds to negotiate the health care
marketplace, making them empowered consumers. This concept has permeated
the health policy literature in the United States to the extent that
many progressives now also believe that patients have a responsibility
to make a cash payment at the time they access health care in order to
improve their health care shopping judgements.

Many other nations provide first dollar coverage for health care
services and yet are able to keep their total health care spending well
below ours. This real life practical experience in these nations
obviates the need for us to get into discussions of moral hazard, the
RAND HIE, Pareto parity, selective definition of insurance, asymmetrical
information, health savings accounts, and so forth when these concepts
are used to obfuscate the real debate that is over pure ideology -
having the freedom as an individual to interact in the health care
marketplace versus collectively covering all of our essential health
care costs in a system dependent on rigid government regulation (social
insurance) or government ownership (socialized medicine). Both markets
and government can control spending, but the former does so at a cost of
depriving far too many people of health care that they should have,
whereas the latter enables everyone to have the health care that they need.

When ACA was crafted, the highest priority was given to make sure that
the impact of the legislation on the federal budget was balanced. On the
spending side, the new plans to be offered in the insurance exchanges
were designed so that the most popular plans would have a low actuarial
value - 30 or 40 percent of the costs of health care would be paid by
the patient. It was realized that many would not be able to pay either
the full premiums or the full out-of-pocket costs of these low actuarial
value plans, so income-indexed subsidies were included in the
legislation, but clearly not enough. Low cost plans with inadequate
subsidies worked for the federal budget, but it will not work for many
patients, as today's report shows us.

So a system designed to satisfy ideology and to comply with federal
budget restraints is proving to be a system that will saddle far too
many patients with intolerable medical debt, with its horrendous
consequences, including impaired access to health care. It's such a
shame. An improved Medicare for everyone with first dollar coverage
would have prevented all of this. (We can still do it, you know.)