OP-ED

The Unaffordable Care Act

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 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, 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 Townhallcommentary, 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 having 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 — possibly because they had not sank money into coverage that provided little of their needs.

However, a growing problem that could increase the ranks of the uninsured 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 paying 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 Health Alert appeared in Town Hall.

Devon M. Herrick, PhD is a health economist and senior fellow at the National Center for Policy Analysis. He has written on ways consumers can lower their drug spending for more than a decade.

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emma.101wjlarocqueAllen UpdegraffhealthcaretedPaul @ Pivot ConsultingLLC Recent comment authors
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emma.101
Member
emma.101

More like the (UWDCA) Unaffordable We Don’t Care Act.

wjlarocque
Member
wjlarocque

i hesitate giving Washington bureaucrats any credit for being intelligent when it comes to strategy, but it makes sense to increase the “misery” factor related to the ACA to the point where those affected demand a “fix,” ergo universal health care, i.e. we’re just in the opening innings of the game whose ultimate objective is one of the left’s golden policy nuggets. In the mean-time, it’s very difficult for me (upper middle income) to rationalize the $25k or so annual cost (premiums plus out-of-pocket) of health care coverage… do any listeners have an opinion about the “faith-based” health care cost… Read more »

Allen Updegraff
Member
Allen Updegraff

Healthcare in American is expensive. But before Obamacare (The Patient Protection & Affordable Care Act) insurance was out of reach for millions. And if god forbid insurance said you have a preexisting condition your just out of luck until broke or dead. I’m curious to hear the alternatives for all the faults you see. If you have no alternative then suggest that we start work on both sides of the aisle to improve what we have now. An example of one improvement can be found in Norway. They have one of the highest standards of living of any country but… Read more »

Ted
Member
Ted

Curious – what do you see as the alternative? Obamacare deductibles and premiums are certainly insane. However, it seems to me that this is a result of the extreme cost of healthcare in the US, as driven by inefficiency, a cultural commitment to freedom of choice, and unreasonably high prices on everything from ambulance services to hospital stays to specialty drugs. What makes Obamacare uniquely expensive as compared to any other system? And what do you propose that would work better? Just not sure I’m understanding how the points you make in your post link directly to Obamacare (as opposed… Read more »

pschilstra
Member
pschilstra

An emotional and lightweight post. Derogatory labels for those with different opinions are decidedly unhelpful in this debate. And, as so often, criticism is cheap if you don’t offer constructive solutions. If Obamacare is not a good start to achieving the Triple Aim (Care better than we have ever seen, health better than we have ever known, cost we can all afford, …for every person, every time.), then how do we get there?

Just to be sure, I am not a “Leftie”!

BobbyGvegas
Member

Thank you. I too found it juvie and rigidly ideological.

John Irvine
Member

I agree but why does healthcare in USA cost more than 2.5 times other countries? Don’t blame it on Obamacare because that was the case before Obamacare. My health insurance cost was rising faster before Obamacare. Look at the history of health care cost in this country we were the same cost up to 1980 after 1980 cost in this country started creep up from the rest of the world. Guess who become our president?

JustSayin
Member
JustSayin

Right on Robert Essenreich. The only thing we should be talking about is the ridiculous cost of care in this country. As Bill Clinton said: “It’s the cost of healthcare, stupid”.

Allan
Member
Allan

Did Bill Clinton say that before or after he raped a woman and was paid for deals that he made?

We don’t have a free market fee for service system in this country. We are mostly all under the government’s thumb and that government involvement has been increasing the cost of healthcare for decades while making a lot of people that did business with the government very wealthy.

Paul @ Pivot ConsultingLLC
Member

From Nortin Hadler’s Citizen Patient:
“nearly half of the direct cost of the health care purchases are useless or nearly useless interventions.” page 44. Rand Corporation and others peg it at around 30%.
Here is a link to my review of the book on Amazon:
http://www.amazon.com/gp/review/R3UPFUQWBZWAID?ref_=glimp_1rv_cl

Perry
Member
Perry

But don’t call it the Affordable Care Act, because it’s not. Which was the whole point to begin with.

BobbyGvegas
Member

“AHIPcare.” It’s not about “care” and it’s only partially about “insurance” (actuarially speaking). A huge chunk is rearranging the regulation of routine 3rd party intermediated pre-payment.

Perry
Member
Perry

AHIPripoff more like it.

BobbyGvegas
Member

Well, yeah. I was never particularly a fan of the ACA. I followed every House draft along the way while it was still a bill.

Allan
Member
Allan

I don’t find any of this shocking. Firstly almost everything bad about the ACA was predicted before its passage. Secondly, it was not as much about providing reasonable healthcare at reasonable cost as it was for the progressive movement to increase their power. After all the Obama administration demonized both businesses and the insurers. Afterwards they got them to sign on board through threats and promises of greater income along with a bit of bribery. The insurers ever striving to become monopolists and almost having achieved that goal were offered guaranteed premiums from the entire non Medicare public while figuring… Read more »

William Palmer MD
Member
William Palmer MD

The actuarial values of 60, 70, 80 and 90 for the bronze, silver, gold and platinum plans mean that folks are buying a very odd product indeed: It is not exactly insurance in the sense that it makes you feel comfortable or secure or makes one feel safe from catastrophes. Eg with the bronze plan, your insurer is only agreeing to come up with 60% of your ‘covered’ costs. This means costs for approved maladies. Odd pains or sagging eyelids may not be approved. When the patient has to come up with 40% of his costs, it is not exactly… Read more »

BobbyGvegas
Member

“Lefties”

Don’t get out much, ‘eh? Far out, man, groovy…

This is the most lightweight post I’ve ever read on THCB. Made of Banal Blinding Glimpses of the Obvious on a bed of Straw.

Perry
Member
Perry

The “Affordable Care Act” should have been named, the “Insurance Mandate Act”. While I have not problem making sure the working poor can get health care, what this law has done is to make insurance (not care) more affordable for SOME Americans. It’s pretty sad when middle-upper middle class Americans can’t afford health care. Even those on Medicaid are having trouble getting care because it pays doctors so poorly, many don’t accept it, or limit their Medicaid Panels. I just learned of a middle aged family friend with 3 kids and wife diagnosed with Pancreatic Cancer and they are in… Read more »

BobbyGvegas
Member

I call it AHIPcare. See my review of the book “Obamacare is a great mess.” http://regionalextensioncenter.blogspot.com/2015/07/obamacare-in-wake-of-king-v-burwell-at.html I just covered the Health 2.0 WinterTech 2016 conference. One of the VCs waxed rather approvingly over the prospect of investing in health-related “consumer finance” apps, given the rise of OOP from the historical baseline of about 5% to as much as a forecasted 35%. As I wrote at KHIT: “One presenter demo’ed an app purporting to generate a general personal “health score” once seeded with some basic info, after which the score would get “refined” by the addition of various social media metrics… Read more »

Perry
Member
Perry

Enjoyed your synopsis of the book, Bobby. What I find hard to understand (other than cronyism) is why all the supposedly brilliant minds that contributed to the ACA didn’t see this coming.

BobbyGvegas
Member

Paradigm blinders in Wonkistan (i.e., assuming that “intermediated pre-payment” = “coverage” = “insurance” = “health care”), and the lobbying power of AHIP. Obama “led from behind” (staying notably passive) allowing the sausage factory that is The Hill to run rampant. There were FIVE health insurance industry lobbyists for every member of Congress.

Ted
Member
Ted

No denying that the big insurers have benefited from the ACA, but what about Pharma, big hospital networks, medical devices, etc?

Seems to me that all those guys are making out a lot better than the AHIP folks, who tend to have much lower profit margins.

Not opposed to hating on the insurance companies, but there’s so many more people to hate on who deserve it even more!